The credit-card regulatory reform enacted earlier this year imposed new restrictions on some industry practices, but a new report suggests it may have created a new pitfall for some consumers.

The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 may have inadvertently undermined the incentive for issuers to be forthcoming about the penalty interest rates that kick in when a cardholder misses payments, according to a July report by the Pew Safe Credit Cards Project. As a result, some customers now face rates they never expected.

Card issuers have long been required to disclose their penalty interest-rate policy in card offers, including what events will trigger a penalty rate increase and what the new rate will be. Prior to the passage of the CARD Act, banks had an incentive to disclose their penalty interest rate because if they disclosed it, they could impose it as soon as a cardholder missed a payment, says Nick Bourke, the director of the Pew Safe Credit Cards Project.

The CARD Act now requires card issuers to give consumers 45 days notice of any rate increase, including a penalty increase. Even though the new law didn t change the underlying requirement to disclose penalty rates, a few large banks have stopped disclosing the rate in card offers since the law went into effect, Bourke says. The vast majority of credit cards, 94%, come with penalty rate terms, and while most banks still disclose their penalty rates, the few that have stopped are large enough that they control about half the cards surveyed in the Pew report.

Bank of America, for example, says in its recent offers that if an account is 60 days past due, the bank may amend the terms of the agreement to increase all interest rates, but it does not specify what a penalty rate would be.

A spokeswoman says that Bank of America does not impose penalty rates on existing balances or new transactions and doesn t plan to start doing so in the future, and that the company is changing its solicitation materials to make that policy more clear.

Because company policies can always change, it s important that consumers focus on the language in legally enforceable documents, Bourke says.

Penalty interest rate policies must be clearly disclosed in solicitation materials, the terms and conditions of a card agreement, and on a consumer s monthly bill. Card issuers must provide 45 days notice of a penalty rate increase. If the cardholder is less than 60 days late paying the bill, the rate increase may be applied only to new transactions made 14 days after that notice was sent, and it can t take effect until the 45 days are up (a notice sent Aug. 1 would take effect Sept. 14 and apply to transactions after Aug. 14). If the cardholder is more than 60 days late, the rate increase can apply to an existing balance as well as to future transactions, but if the cardholder makes the next six monthly payments on time, the rate on the existing balance must revert to the old, lower rate.

Consumers who spot credit-card materials that fail to include required disclosures can contact the Federal Reserve or the Office of the Comptroller of the Currency, the regulators that oversee this area, or a consumer advocacy group, Bourke says. As an individual consumer, it can sometimes not feel gratifying to go to a banking regulator, but it is important that the regulators hear this information, he says.

The Pew study calls on regulators to clarify the penalty rate disclosure details of the CARD Act.

A consumer who gets slapped with a penalty rate increase should immediately stop using that card, says Bill Hardekopf, the chief executive of LowCards.com. Even if it s an Arby s roast beef sandwich, if you have a penalty rate of 30%, that $5 sandwich can instantly become $6.50, Hardekopf says.

Consumers who have been hit with a penalty rate increase would do well to make payments on time for three or four months and then call a lender and ask for a rate reduction, says Scott Crawford, the CEO of DebtGoal, which offers negotiating tips at NegotiateMyRate.com. The competitive landscape is shifting following the recession and the CARD Act, so banks are now willing to negotiate, Crawford says. If possible, consumers should emphasize a prior history of on-time payments, and stress that recent financial troubles were temporary, he says. If the first customer service representative can t help, a cardholder can ask if another department can make a change, or ask to speak to a supervisor, he says.

Having another offer in hand can lift a cardholder s confidence during this negotiation, Crawford says. However, consumers should use caution before making a balance transfer. There are some good offers in the marketplace now, but consumers should do the math to make sure that the lower interest rate saves them enough to make up for the transfer fee, Hardekopf says. The Pew Safe Credit Cards Project report found that the median balance transfer fee rose by a third from July 2009 to March 2010, from 3% to 4%.

Getting hit by a penalty rate increase is often a sign of larger financial trouble, industry analysts say. One thing that anybody in that situation should consider is seeking some counseling from a nonprofit credit counseling agency, Bourke says. Even winning a reduction in interest rates shouldn t distract consumers from the central goal of paying down debt, Crawford says. Try to win the war, not just the battle on the rates, he says.