Americans with the best credit may be hurt the most as the first phase of a credit card reform law takes effect, according to Schwark Satyavolu, the founder of a card-comparison Web site.

Lenders are raising rates across the board, said Satyavolu, the president and co-founder of, which compares terms offered to consumers for credit cards, cell phones and gasoline. The company said the lowest average card rate is about 11.25%, up from 8.85% in January. The average for less creditworthy customers rose to 15.75% in July, from 13.75% in January.

"Banks are setting the bar high enough so they'll only go down from here," Satyavolu said in an interview.

The first parts of the Credit Card Accountability, Responsibility and Disclosure Act took effect Thursday, requiring issuers to give customers more notice about rate changes and more time to pay their monthly bills.

Banks have already adopted some other parts of the credit card law, Satyavolu said. Eleven major lenders have dropped "universal default," the practice of raising interest rates if a payment is missed with any other company. Fourteen have stopped double-cycle billing, in which lenders calculate finance charges based on more than one billing cycle.

But no major lender has started applying customers' payments to higher-interest balances first, Satyavolu said. This provision of the law will cost issuers more and takes effect in February.

Rates are about 20% higher than in December, said Eleni Constantine, the director of the financial security portfolio at the Pew Charitable Trusts. The lowest median advertised rate is 11.99% now, compared with 9.99% in December.

Banks have been raising rates on consumers at the same time that their own borrowing costs are falling, giving them bigger marginal lending rates and more profits, said Constantine, who helped shape the law as a staff aide to Rep. Carolyn Maloney, D-N.Y.

The bulk of the credit card law takes effect in February. That is when retroactive rate increases on existing balances will be fully banned and consumers will be protected from "hair-trigger" rate changes on minor infractions, such as sending a single payment a few days late, Constantine said.

"It should shift the balance of power between consumers and banks," she said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.