Credit card rates, minimum payments on the rise while access to credit falls

08.19.09
By Nicholas Storie

A number of Americans are struggling to pay their credit card bills each month, with many feeling it is getting harder and harder to keep up to date on their payments. And according to a new study from Consumer Action - they're right.

The 2009 Credit Card Survey from Consumer Action finds that consumers are seeing lower credit limits, higher interest rates and increased minimum payments.

Ruth Susswein, coordinator of the survey for Consumer Action, says most Americans will continues to see these actions from credit card companies in the run-up to new credit card legislation.

"We are seeing lenders make good on threats to raise the cost of credit, if a new credit card law passed," she said.

While many people are finding it hard to make their minimum payments, it seems that credit card companies are not easing up, as a number have increased their penalty rates in the last few months. According to the report, Chase increased its penalty rate by almost three points between March and June to 29.99 percent while Capital One increased to 29.4 percent - a 6.25 percent increase.

Consumers also appear to not be benefitting from the fall in the prime rate - one of the few rates that has actually fallen in recent months. The report finds that although the prime rate has fallen two points since last year, variable credit card rates have only declined about one point.

"Credit card companies are expecting their customers to foot the bill for their losses, through steep increases in rates and fees," said Susswein. "When the prime rate falls, it is unfair not to pass along the savings to variable rate cardholders. It's a game of heads I win, tails you lose."

While most say these actions from the credit card companies are because of new regulations, the card companies themselves say there are other factors playing into the increases in rates and payments.

"[Regulation is] not the leading factor, it's not the only factor, it's a factor," American Express spokeswoman Desiree Fish told ABC News.

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It's getting harder for Americans to stay up-to-date with their credit card bills