Credit card interest rates are increasing no matter who issued your credit card, no matter if you have always paid your credit card bills on time, and no matter if you are a loyal credit card customer. It's not personal; in today's economy, credit card issuers are juggling the task of maintaining your business, while maintaining their own balance.
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Same Credit Card, Just More Cha-ching

Have you left home without checking your credit card lately? Look closely and you'll probably see higher interest rates on your credit card, a monthly or yearly fee you didn't have before, or a credit card rewards program that isn't as rewarding as it used to be.

Many credit card customers are reading unwelcome news about their credit card interest rates, credit terms and more. If you haven't seen these changes yet, look again on April 1 2009, when credit card changes are scheduled to start. More credit card changes may be coming your way later in the year.

Credit card interest rates are increasing no matter who issued your credit card, no matter if you have always paid your credit card bills on time, and no matter if you are a loyal credit card customer. It's not personal; in today's economy, credit card issuers are juggling the task of maintaining your business, while maintaining their own balance.


Credit cards interest rates are tied to the prime rate which has actually fallen: from 5.25 percent a year ago to 3.25 percent now. Why then has the national average for consumer credit cards increased from 11.3 percent to 12.1 percent? (according to the Banks that are receiving government bailout money, or low interest rates on borrowed money from the Federal Reserve, don't seem to be passing those savings on to consumers.


Credit card issuers love it when you make late payments. In 2008, credit card companies reported $19 billion in penalty fee income, up 5 percent from 2007. For 2009, credit card penalty fee income is expected to rise to a record $20.5 billion. Here's a look at more hidden credit card fees that have recently come out of hiding:

-- In January 2009, Chase began charging $10 a month to 400,000 customers who have large balances but little account activity.

-- Balance transfer fees used to be capped to $50 or $75. Today, balance transfer fees are 3 percent, with Bank of America charging 4 percent on certain offers.

-- Cash advance fees were 3 percent; Bank of America now has 5 percent cash advance fees for advances obtained through ATMs and at banks, and 4 percent on direct deposit and check cash advances.

Analysts also predict issuers will reinstate annual fees on all accounts.


Chase increased the minimum payment from 2 percent to 5 percent for cardholders with large balances.


Many credit card issuers are reducing credit limits. American Express in particular cut its credit limit by half or more. And when credit card issuers cut the credit limit to amounts lower than the balances owed, they set off a whole domino effect of new fees you are now liable for, from fees for being over-the-limit on your credit limit, to late payment fees because you didn't pay the new minimum due. Lowering credit limits can damage the credit scores of consumers who carry a large balance.


You may want to start looking for a more rewarding experience than what your credit cards can give you:

-- Citi's Thank You Rewards program added a $39 fee for all tickets redeemed through its CitiMiles program.

-- AmEx's Delta Sky Miles "Always Double Miles" program on everyday purchases became extinct.

-- The Hess Visa card's 10 percent introductory rebate for the first 90 days will be scaled back to only 60 days and the 5 percent gas rebate will be 3 percent effective April 1, 2009.

American Express is also offering a $300 gift card to certain cardholders who agree to pay their balances in full by April 30, 2009 and close their accounts.


Why now, after the federal government has offered billions to help struggling banks bolster lending, are consumers paying the price? It's hard to pinpoint one reason. Financial, regulatory and economic forces are all making credit card issuers raise the cost of borrowing on credit cards in order to limit their own exposure. The recession, financial markets, job losses and growing credit card payment defaults - these make credit card issuers feel insecure.


Card issuers may be getting ready for 2010, when sweeping new changes in federal credit card regulations take effect and significantly limit how and when interest rates can be changed (called re-pricing). Congressional attempts to curb card industry practices are also looming, plus a pledge to enact consumer card protections even sooner than 2010.


There are still good credit card offers out there. Shop around and compare. And stick with what's always been good advice: read and review all mail from your credit card issuers to stay abreast of changes. Don't get angry; get ready. Keep your credit rating intact by using your credit card conservatively. Even if you just charge something small and pay it off at the end of the month, using your credit card helps you build a good credit history. Good credit is better than no credit. Issuers are closing credit cards you're not using, so use that open credit card with a long history of good payments, even sparingly, to maintain and even increase your credit score. Be vigilant about paying on time. Pay down debt when you can and continue to build a good credit reputation that will reward you again and again with better loans, better rates, better payment terms, if not on your terms, then certainly on the best of what's available on today's best credit cards.


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