We all know that credit card companies, like any other type of company, are in business to make a profit. I’m all about capitalism and profit making.  But there are limits.

From the consumer standpoint, the credit card reform that took place last year has resulted in very little benefit.  And it should come as no surprise that banks find a work-around to new rules & regs, to make sure they don’t miss out on any profits.

What did the CARD Act do?

• The CARD Act put limits on non-interest fees, such as over limit fees and late charge fees.
• The CARD Act prevents banks from raising most interest rates retroactively.
• The CARD Act also cracked down on disclosure rules.

What did the CARD Act not do?

It did not cap our worst enemy – interest rates.

Here’s the fine print – yes, the CARD Act does prevent banks from raising most interest rates retroactively, but there’s no limit on the rates they can charge new customers.

So what happened next?  Credit card lenders found their way around this without violating the new legislation.  How, you ask?  By setting record high APR’s for new accounts.  New credit card offers are setting rates at nearly 15% for new customers.  And those with not-so-good credit can look for APR’s as high as 59.9%.  Yikes.

This is at a time when banks borrowing costs are super cheap – 0% to .25%.

Beverly Harzog, credit card expert at Credit.com states, “rates are going up because card issuers know that once you get a card, they can’t raise the rates, so they’re raising rates on the front end to ensure they get the revenue from that interest.”

Time to protest!

Cut your cards and eliminate your credit card debt as quickly as possible.