By Kathy Chu, USA TODAY

This year, President Obama signed a law that makes it harder for card issuers to raise interest rates for no reason and to impose certain charges on consumers. But because many of the law’s provisions don’t take effect until February, issuers have been able to increase rates and fees at will for customers – even those who pay their bills on time.

Experts had generally expected issuers to try to recoup losses. But the extent of their repricing – along with an expected decline in the industry’s credit costs – means that issuers’ earnings should recover in 2010 and 2011, analysts say. For instance, Bruce Harting at Barclays Capital wrote to clients that the law could reduce Capital One’s fee income by up to 20%, “but we believe this will be more than offset by declining credit costs and stable margins … that have benefited from the repricing that occurred.”

Consumer groups estimate banks have reaped hundreds of millions from recent rate and fee increases, helping offset their losses as more consumers struggle to pay bills. Major banks, including Bank of America, Chase and Citigroup, have raised interest rates and balance-transfer fees, or added new credit card fees.

Capital One spokeswoman Pam Girardo says the bank has also raised consumers’ interest rates, cut credit limits and closed accounts. But she adds that the bank has adjusted the pricing in ways “consistent with the direction and intent” of the new law.

Roughly 10% of banks’ card loans are not being paid back, says Kenneth Clayton of the American Bankers Association, affecting the price all consumers have to pay for credit.

The problem is not that banks are able to “make a healthy return in complying with this new law, but (that) … the credit card industry appears to be up to its old tricks,” says Travis Plunkett, legislative director of the Consumer Federation of America.

Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group, says the industry’s rate hikes underscore the need for a Consumer Financial Protection Agency. This proposed agency has been the subject of contentious debate by Congress.

Christopher Brendler, analyst at Stifel Nicolaus, says that issuers will make up for expected losses in the short term because they’ve “protected themselves pretty well,” but that the new law could still mean a long-term hit to issuers’ results.

(Source: http://www.usatoday.com/money/perfi/credit/2009-12-09-creditcards09_ST_N.htm)

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