With the Credit Reform Act on a February 2010 timeline, card issuers are looking for creative ways to paint a profitable bottom line. Increasingly, they’re turning to variable rate credit cards, which are tied to the U.S. prime rate. Why the shift, and what does it mean to card consumers?

A key part of the issue is that the new credit bill targets card issuers who attempt to raise interest rates. But language in the bill seems to only restrict card companies from hiking rates on fixed-rate credit cards – and not variable-rate credit cards.

That leaves credit card companies with a pretty big loophole. Now, card issuers are already notifying customers that their cards will be switched from a fixed-rate platform to a variable-rate one.

Up first for consideration is Discover Card (Stock Quote: DFS). In August, the card company served notice to two million customers that their fixed-rate cards could be shifted to variable-rate cards in the next few months.

The move only impacts a significant minority of Discover Card clients – according to the Nilson Report, an industry newsletter, it has 49.2 million credit card customers, through 2007.

But the impact for the unlucky two million could be substantial. Those customers face potentially higher interest rates if the economy improves and the Federal Reserve elects to raise interest rates. Higher rates also means higher payments, meaning that it could take Discover customers even longer to pay down their credit card debt. One piece of good news: The prime rate does not rise and fall in dramatic fashion. So it’s highly unlikely your card rate will jump from 12% to 30% overnight, even if you do accept the switch to a variable-rate product.

Card customers can opt out of the variable-rate switch, but they’ll likely have to close down their credit cards and try to find another fixed-rate deal down the road. In the Discover Card deal, customers have 45 days to decide whether to accept or opt out of the variable-rate card.

In essence, the variable-rate loophole takes control of card rate platforms away from consumers and gives them to card issuers – certainly not a primary goal of politicians who signed off on the bill. Under the variable-rate option, there really isn’t a strong mechanism that prohibits card companies from switching to variable rates, and from raising rates under the new platform whenever they want.

Besides Discover, Bank of America (Stock Quote: BAC), Capital One (Stock Quote: COF) and Chase (Stock Quote: JPM) have all rolled out transition programs away from fixed-rates cards and to variable-rate ones.

A credit card consumer who faces such a switch has limited recourse. As mentioned early, customers can opt out of the change and close their accounts down. Or, consumers can try contacting their card companies directly and attempt to negotiate a re-entry into the fixed-rate card program.

After all, card companies still can’t bounce you from a fixed-rate to a variable-rate credit card without you having a say in the matter. In the end, that little bit of leverage might be your best defense.

—For a comprehensive credit report, visit the BankingMyWay.com Credit Center.