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Some of the Credit CARD Act's broad changes have created costs and difficulties for credit unions that outweigh the benefits to credit union members, NAFCU Regulatory Affairs Counsel PJ Hoffman told the CFPB on Tuesday.

Hoffman, writing in response to the CFPB's request for information about the credit card market, outlined the association's concerns about some of the issues credit unions are facing as a result of the CARD Act, which changed credit card pricing requirements in a number of key areas.

The CARD Act has made it harder for some credit unions to price for risk, Hoffman noted. For example, some credit unions have not been able to develop an effective process for increasing rates on members who request a higher credit limit but have deteriorating credit, Hoffman said. In these cases, "credit unions have to accept risk without the ability to do proper risk-based pricing."

Hoffman also noted:

• The CARD Act and other regulations have had a negative impact on credit unions' credit card product innovation. On this point, Hoffman said the costs of complying with the regulations are greater than the costs of developing new credit card products.
• Some credit unions are fully engaged in risk-based pricing for credit cards, while others are either minimally engaged or not engaged at all.

NAFCU continues to advocate for enhancing credit unions' independent ability to use their best judgment on credit card pricing based on what is in the best interest of their membership and business model.

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