Inside the Vault

Inside the Vault - Spring 2014

Inside the Vault is an economic education newsletter for educators.

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Credit Card Usage Although credit card usage declined from 2006 to 2009, it rebounded soon afterward. As shown in the chart below, from 2009 to 2012 the number of annual transactions increased substantially for both general- purpose and private-label credit cards. (General-purpose cards are issued by a major electronic payment net¬work, such as Visa and MasterCard; are accepted by a wide vari- ety of merchants; and include credit, debit, and prepaid cards. Private-label cards are merchant specific; usable only at a particular merchant or chain of merchants, such as Target and Macy's; and include credit and prepaid cards.) Use of general-purpose credit cards for remote transactions (when the credit card is not present, e.g., online sales) continues to grow. In 2012, they accounted for two-thirds of all remote transactions. In addition, from 2009 to 2012, the total dollar value of credit card transactions—how much is spent using credit cards—increased. In 2012, the credit card subset of general pur- pose cards accounted for the highest dollar value of general-purpose card transactions (53 percent), followed by debit cards (44 percent) The CARD Act: Has It Made a Difference? BY JEANNETTE N BENNETT Economic Snapshot The CARD Act What's Your Question? What should I know about the CARD Act? Resources New this Spring I n 2009, Congress passed the most substantial reforms in the credit card industry in over 40 years—the Credit Card Accountability Responsibility and Disclosure of 2009 (the CARD Act). The CARD Act addresses many practices consumer advo- cates—and Congress—identified as problematic. Although the Truth in Lending Act of 1968 mandated disclosure of information about the costs (terms) of credit, there were few limits placed on the pricing practices (e.g., fees) of card issuers. Con- gress intended the CARD Act, often called the Credit Cardholders' Bill of Rights, to establish fair and transparent practices for credit cardholders. Put simply, the CARD Act offers cardholders protections that can save them money. Fair practices include lower fees and limits on interest rate increases. Transparent practices include bet- ter and timely communication so consumers know how much they are really paying for credit. This article reviews some of the reforms initiated by the CARD Act and their effects on credit card usage and consumer savings. Volume 19 Issue 1 Spring 2014 A N E C O N O M I C E D U C AT I O N N E W S L E T T E R F R O M T H E F E D E R A L R E S E R V E B A N K O F S T. L O U I S continued on Page 2 T H E F E D E R A L R E S E R V E B A N K O F S T. L O U I S : C E N T R A L T O A M E R I C A' S E C O N O M Y ® © Thinkstock

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