Credit Card Act loophole driving move to variable rates


Millions of credit card holders are being shifted from fixed rate credit cards to variable rate cards primarily because of a loophole in the Credit Card Accountability, Responsibility and Disclosure Act, which was supposed to protect consumers from large interest rate increases, spiraling fees, and changing terms.

The bill might have passed with great fanfare and promises of protection against unfair rate increases, but the credit card companies have already found a loophole to avoid the bill. The bill was designed to give card holders fair warning about rate increases, but still allows for credit card companies to raise rates without giving any notice or warning, even after the bill goes into effect, if the card has a variable rate.

"There is a tremendous loophole in this law and it is those credit cards with variable rates." Bill Hardekopf, CEO of and author of The Credit Card Guidebook. told me by email. "Now that we are learning more about the details of the bill, surprises like this may start coming out."