A law restricting credit card acess for poor credit risks has resulted in fewer defaults.
A law restricting credit card acess for poor credit risks has resulted in fewer defaults. - 
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Tess Vigeland: It's been three years since Congress passed the Credit Card Accountability, or CARD Act. Lawmakers were looking to crack down on the hidden fees and ballooning interest rates charged by credit card companies. You may remember at the time the financial industry warned of dire consequences. But it turns out, the reforms may actually have been a blessing to the purveyors of plastic.

Marketplace's John Dimsdale reports.

John Dimsdale: The CARD Act did away with many profitable credit card practices. No more could issuers offer enticingly low interest rates that could be quickly jacked up on outstanding balances. Regulators also imposed strict limits on overdraft fees. Some banks predicted the bill would mean the end of plastic.

Ben Woolsey: That was an effort of saber rattling and fear-mongering on the part of the industry to try to ward off passage of this legislation.

Ben Woolsey is the director of consumer research at CreditCards.com. He says three years later, repayment delinquencies have been cut in half. And banks are back to turning plastic into gold.

Woolsey: Card issuers have returned quite robustly to profitability since the credit card act went into effect. None of the predicted consequences ended up coming to fruition. They’re really much better off now than they were before.

And so are credit card users. Scott Talbott is with the Financial Services Roundtable, a Washington trade group.

Scott Talbott: What the CARD Act did was make the terms of your credit card clearer and easier to understand. So when customer understands the product, then everybody wins.

But Talbott doesn’t apologize for the industry’s early objections the new regulations.

Talbott: Banks are for-profit entities, so there was that concern.

But now, some of the banks that got out of the credit card business after the recession and the regulatory crackdown are jumping back in.

In Washington, I'm John Dimsdale for Marketplace.

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