Rising unemployment and the continuing poor economy is likely to "significantly" impair credit card balance growth through 2010, with only modest growth returning in 2011, according to a new study.

The report, by Needham-based TowerGroup, found the payment rate of national credit cardholders declined below 15 percent through the end of May, a rate last seen in 2002, and attributes the decline mainly to increased unemployment rates. Well-intended but excessive regulatory intervention coupled with tighter consumer budgets, reduced spending on credit cards, and a shift to debit cards is decreasing bank card profits, the company said.

The pending Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (CARD), effective July 2010, will place the bank card industry in "suspended animation," according to TowerGroup research. Changes affecting credit card terms and limiting risk-based repricing will cause issuers to curtail lending and tighten available credit.

The company said card issuers will be unwilling to liberalize their credit policies until they can calculate the financial risk and reward trade-offs resulting from the CARD legislation. TowerGroup foresees that this could take at least six months to a year after the enactment of the CARD Act and that growth will be minimal until mid-2011.

"Like a house of cards falling, the credit card industry is unraveling as unemployment rates continue to soar, causing consumers to reduce their spending and decrease or delay their payments to creditors," said Dennis Moroney, research director, bank cards, at TowerGroup. "It’s evident there is no single cause behind U.S. credit card issuers’ current business woes, but pressure is mounting for issuers to adjust their business strategies and rebuild."