Pew: Law Vanquished Many Credit-Card Ills, Not All

Publication: Philadelphia Inquirer

Author: Jeff Gelles

07/22/2010 - There's good news for credit-card users, according to a report today from the Pew Charitable Trusts: As promised, many of the credit-card industry's best-known tricks and traps for consumers were vanquished by last year's credit-card law.

The report looked at card data collected in March, and found that three of the law's prime targets were gone:

  • "Hair trigger" shifts to penalty interest rates on existing balances, based on minor account violations such as being a day late on a payment, .
  • Unfair payment-allocation schemes that trapped people who accepted "0 percent" interest rates on balance transfers into paying unexpected interest if they also used their new cards for purchases.
  • Meaningless credit limits, in which banks allowed people to spend beyond their limits but then imposed unexpected "over-limit fees" on them.

By the way, if you weren't paying close attention, you might wonder about the role of the Pew Charitable Trusts in the credit-card arena.

Pew played a large - and largely unheralded - role in the reforms enacted last year. The Philadelphia foundation's Safe Credit Cards Project started out by trying to foster voluntary reform by the mega-banks that had come to dominate the industry. When its voluntary push seemed to stall, it became one of the most important advocates for a new law, in part because of its reputation for pushing for policies based on solid data and research.

Pew recognized the truth of what less-well-funded consumer advocates, and their academic allies such as Harvard bankruptcy expert Elizabeth Warren, had been arguing for years: that the tacit deregulation of consumer credit, spurred by a 1978 Supreme Court decision and that decade's high inflation, had given birth to a credit-card business built on tricks and traps.

Read the full article, Pew: Law Vanquished Many Credit-Card Ills, Not All on the Philadelphia Inquirer'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Pew is no longer active in this line of work, but for more information visit the Safe Credit Cards Project on

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