Banks are lowering credit card rates in response to CARD Act

NEW YORK (CNNMoney) -- More than a million Bank of America customers saw their credit card rates decrease last month, the nation's largest credit card issuer confirmed this week. And more cuts are coming from all the big banks.

The rate declines come as a result of the CARD Act, which requires credit card issuers to re-evaluate customers' accounts every six months -- if they had their interest rate hiked after Jan. 1, 2009. Before the rule, issuers were able to increase rates at any time and weren't ever required to re-evaluate accounts.

However, the Act did not specify what criteria the banks should use when determining if customers qualify for lower rates, so each institution uses its own assessments.

That means Bank of America (BAC, Fortune 500) customers aren't the only ones seeing their rates cut. The nation's other major issuers are also lowering APRs for certain cardholders.

A spokeswoman for Discover (DFS, Fortune 500) said the company will begin decreasing rates for qualified customers beginning in March. American Express (AXP, Fortune 500) is currently lowering rates for "a small segment of impacted accounts."

Wells Fargo (WFC, Fortune 500) also confirmed it has been decreasing rates, saying a majority of its credit cards were eligible for the re-evaluation. And JPMorgan Chase (JPM, Fortune 500) is automatically lowering rates as it sees fit.

"If a lower rate becomes available for an account, we will automatically adjust for the lower rate and the customer will see the change on his or her monthly statement," a Chase spokesman said.

The issuers declined to say how many customers were getting rate reductions, except for Bank of America, which said "more than one million" would be helped.

But while this first round of re-evaluations might lead to significant rate decreases for customers with really high rates, few are likely be affected in subsequent reviews, said Brian Riley, senior research director at financial services consulting firm TowerGroup.

"Issuers have to create tranches to measure improvement and decrease rates based on that, so you'll see some pronounced decreases and there will be a lot of cleansing out there," he explained. "But once the pricing model normalizes you're not going to see a lot of people getting lower rates."

And before you pop the champagne and celebrate, remember that issuers aren't going to sit back and let money slip away.

"It's always good to see prices go down, but the concerning part is, what's the off-setting factor here?" said Riley. "It's hard to believe that they're just saying 'here's a free gimme'."

In fact, banks are already offsetting the money lost due to the CARD Act by adding more fees to checking accounts and debit cards.

Riley said some issuers are now experimenting with everything from teller fees, statement fees and maximum charge fees -- where customers are charged if they make purchases with their debit cards exceeding a certain amount.

"In many ways this is a zero sum game," said Riley. "The interest is under attack, fees are under attack, so they're tweaking things. They're not non-profit organizations, so they're not going to settle with losses."