Credit card companies continue rate hikes

05.12.09
By Sarah Beldo

With the advent of new legislation governing credit card company practices on the horizon, are issuers taking steps to change their behavior?

Not especially, according to a new report by the Center for Responsible Lending. Instead, the group found that the majority of issuers continue to increase cardholders' interest rates and impose higher fees.

The CRL looked at data from Mintel Comperemedia, Lightspeed Research, media reports and online consumer complaints to find out how credit card companies have been preparing for the Federal Reserve's rule changes, which take effect in July 2010.

"Some issuers have taken moderate steps to implement early a few of the changes the pending Fed rule will bring," the center states. "But for the most important rules, those that could save customers the most, no visible progress has been made."

According to a CRL estimate, at least 10 million American consumers have had their interest rate increased over the past six months.

Meanwhile, all of the top eight credit card issuers continue to apply customer's monthly payments to the balance with the lowest interest rate - which can mean that credit card debt takes longer to pay off and costs cardholders more over the long term.

In addition to hiking consumers' interest rates, the CRL notes that many of the top card issuers are levying higher fees for cash advances, balance transfers or late payments.

Out of the top eight lenders, five are known to have raised fees during the last six months. One company assessed by the center now charges a monthly account maintenance fee and has also raised the minimum payment amount on some accounts that had come with a low-rate promotional offer.

With the industry in such a state of flux, consumers are advised to keep a careful eye on any communications from their credit card issuer - the terms of your account could change at any time.

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10 million consumers have had their interest rate increased over the past six months.