A Credit Card Regulation That Worked for Consumers & Banks Too | Innovation & Institutions, Will it Blend? | Scoop.it

"Economists found that the Card Act, passed in 2009, saved consumers billions of dollars by cutting through a tangle of credit card fees.  ...and more."


Congress decided to force down the hidden fees that credit card companies collect from their customers. It passed a law called the 2009 Credit Card Accountability Responsibility and Disclosure Act   ...It's a clear case of regulation that worked. 


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...the new law saved customers an annualized 2.8 percent of the average daily balance on cards - [$20.8 billion ...

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..the authors of the new study access to information on more than 150 million credit card accounts. They found that on average, the new law saved customers an annualized 2.8 percent of the average daily balance on cards - [a] $20.8 billion estimate.


…a surprising discovery made in the new paper: Subprime credit card holders do default more often than others, but the interest and fees they paid made them far more profitable for the banks than any other groups of credit card holders, even during the financial crisis.



“This was probably the worst period in modern history to be a lender...when banks were hemorrhaging money on subprime loans, subprime credit cards were a major source of profits.” With profits that high, banks could still do well even with lower fees.