Bank of America Corp and JPMorgan Chase & Co are switching some customers who have fixed-rate credit cards to potentially higher variable rates, acting before a new law takes effect that limits what card issuers can charge.

The largest U.S. banks, which are also the largest card issuers, plan to tie more cardholders' rates to the prime rate, a benchmark that is traditionally 3 percentage points above the Federal Reserve's key lending rate, the federal funds rate.

With the Fed's target rate now in an abnormally low zero to 0.25 percent range to help lift the economy out of recession, the prime rate is 3.25 percent, a level last seen in 1955.

Yet when the central bank starts boosting its target rate, the prime rate should follow, boosting borrowing costs. That could help issuers absorb record amounts of customer defaults.

Variable rates reflect Chase's changing costs for funding credit card loans, JPMorgan Chase spokeswoman Stephanie Jacobson said. As a result, our customers may benefit from lower rates when the costs to Chase are decreased, or may experience higher rates as costs increase.

Bank of America spokeswoman Betty Riess said switching to variable rates enables us to better manage our business as market conditions change. She said the variable rates will not at this time result in rate changes, and that customers will see the variable rates beginning on their August statements.

The Los Angeles Times earlier on Wednesday reported the changes. It said Citigroup Inc and American Express Co , two other large card issuers, had no current plans to switch fixed-rate accounts to variable rates, but would not rule it out. Neither immediately returned calls seeking comment.

In May, U.S. President Barack Obama signed into law the Credit Card Accountability, Responsibility and Disclosure Act, setting new restrictions on card rates and fees.

That law was adopted in response to anger among consumer advocates and recession-strapped cardholders at an industry they say nickels-and-dimes many of the 90 million card-carrying households, especially those least able to afford high costs.

But card companies got a break because the law does not take full effect until next February, giving them a window to change some of their policies.

JPMorgan is based in New York, and Bank of America in Charlotte, North Carolina. They are expected to report second-quarter results on July 16 and July 17, respectively.

(Reporting by Jonathan Stempel, editing by Leslie Gevirtz)