Consumers have bemoaned credit card companies' practices for years but with new credit card rules scheduled to take effect Monday, card holders can breathe a sigh of relief, right?
Not so fast, experts say. Even with the enactment of the second phase of Congress' Credit Card Accountability, Responsibility and Disclosure Act of 2009, card companies and banks will still have a number of tools at their disposal that may rankle customers.
Namely, card companies can still institute new fees and revive old ones, close accounts and raise minimum payments. In addition, as long they give you the 45 days' notice required by the CARD Act, card companies can still increase interest rates on new purchases. The new law does limit rate increases, but only on existing card balances.
When it comes to raising revenue, "make no mistake, if they haven't thought of it, they will," said Adam Levin, the founder of the credit education Web site Credit.com and a former director of the New Jersey Division of Consumer Affairs.
Revenue losses expected from the CARD Act -- including an expected decline in once lucrative over-the-limit fees -- are part of what's motivating companies, said Bill Hardekopf, CEO of the card comparison Web site LowCards.com.
Credit card "issuers are for-profit companies. They're not philanthropic organizations -- they're in the business to make money, so if you limit a company over here on how they can make money, they're going to come up with ways to make money over there," Hardekopf said. "That's truly what's happened."
Cardholders are already noticing changes. A recent survey of 1,000 credit card customers by Credit.com found that more than 43 percent had experienced one of the following with their credit card accounts:
Had their account closed. (11 percent)
Interest rate increases. (27 percent)
Fee increases. (19 percent)
Had their credit limit lowered. (13 percent)
Minimum payment increases. (15 percent)
Rewards program reductions. (11 percent.)
With the exception of credit card limit decreases, the incidence of all these changes were up compared to Credit.com's last survey in June, 2009.
New Credit Card Fees
Scott Talbot of the bank lobbying group the Financial Services Roundtable, said the main factors driving credit card changes in recent months are card users' own actions -- such as missed or late payments -- as well as "the generalized risk of the economy."
Talbot said the restrictions of the CARD Act play only a small role in changes to credit card terms, but did suggest that credit card regulation has impacted card fees, specifically.
"Credit card lending is the riskiest type of lending. If restrictions are placed on the ability of the market to price for that risk, then it will place upward pressure on fees," Talbot wrote in an e-mail to ABCNews.com.
New and resurrected fees have drawn increased scrutiny as of late, with banks such as Ohio-based Fifth Third Bank taking heat for introducing an "inactiviity" fee for most of its card holders. Fifth Third card holders are charged $19 if their accounts have no transactions for 12 months.
The fee helps "offset the increasing costs of servicing credit card accounts" and also encourages "account holders to actively use and manage the credit card accounts that they have," said bank spokeswoman Stephanie Honan.
Experts say that annual fees, which seemed to peak in popularity decades ago, are also making a comeback. In October, Bank of America notified a small number of customers -- one half of one percent of all BofA card holders, the bank said -- that they would be charged annual fees of $29 to $99. Citigroup made headlines for announcing annual fees for some of its card holders last summer.
But both banks say they have also taken a number of customer-friendly steps. Bank of America says it hasn't raised interest rates for card holders, with the exception of late payers, since the CARD act was passed -- but before it took effect -- last year. Citigroup allows customers who have weathered recent interest rate increases to pay reduced rates if their purchases reach a certain minimum each month.
"We understand that customers don't like price increases, especially in difficult economic times," the bank said in a written statement, but Citigroup is "providing customers with greater choice and more control," it said.
Hardekopf said card companies are watching what their competitors do and may model certain steps -- like instituting new fees --after those of their rivals.
"If one issuer tries something, that's viewed as a test market for others to learn from that," he said.