The Credit Card Accountability Responsibility and Disclosure Act, which went into effect a year ago, banned some of the worst practices:

  • Rate hikes for no reason.
  • Universal default, which allowed card issuers to raise your rates if you fell behind with another lender.
  • Repeated approval of over-limit transactions in order to charge multiple fees.
  • Ever-moving due dates and due times, which meant you could be slapped with a late fee if your payment didn't reach the card's processing company by a certain time of day.

Some have claimed that the Credit CARD Act caused card issuers to slash credit limits, raise interest rates and precipitously close accounts. The reality is more nuanced. Card companies began reducing credit limits, closing accounts and raising rates when the credit crunch began in late 2007, well before the act was passed. The recession accelerated those trends.

The Credit CARD Act definitely cut into issuers' revenue. According to a report by the Office of the Comptroller of the Currency, card companies' income from over-limit fees virtually disappeared in the year after the law went into effect and issuers were required to get consumers' consent before approving over-limit transactions. Late-fee revenue dropped in half after issuers were required to fix due dates and due times were eliminated.

The issuers knew their revenue was in peril, of course, and that interest rate hikes would be much tougher under the law, so they raised rates on many accounts before the law kicked in.

But Warren said the comptroller study, and the bureau's analysis of data supplied by the largest credit card issuers, show that the Credit CARD Act was still beneficial to consumers.

"The data indicates that the overall cost of credit cards did not go up," Warren said. "The pricing is just more visible upfront."

Hacking through the gobbledygook

But there is still work to be done, thanks to that fine-print shrubbery that Warren wants to chop down.

"Today it is not possible to look at four credit card agreements and tell which one is cheaper," Warren said. "Part of the reason is that agreements are still too long and complicated."

The same is even more true of mortgage agreements. Warren said that the agencies responsible for two forms provided to consumers have been in negotiations to combine the forms -- for the past 15 years. Instead "the forms have been revised to become longer and more complicated," she said.

Cutting through the bureaucracy is something the nascent bureau can do, since it will take over consumer protection responsibilities that are currently scattered among seven agencies.

That is, of course, exactly what scares the banks, which are used to ineffective, understaffed consumer protection departments hidden in the agencies' backwaters.

Equally scary is that the bureau may be headed by a plain-spoken, personable "granny" who understands exactly how tough it is for consumers today and who wants financial products that can help them rather than make things worse.

For her part, Warren seems to relish the challenge.

"I have so much fun doing this," she said. "I get up every morning looking forward to this."

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