February 11th, 2015
from the Philadelphia Fed
From 2008 to 2010, there was a sea change in the American credit card market. A new law, the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (the CARD Act), prohibited a number of common practices while imposing new underwriting and disclosure requirements. At about the same time, the U.S. entered a financial crisis followed by the most severe recession since the Great Depression. During this period, the supply of available credit in the card market contracted sharply. Average credit limits fell by 14 percent on open accounts and by more than 32 percent on new accounts. Even in 2015, the credit card market looks very different today than it did in 2007.
Since the CARD Act provisions took effect, researchers have begun to investigate how the confluence of these two events - the CARD Act and the Great Recession - has affected the market for credit cards. Scholars and government agencies have examined aggregate measures, including the number of accounts, total balances, and total credit lines, as well as changes in the distribution of credit risk. Researchers have also studied changes in interest rates, fees, and repayment rates, and the implications of these changes for consumers' access to and use of credit cards.