Credit Card Issuers Fight Back

Credit card issuers have been hit hard, very hard by a number of things that has rocked the industry. First and foremost is the recession. The credit card industry goes as the economy goes.

The industry rises and falls nearly in lockstep with the unemployment rate and right now the unemployment rate across the country is as high as it’s been in three decades.

High unemployment means increased credit card defaults and right now defaults and charge-offs are at an all-time high across the entire industry. Some credit card companies such as Advanta have gotten out of the business altogether.

Couple that along with the new credit card reform act that restricts banks and credit card companies from raising interest rates and imposing fees, among other things, and you can see why the industry is in such dire straits.

While Congress passed new laws regulating the ability of credit card companies to raise interest rates on existing balances, they also gave them, unwittingly or not, a huge window before that new law goes into effect which is February of 2010.

In the meantime, the credit card companies have been using that window to in fact raise interest rates and introduce new fees or raise existing ones. Citigroup has in fact raised a number of their cardholder’s interest rates to a stunning 29.99%, the highest percentage allowable by law.

Bank of America for their part will be introducing annual fees to some of their cardholders where there were none charged before. Other credit card companies are planning to make similar moves if they haven’t done so already.

Issuers told Congress point blank before passing the new rules regulating the industry that there would be ramifications and it looks as though they weren’t kidding. As Bill Hardekopf of www.lowcards.com stated, “they have already proved many times that they were not bluffing”.

Due to these actions it is very important that cardholders carefully check their statements each and every month as well as carefully read every piece of mail that their issuer sends them.

It is also important to remember that you always have the option of shopping around to see if you can secure a better deal. If you have a strong credit rating then you will be in a good position to pick and choose the best credit card deals currently available.

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