8-In-10 Americans Want More Credit Card Protections

Prior to the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009, restrictions on credit card issuers were loose at best. But in the wake of the Great Recession, the CARD Act imposed proof-of-income limits on card applicants under 21 years of age without an adult co-signer, set limits on interest rate increases on existing card balances, and directed payments above the minimum toward higher interest balances.

In addition, the CARD Act increased card issuer disclosure requirements. Cardholders must be told how long it will take to pay off an existing balance at the minimum monthly rate, and issuers now follow a standard template on fee and penalty disclosures.

With the CARD Act passing its ten-year anniversary, CompareCards.com surveyed over 1,000 consumers to evaluate the CARD Act and gather opinions on credit card regulation. An overwhelming number of respondents agreed that more should be done to protect consumers.

Only 6% of respondents disagreed that more legislation or regulation is necessary, compared to 79% who agree (with 55% strongly agreeing). Many respondents may not be aware of existing protections, since 47% of respondents had never heard of the CARD Act and only 40% of those respondents it had a positive effect while 45% said it had little or no effect. People's answers likely reflect their own credit card experiences.

The greatest CARD Act shortfall is the lack of credit card interest rate caps. Federal law prohibits credit unions from charging more than 18%, but other financial institutions may charge any rate that doesn't conflict with state laws where the card issuer is incorporated.

Average credit card annual percentage rates (APRs) are just over 17.6%, with the average for bad credit at 25.33%.

A vast majority (88%) of respondents were in favor of credit card interest rate caps for all financial institutions. Lower-income consumers were more likely to support a cap than higher-income respondents — understandable since higher APRs put more pressure on lower-income families to avoid higher balances and increased interest charges.

Nevertheless, nearly a quarter (24%) agreed that when someone is sixty days late with a payment on one credit card, that person's other credit card issuers should be able to raise their interest rates regardless of the payment history on the other cards. That practice, known as universal default, was banned by the CARD Act.

Are you tempted to give up on credit entirely and switch to debit cards? You probably shouldn't. As Steve Weisman, cybersecurity expert and author of Identity Theft Alert explains, "Due to stronger consumer protection laws for credit card fraud that do not extend to debit card fraud, it is important for people to refrain from using their debit cards for anything other than at ATMs." Federal law limits your liability to $50 on stolen credit cards, but debit cards don't carry the same protection.

Regardless of your knowledge about the CARD Act, its crucial that you understand how to use credit responsibly. Know how to interpret the terms, conditions, fees, and interest rate options for all of your cards. If you aren't sure, today's a great day to learn. You may have been squandering money based on policies you didn't understand and options that you didn't know that you had.

Credit cards can be an effective way to manage money, improve credit, earn points, and travel with perks if used the right way. Check out Benzinga's tips on using credit cards effectively, curated by our own personal finance team.

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