Credit-Card Laws' Unintended Consequences

NEW YORK ( TheStreet) -- The Credit CARD Act took effect this week, putting protection in place for consumers. But the law has resulted in unexpected fallout that might hurt more than it helps.

The CARD Act will put restrictions on interest rate hikes, limitations on marketing credit cards to adults under age 21 and a ban on over-the-limit fees. Here are some unintended consequences:

1. Since issuers will be unable to raise interest rates on new accounts for 12 months, they simply raised the advertised APR before Feb. 22 so it affected everyone shopping for a new credit card account. According to the Complete Credit Card Index which tracks over 1,000 credit cards, the advertised annual percentage rates for credit cards averaged 13.46% last week. Six months ago, the average was 12.11%, and a year ago, it was 11.51%.

2. People under 21 will find it harder to build up their credit score. If they do not have a job with enough income, they must get an adult to co-sign. Many young adults will not take this extra step, losing out on the opportunity to form a good credit history throughout college. Without a positive credit history, they may not receive as good an interest rate on their first house or car loan.

3. Fees, fees and more fees. Issuers are introducing more cards with annual fees, increasing existing fees and putting new fees on accounts. Last October, Bank of America ( BAC) notified a small percentage of their customers that it is adding an annual fee of $29 to $99 on their accounts beginning in February. Last week, Citigroup ( C) announced that they will assess a $60 annual fee beginning in April, which can be credited to your account if you spend $2,400 in the next year. Balance-transfer fees, which have been at 3% for most issuers, have now been increased to 5% by JPMorgan's ( JPM) Chase and Discover ( DFS). Fifth Third Bancorp ( FITB) recently added a $19 inactivity fee if your card is unused for a 12-month period.

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