If you've got a credit card, you've likely been zinged already.
Higher interest rate? Yep. Lower credit limit? That, too. New fees for late payments? Absolutely.
In the months since Congress clamped down on what it deemed as "unfair and deceptive" credit card practices, dozens of credit card companies have been busily hiking fees, rates and penalties in anticipation of stricter rules.
In the last few weeks alone, Bank of America tacked annual fees of $29 to $99 onto some cards and Citibank jumped some annual interest rates to nearly 30 percent.
Pablo Espinoza, a California state Assembly staffer, knows it too well. A Citibank customer for 11 years, Espinoza said he frequently got "preferred" treatment, such as the temporary 5.99 percent interest rate he was carrying. Not anymore.
A week ago, he got a Citibank letter informing him that his interest rate was going up -- way up -- to 29.99 percent.
"It was shocking to get the letter," said Espinoza. "Five months ago, I was one of their best customers. ... They're trying to circumvent the (new federal) regulations and squeeze consumers to get back in better financial shape."
Espinoza said he's never been late with a payment and has a decent credit score but was told that his minimum payments weren't high enough to keep him at a lower rate.
On Thursday, a Citigroup Inc. spokesman in New York said the company cannot discuss individual customer accounts nor disclose how many cards were bumped to 29.99 percent.
"Customers have at least 45 days to accept these terms or refuse them by opting out," said Samuel Wang, public affairs vice president. Most of those who opt out "can continue to make purchases at their existing (lower) rate until the card expires."
In a queasy economy, banks say raising rates on consumer credit cards is a financial necessity.
"With a credit card, there really is no collateral if the consumer defaults. ... The credit card issuer is left holding the bag," said Beth Mills, spokeswoman for the California Bankers Association, which represents 200 financial institutions.
Given the economy, unemployment and default rates, Mills added, "interest rates are the way to manage and control risk."
Not surprisingly, the flurry of credit card rate hikes has customers howling and consumer groups tallying the damages.
Last week, the Pew Charitable Trusts released a new survey showing "harmful" practices were still endemic across dozens of cards issued by the 12 largest banks, which cumulatively hold $781 billion in credit card debt. It found that median annual percentage rates (APRs) have jumped as high as 17.99 percent through July this year, up two percentage points from December 2008.
And in its first look at credit unions, the Pew survey (http://) noted that rates and fees on cards issued by credit unions, including Golden 1, are considerably lower than those from banks.
The recent spate of rate hikes shouldn't come as a surprise, say those who track the credit card industry. In May, when Congress enacted stricter consumer protections under the Credit Card Accountability Responsibility and Disclosure Act of 2009, card issuers warned that higher fees and rates might be the result.
"That is exactly what they have done," says Bill Hardekopf, CEO of LowCards.com, an online comparison site. Since January, nine of the major credit card companies have initiated nearly 60 changes, most of which upped transaction fees, balance transfer fees and interest rates, he said.
Hardekopf predicts the rate jumps will continue into 2010.
"The banks and (card) issuers are not philanthropic organizations," he said in a statement. "They are for-profit companies that have already lost billions of dollars and have struggled for over a year to rebound from the financial crisis."
But consumers could be catching a break.
In recent weeks, congressional lawmakers have proposed a freeze on further spikes in credit card interest rates, at least until February 22, when most of the new consumer protections go into effect. Another proposal would speed up the February provisions to December 1 of this year, as a way to halt further rate hikes.
What to do? If you get a letter or notice on your statement that your interest rate is headed uphill, call your credit card issuer. Ask for an explanation. Take notes of your call. Sometimes it takes persistence.
Espinoza, the Capitol staffer, said it took him two calls to get a satisfactory response from Citibank about his 29.99 percent interest rate. Eventually, they dropped it by half -- to 14.99 percent. When he asked to close the account and pay off the balance, he got an even lower rate: 12.99 percent.
If you're opting for a new card, shop around and compare. But read the fine print. If you get an enticing offer for a very low interest rate, be sure you know how long it will last, what it will revert to and what are the card's annual fees and costs for balance transfers, missed payments and so forth.
Go to online comparison sites, such as lowcards.com, creditcards.com and cardratings.com.
And take a tip from the Pew study: Credit unions are currently offering the most competitive rates of all.
State employee Melissa Thompson has a Chase card with a $2,200 balance. This year, the interest rate more than doubled -- from 11.9 percent to 25.4 percent.
By contrast, she said, her Visa card with Sacramento-based SAFE credit union has a 9.9 percent rate on a $3,200 balance. Both balances are left over from her wedding and Hawaiian honeymooon this spring.
Every month, Thompson said, she makes a $450 to $750 payment to Chase -- and every month calls to ask for a rate reduction. So far she has had no luck.
Having lost income herself through the state's furloughs, Thompson said she doesn't have a lot of sympathy for card issuers. "I am very frustrated with (Chase), considering that as a taxpayer, I helped to bail them out."
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ABOUT THE WRITER
Claudia Buck is the assistant business editor of The Sacramento Bee. Personal Finance Notebook answers questions about money matters, tapping a roster of experts for advice on navigating the often-confusing world of personal finance. Submit questions to or P.O. Box 15779 Sacramento, Calif. 95852.
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