Journal of Law, Finance, and Accounting > Vol 7 > Issue 1

The Credit Card Act and Consumer Debt Structure

Yiwei Dou, New York University, USA, Julapa Jagtiani, Federal Reserve Bank of Philadelphia, USA, , Joshua Ronen, New York University, USA, Ramain Quinn Maingi, New York University, USA
Suggested Citation
Yiwei Dou, Julapa Jagtiani, Joshua Ronen and Ramain Quinn Maingi (2022), "The Credit Card Act and Consumer Debt Structure", Journal of Law, Finance, and Accounting: Vol. 7: No. 1, pp 91-126.

Publication Date: 28 Apr 2022
© 2022 Y. Dou, J. Jagtiani, J. Ronen, R.Q. Maingi
Corporate governance,  Financial markets,  Information systems and industries,  Strategic management,  Strategic management,  Econometric models,  Microeconometrics,  Panel data,  Industrial organization,  Law and economics,  Public economics,  Legislatures,  Bureaucracy,  Congress,  Government,  Political economy,  Regulation
JEL Codes: G21, G28, G18, L21
CARD Actcredit cardscredit limitsconsumer debtsubprime borrowers


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In this article:
The CARD Act of 2008 
Data and Sample Construction 
Descriptive Statistics 
The Methodology 


We investigate whether the Credit Card Accountability, Responsibility, and Disclosure (CARD) of 2009 influenced the debt structure of consumers. By debt structure, we mean the proportion of total available credit from credit cards for each consumer. The act enhances disclosures of contractual and related information and restricts card issuers' ability to raise interest rates or charge late or over-limit fees, primarily affecting subprime borrowers. Using the credit history via the Federal Reserve Bank of New York/Equifax Consumer Credit Panel during 2006--2016, we find that the average ratio of credit limit on cards to total available credit declined for subprime borrowers in comparison to near-prime and prime borrowers after the introduction of the CARD Act. The decline did not occur before the bill was first proposed by the Federal Reserve and introduced in Congress; it took place afterward and continued through the end of our sample period. The results suggest unintended consequences as the CARD Act likely had an adverse effect on subprime borrowers.