Loopholes still exist in CARD Act

The Credit Card Accountability, Responsibility and Disclosure Act is aimed toward providing consumers with more protection against credit card issuers, but they will not be completely invulnerable when it comes to certain terms and conditions.

One of the most praised aspects of the new legislation is the cap on penalty fees. The Associated Press reports that companies will no longer be able to charge members more than $25, but one loophole still exists. If a member repeats penalties within a six month period, the cap becomes $35. When an issuer believes that a $25 penalty may not be enough, they can also ask the government for permission to assess a larger one if necessary.

Inactivity fees have become a thing of the past since the CARD Act became law, but Philly.com reports that this does not stop issuers from cancelling accounts. They will still have the authority to close inactive accounts, which can cause credit score damage for the holder.

Consumers looking into applying for new credit cards should read all terms and conditions to avoid falling into debt.