Hard To Believe! – It’s been five years since The CARD Act was signed into law by President Barack Obama. The law has saved Americans billions of dollars in predatory and excessive fees on credit cards.
By one estimate, the CARD Act has saved consumers $12.6 billion annually in lower fees and interest charges; a recent report from the Consumer Financial Protection Bureau identifies nearly $4 billion annual savings in fees alone.
Our good friends at San Francisco-based Consumer Action says the CARD Act has been hugely successful in banning the biggest unfair credit card gotchas like retroactive interest rate hikes and excessive penalty fees. However, now it’s time to tackle the missing protections, like limits on fees and credit features, on the other payment cards like debit and prepaid.
For debit card transactions, overdraft fees are particularly destructive. For debit cards, the typical overdraft fee exceeds the size of the overdraft itself. At $35 per overdraft, these fees can quickly overwhelm customers, particularly when multiple fees are applied in a short period of time. Even following a 2010 “opt-in” requirement intended to curb such abusive charges, CRL research found that overdraft fees on ATM and debit card transactions cost consumers at least $5.8 billion per year.
While the debit card market has been subject to some oversight, the quickly expanding prepaid card market has not. Despite the market’s rapid recent growth, there are no federal laws or regulations protecting consumers from hidden fees, expensive credit features, and other hazards; moreover, there are no requirements to clearly disclose all the costs and fees of prepaid cards to consumers. Currently, the Consumer Financial Protection Bureau (CFPB) is considering rules on prepaid and debit cards.