WASHINGTON, Feb. 22 (UPI) -- Two federal agencies said Tuesday that U.S. credit card issuers had radically changed their ways since the CARD Act took effect a year ago.
One report released by the new Consumer Financial Protection Bureau studied the nine largest U.S. credit card companies, which represents 90 percent of the industry, The Washington Post reported.
The CFPB found the practice of raising rates on existing credit card accounts had dropped from 15 percent of all accounts to 2 percent in the past 12 months. Unless a borrower is late on two consecutive payments, the practice is banned by the Credit Card Accountability, Responsibility and Disclosure Act, known as the CARD Act.
In a separate report, the Office of the Comptroller of the Currency said that fees for late payments, capped in the new law at $25 for the first late payment and $35 for the second, had dropped from $901 million in January 2010 to $427 million in November 2010.
Late fees also cannot exceed the minimum payment due, but some banks are raising minimum payments, the Post said.
"Much of the industry has gone farther than the law requires in curbing re-pricing and over-limit fees. Leaders in the industry deserve credit for moving in the right direction," said Elizabeth Warren, special adviser to the CFPB.
"The CARD Act has made a big difference by putting an end to some of the bait and switch tactics that unfairly trap credit card consumers in high interest debt. Thanks to the new law, consumers stand a much better chance of avoiding the credit card gotchas," said Pamela Banks, senior policy counsel for Consumers Union, a non-profit group that publishes Consumer Reports.