Card Companies' Rate Policies Still Unclear

Odysseas Papadimitriou is founder and chief executive officer of Evolution Finance, the parent company of Wallet Blog and Card Hub, an online marketplace for credit-card offers.

NEW YORK (TheStreet) -- A credit-card agreement isn't anyone's first choice for reading material.

The language is arduous, and the terms are intentionally vague. Still, it's important for consumers to understand the policies. The new credit-card law (Credit CARD Act) was supposed to bring clarity, but some credit-card companies are using old tricks to keep consumers in the dark regarding their protection from interest-rate increases.

It used to be that credit-card companies, such as JPMorgan's(JPM) Chase, Bank of America(BAC), Citigroup(C) and American Express(AXP), could re-price the annual percentage rate on your balance for any reason at any time. All they had to do was give you notice, and there wasn't a lot you could do to avoid the increase.

The CARD Act has certainly made the rules around rate increases better for consumers, but that hasn't stopped credit-card companies from trying to make you think otherwise. Although the fine print is confusing, you should rest easy knowing that consumer-protection rules in the CARD Act apply to all credit cards, with the exception of business credit cards.

To investigate just how misleading credit-card companies are trying to be, CardHub.com evaluated the top 10 credit-card issuers (based on outstanding balances) for the clarity of their post-CARD Act penalty-APR polices in the June Penalty APR Study.

The study gave poor ratings to six of the 10 issuers because they were either lacking transparency or appeared to be using the new rules to engage in "gotcha" rate practices. The fact that the majority of issuers evaluated did not clearly explain how rate increases work is not surprising, given that the study also found that the sample statement on the Federal Reserve's Consumer's Guide to Credit Cards does an equally poor job.

The CARD Act has made things better, but if you look at credit-card companies' disclosures, it's impossible to determine what their policy is relative to the law. Therefore, trying to make out the fine print on your credit-card application is a waste of time. When it comes down to it, no matter how vague or complicated they try to make it, all credit-card companies must uniformly comply with the rules under the CARD Act.