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Regulations aiming to make credit cards more consumer-friendly have been effective, researchers found. Fee restrictions enacted by the CARD Act of 2009 have saved U.S. credit cardholders $20.8 billion a year, according to a study released in October. Not only have borrowing costs come down for the average American, but the changes had the most impact for consumers with low credit scores.

While the changes made credit cards more affordable, they didn’t restrict consumers’ access to credit: The number of new accounts opened and credit limits available remained consistent as the regulations went into effect in February 2010.

The paper, “Regulating Consumer Financial Products: Evidence from Credit Cards,” was compiled by experts from the Office of the Comptroller of the Currency, National University of Singapore, University of Chicago and New York University, and it drew conclusions from credit card accounts held by the eight largest U.S. banks. The data covered more than 150 million accounts, which the researchers classified as a significant portion of the industry.

How the CARD Act Helped

Limits on credit card fees — late fees and fees for exceeding credit limits — reduced annual borrowing costs by 2.8%. Among Americans with FICO scores below 620, costs declined by 10%.

As the authors noted in their paper, industry experts thought the regulations might trigger increased interest rates or other credit card costs in order to offset the loss of fee revenue. But that wasn’t the case. Part of the CARD Act prevented lenders from increasing interest rates on a whim (a common practice prior to the legislation), but the data showed no sharp uptick or gradual increase in interest rates as the regulations went into effect.

“These results suggest the CARD Act brought about an across-the-board reduction in borrowing costs,” the researchers stated.

Establishing Good Credit Habits

This is good news from a budgeting standpoint, but people avoiding late fees are doing more than just saving money. Making late payments on debt can gouge consumers’ credit scores, which impacts their access to affordable credit. Individuals can see how habits like late payments hurt their credit profiles by reviewing their credit reports, and using free tools like Credit.com’s Credit Report Card that provide an analysis of these reports.

Much of personal finance is behavior-based — those who make and stick to budgets tend to have better credit health — and while shifts among consumer behaviors were less statistically significant than changes in borrowing costs, they emerged as a result of the regulations.

The CARD Act required credit card statements to clearly explain the cost of repaying the balance when making minimum payments versus the cost if the cardholder repaid the balance within 36 months. The number of consumers who paid their balances at a rate of 36 months increased by half a percentage point, the study noted, resulting in an average of roughly $24 in annual interest savings for those borrowers who changed their behavior. This translated to an overall reduction in average daily balances of about $71 billion.

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