Consumer Payment Card News

Card Regs

A new study, sponsored by the American Bankers Association, and featuring economists Jonathan Orszag and Susan Manning concludes that placing further legislative restrictions on credit card interest rates and fees is likely to harm the vast majority of consumers. The study says proposals for price controls on credit cards may help a small minority of borrowers, but only at the cost of harming the vast majority of borrowers; innovation and deregulation have allowed credit card prices to reflect borrower risk more precisely, which has benefited the vast majority of borrowers; and effective alternatives exist to protect consumers from unfair or deceptive credit card practices without raising costs or limiting credit access for other borrowers. The study argues that credit restrictions would harm the economy more broadly as a result of consumers’ reduced ability to maintain consumption through periods of income disruptions or borrow against future earnings. A copy of the full report, “An Economic Assessment of Regulating Credit Card Fees and Interest Rates”, is available on the ABA’s Web site at: “ rates92507.pdf”: rates92507.pdf

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