CARD Act Misses Mark on Interest

Publication: New Haven Register

06/17/2010 - The Federal Reserve this week adopted rules meant to protect credit card holders from predatory penalty fees and other charges, but not everyone feels the agency went far enough.

Researchers for The Pew Charitable Trusts found that most consumers are charged a $39 late fee, even if the minimum payment required is only $20. The Fed just completed its final round of implementations of the Credit Card Accountability, Responsibility and Disclosure Act, signed into law last year.

Under the latest changes, which take effect Aug. 22, credit card issuers are prohibited from charging a late fee of more than $25, unless the company can show that a higher fee represents a reasonable proportion of the costs it incurs because of violations.


Nick Bourke, director of the Pew Safe Credit Cards Project, said Wednesday that the Fed has “done its job with mixed success.”

The CARD Act was designed to prevent unreasonable penalties, but Bourke said the Fed did not invoke power from Congress to restrict or cap interest rate increases on seriously delinquent accounts, which are 60 days or more in arrears.

“I think the bad news is the Fed missed an important chance to fix problems with penalty interest rate increases,” which Bourke said are in the range of 29 percent. “The Fed should have addressed whether that’s reasonable and proportional.”

Read the full article, CARD Act Misses Mark on Interest, on the New Haven Register's Web site.

Pew is no longer active in this line of work, but for more information visit the Safe Credit Cards Project on

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