Photo illustration by Allison Rathgeber and Byron Koontz.

By Ryan Costello, The Vista Staff Writer

A recently passed law that restricts credit card companies’ ability to raise interest rates is slated to take full effect in 2010, and the creditors are passing on the squeeze to their cardholders.

College students, who own an average of $3,173 in credit card debt, are among those who are most effected.

The law is called the Credit Card Accountability, Responsibility and Disclosure Act, or CARD.

Currently, all the credit cards offered online by the nation’s 12 largest bank card companies violate at least one part of the forthcoming law, according to a study released last week.

The Pew Health Group claims most of these violations are in relation to portions of the law that prohibit unfair or deceptive practices in the advertising or billing language.

Leading up to the CARD legislation’s enactment, credit card companies have started increasing interest rates to cover potential losses from the law’s regulations. Cardholders with ratings of 700 or higher have seen an over one percent increase in interest rates, with some clients experiencing rate hikes of over 10 percent.

College students have one of the fastest growing credit card debts in the US. In a study conducted by Sallie Mae, student credit card debts have increased nearly 50 percent since 2004.

This rate has ballooned along with the cost of college tuition and fees, which College Board says has also increased 50 percent in the past decade to an average of $6,585 annually.

Also, students are relying more on credit cards to pay for school supplies, averaging $2,200 a year, 134 percent higher than in 2004.

One professor at UCO hopes recent statistics lead to future lessons and responsibility among college students.

“Credit card companies gain at the loss of the consumers,” Dr. Mohamad Shaaf said. Shaff, who has been a professor of economics at UCO since 1980, said, “For the most part, [deals with credit card companies] are not mutually beneficial.”

Shaaf said although college students realize credit cards aren’t free, they fail to realize how much of their future income is mortgaged to creditors.

“When they become hostages. They’re in a box. They’re in a prison.” Shaaf said.

“The best thing to do is to simply avoid borrowing,” Shaaf said. While he said this is a difficult prospect, Shaaf said students use credit only as a last resort.

When the CARD legislation is fully enacted next year, it protects cardholders on several fronts.

For rate increases stemming from late payments, the rate must return to its original percentage after bills are paid on time for at least six months.

Also, a bill cannot be considered past due if the payment was postmarked at least 21 days prior to the due date, which the law will require be the same each month.

Cardholders will also be protected from overage fees, which can only be given if the client agrees to allow the card to make ‘over credit limit’ purchases.

Finally, credit card companies must provide a detailed schedule showing cardholders the amount of time needed to pay off date through making minimum payments.