"The new rules of the road established by the Credit CARD Act will shield credit cardholders from widespread abusive practices," Senate Banking Committee Chairman Chris Dodd, (D-CT), the bill's author, said in a statement at the time of the bill's passage.
But credit card companies are already finding loopholes in the new regulations to ensure that those reforms do not take a chunk out of their profits, according to CNNMoney.com.
Because some aspects of the newly passed law do not take effect immediately, credit card companies are taking advantage by arbitrarily raising interest rates before the regulations take effect in February. Starting then, credit card issuers will no longer be subject to interest rate hikes unless there is a late payment or another infraction explicitly spelled out in the agreement. In the meantime, credit card companies have been jacking up rates to as much as 36 percent. Even when the law applies in February, customers will still be subjected to interest rate hikes on new purchases. The law covers only existing balances.
Another way in which credit card companies are ensuring that their bottom lines are not hurt by the new reforms is through new fees imposed on customers. The law has its limits, and the bill recently passed by Congress only regulates existing fees. So credit cards are simply creating new, unregulated fees to add on to the existing ones. Many customers are finding that their credit card companies are instituting inactivity and annual fees for the first time, as well as creating new ones.
After February, credit card companies will no longer be able to raise minimum monthly payments by more than 100 percent. But for now, credit card companies are jacking up monthly payments by as much as 150 percent.
"This is making payments virtually impossible for some people," Consumer Union's Pamela Banks told CNNMoney.com. "It's throwing people off when they were living on a tight budget anyway."
Some customers are finding that their credit card companies have slashed their credit limits, or canceled their plans entirely. Some customers are seeing their credit limits slashed by as much as 75 percent, according to CNNMoney.com.
"Usually cardholders have this credit line available for an emergency, for this kind of current economic situation," said the Center for Responsible Lending's Josh Frank, according to CNNMoney.com. "But now they're turning to it when they need it, and it's gone."
While the reforms may have seemed like a big victory for consumers when the bill was passed, there is already ample evidence credit card issuers are devising ways to keep their profits just as healthy as before.
"As we close the loopholes on some things, they open up elsewhere," said Consumer Unions' Banks. "Reform acts don't cover everything, and cardholders have to watch out for their own accounts."