As mentioned previously, Congress is working on a credit card bill of rights intended to protect consumers from the onslaught of fees and restrictions imposed by credit card companies. While the intention of government is to regulate how credit card issuers manage or structure credit card accounts, the new legislation could make it much more difficult for a consumer with poor credit to get a credit card.
 
The majority of credit cards for bad credit contain higher than normal fees for establishing a new account. The primary reason for charging higher fees to open a new account is that it reduces the future risk of credit card issuers losing money. Remember, these companies are extending credit or trust to individuals who don't have a sound credit history. Price controls on low-limit credit cards would make it more difficult for these companies to break-even or grant credit to those with a poor credit history. The legislation proposes that new account fees cannot exceed 50 percent of the credit line. In other words, if a credit card for bad credit offers a $500 credit line than the startup fees cannot exceed $250.
 
To open a new credit card for $250 is an expensive proposition, especially for someone who is likely to have a lower income. However, the delinquency rate for these types of accounts is over 40%, so only 60% of the time do issuers actually get repayment on the credit or funds that they have issued. Issuers must cover the risk associated with lending to this credit segment some way and one of the most practical ways lies in high up-front fees.
 
Credit cards have become a necessary device for carrying out everyday living. If issuers of credit cards for bad credit are given further restrictions on fees which would prohibit them from offering a profitable credit card product, the net effect could be far fewer credit card options for those with a credit score under 580. Moreover, it will be even more challenging to repair or improve a bad credit score.