Credit card companies still finding loopholes in laws

Credit card issuers have lost out on millions in profits as a result of the laws put in place by the Credit Card Accountability, Responsibility and Disclosure Act, which prohibited practices deemed excessive and harmful to consumers.

According to a report in the Dallas Morning News, however, those companies have made up some of those lost profits by exploiting loopholes in the Credit CARD Act. They are complying with requirements like the necessity of 45 days’ notice before changes to a credit card agreement, any payment made above the minimum be put toward the credit card debt with the highest interest rate, or those eliminating fees for going over a card’s credit limit. But at the same time, they’ve found new ways to drive revenues.

The report said that the Pew Safe Credit Cards Project has found that companies are still engaging in what it calls questionable practices, including sharp, unannounced rises in penalty interest rates.

"For the first time, we have seen credit card disclosures warning consumers that interest rates could go up as a penalty for certain actions, but not stating how high those rates could go," Nick Bourke, director of the project, told the paper.

Pew found that surcharge fees for cash advances also rose sharply between July 2009 and March of this year, the report said. The average increase for these charges rose by one-third, from 3 percent per transaction to 4 percent.

Consumers should be aware that any new card they sign up for now may come with an attractive introductory interest rate, which then increases significantly when that initial period ends. This practice may seem harmful as well, but because it was spelled out in the credit card’s initial agreement, it is perfectly legal under the new laws.