The government s latest effort to keep credit-card issuers in check is drawing fire for not having gone far enough.

A little more than three months after the Credit Card Accountability Responsibility and Disclosure (CARD) Act was enacted, some cardholders and consumer advocates say the legislation has failed to deliver on its promise of keeping the consumer protected from abusive practices. They warn that flaws in the CARD Act are doing little to help consumers pay off their debts and that, in some cases, it is undermining their efforts.

The act does not stop issuers from lowering lines and closing lines, says Josh Frank, senior researcher at the Center for Responsible Lending. Neither does it compel them to lower rates.

Although the major issuers have reported monthly declines in credit-card delinquencies since February, charge-offs -- consumer debts that credit issuers do not expect to be paid back -- have remained elevated since the CARD Act took effect. The first quarter charge-off rate for U.S. issuers reached 11.12%, a record high, according to Moody's Investors Service s U.S. Credit Card Index. In March, the rate was 11.21%, up from 11.08% in February.

One aspect of the CARD Act drawing criticism is the new rule governing how cardholders payments are allocated toward their debts. The initial proposal for reforming the credit-card industry included a payment allocation method that would apply a consumer s entire payment to the balance with the highest interest first. However, that provision was weakened in committee, says Odysseas Papadimitriou, the CEO of Evolution Finance, which publishes CardHub.com, a credit card comparison web site.

Today, the CARD Act requires issuers to apply only those payments above the minimum to the account with the highest interest rate. Take a card holder who carries two balances of differing interest rates with the same creditor say, a regular-purchase balance and a cash-advance balance -- and a minimum payment of $30. If he sends in $40, only $10 will be applied to the account with the highest interest rate. The $30 minimum payment will apply to whichever balance the issuer elects.

If an issuer pays down the balance with the lower interest rate first, while the balance with the higher rate continues to grow, card holders may take more time to pay down their debts, says Frank.

If you are only paying the minimum, most issuers will allocate it in the worst possible manner for the consumer -- that is, the one that keeps the finance charges as high as possible, he says.

Discover Financial, for instance, says on its terms and conditions that it will generally apply payments above the minimum to balances with higher interest rates before those with lower rates. However, the company adds that we will apply payments and credits at our discretion, including in a manner most favorable or convenient for us.

A number of issuers raised their minimums shortly before the law was enacted. In December, for instance, Discover raised card minimums by $40 for cardholders who have balance transfer balances. A company spokeswomen says the move was designed to help card members who carry a balance transfer pay down their debt faster. Anticipating the credit-card law, in January 2009, JP Morgan Chase (JPM) increased the minimum payment on some of their accounts from 2% of the balance due to 5%.

Card issuers remain motivated to continue raising minimums, says Bill Hardekopf, the chief executive of LowCards.com, a credit-card comparison site. Raising the minimum payment isn t illegal, he says, adding that doing so allows them to assign more of that payment to whichever balance the issuer chooses, he says. That way, an issuer can continue to charge the higher interest rate on a greater amount of the balance.

There is no ceiling for how high a minimum payment percentage amount can be, says Peter Garuccio, a spokesman for the American Bankers Association. But the CARD Act generally prevents banks from raising the minimum payment percentage by more than double its current rate, he says.

Garuccio says this provision could force some consumers to be more responsible. By paying more each month, cardholders will potentially be able to get out of debt sooner, he says.

Some cardholders and advocacy groups say users have benefited from provisions of the CARD Act designed to increase transparency.

One provision mandates that cardholders receive on their monthly statement a snapshot of how long it will take them to pay off their current balances if they only made the required minimum payments. In an April poll conducted by the National Foundation for Credit Counseling, a quarter of respondents reported they were inspired to pay more each month after viewing that breakdown.

The law also requires issuers to list a toll-free number to a nonprofit credit counseling agency on statements. Twelve percent of those surveyed reported calling the number, according to the NFCC.

This disclosure aspect of the CARD Act appears to have had the intended result, said Gail Cunningham, a spokeswoman for the NFCC.