When the Credit CARD Act got signed into law, the majority of consumers and their advocates were in a celebratory mood. The Act was specifically designed to end the predatory practices of credit card companies and give credit card holders a fighting chance in the credit card industry arena. However, Congress dropped the ball when it staggered the activation of the Credit CARD Act for as long as August of 2010, giving credit card companies 15 months to adjust their businesses to the requirements of the new Act.

The huge amount of leeway in terms of time that Congress gave credit card companies shows a certain uncharacteristic naivety in Congress. They had actually expected credit card companies to back away from their predatory practices and move to a more benign business model, one which conforms to the requirements of the Credit CARD Act. At the moment, it is readily apparent that credit card companies are not backing down and are actually intensifying their practices.

According to a report from the Safe Credit Cards Project of the Pew Charitable Trust, interest rates in the credit industry have gone up by an average of 20%. Aside from hiking interest rates, credit card companies have also used tactics akin to “sleight of hand” magic tricks to raise the rates of card holders who use their credit prudently and who manage to pay off their balances on time to more than double their former rates.

Consumers are getting hammered by what credit card companies are doing. Those who are lucky enough to move away have done so. However, a majority is still stuck with their credit cards and is fast sinking, burdened by the changes credit card companies are introducing. Consumers have gotten weary of the situation and pressure is fast building up for some changes to be made. As a result, legislators are finally speaking up against what credit card companies are doing and are now supporting a new law which will move up the effective date of the Credit CARD Act to as early as December 1 of this year.

Ben Bernanke, Chairman of the Federal Reserve, acknowledges the benefits that an earlier Credit CARD Act activation would bring to consumers. However, he also said that this might cause problems for credit card companies who need to adapt their billing and accounting systems to the new requirements of the act, among other changes.

Bernanke’s opinion will most likely weigh more heavily in the Senate that it does in the House. Senate lawmakers have been known to be very deferential to regulators and to the financial institutions such as banks and credit card companies whose biddings the regulators regularly conform to. Pressure in the House may yet overturn that tradition in the Senate however which may result in long awaited protection for American consumers.

New York based financial giant American Express Company reported a third quarter net income fall of 21% which translates to $640 million or 53 cents per share. Previous figures were at $825 million or 70 cents per share. Revenue also fell to 16% which translates to $6.02 billion. According to American Express, these figures are much better than what they actually expected and the company feels confident that the end of the recession may finally be in sight.

American Express is often taken as a measure of the spending patterns of affluent consumers and corporations and their expression of confidence over the recession is surprising considering that defaults and credit card payment delinquencies are still at very high levels.

Ahead of the surprisingly positive comments made by American Express regarding the recent trends, AmEx shares jumped $1.34 each or 3.8% to $3.64 at 4 p.m. Trading. After hours, their stock fell by 22 cents.

Chief Executive of the company, Kenneth Chenault said. “While there is still reason to be cautious about high unemployment levels, we are seeing broad-based improvements in credit quality, the trends in card member spending are encouraging and there are signs that the recession may be approaching an end”. Chenault also said that the increase in corporate spending can be taken as another positive sign of economic recovery.

American Express’ optimistic outlook is not shared by other credit card companies, however. Most have expressed doubt if the early signs of recovery may actually translate to actual trends at the moment. Major bank and credit card issuer Capital One Financial Corp. for instance was less than optimistic in their reports, even as the company’s earnings exceeded expectations and their shares increased to 7.6% during trading after-hours.

Even with American Express’s positive outlook and its better than expected earning figures, the company’s credit card default rates are still way above the rates it saw last year. During the third quarter of this year, American Express wrote of 8.9% of credit card loans in its U.S. market. Last year, during the same period, the company’s write offs were at 5.9%. However, the current write off rate is lower by 10% than the figures during the April and June period.

Meanwhile, McClean VA financial services firm Capital One reported a third quarter profit rise of 14% translating to $425.6 million from $374.1 million from the preceding period this year. Per share, Capital One’s earnings dropped to $0.94 from $1. The company also wrote off 9.64% of their credit card loans, an increase of 6.13% from figures taken a year earlier.

In the face of the economic collapse and the role financial companies played, President Barack Obama recently called for the formation of a robust agency which had the power to police the fine print in mortgages, credit cards and other similar financial services ranging from auto financing to payday loans.

The plans for a new financial control agency was introduced by Barack Obama after the creation of the Credit CARD Act, a landmark set of legislations aimed at protecting consumers from credit card company practices. Apparently, the president saw that the Credit CARD Act alone would not suffice in curtailing the runaway practices of financial institutions which contributed greatly to the economic collapse.

With the new agency, Obama planned to encourage financial institutions to introduce standardized, no frills mortgages. These home loans would serve as a base from which consumers could compare more elaborate mortgage offers from financial institutions. The president also wanted to create a clearer line of communication between consumers and financial companies. He also planned for the agency to be able to examine bank books, similar to already established financial regulators, so as to keep an eye out of how safe and sound the entries are.

From the outset, banks have always been completely against the creation of the new agency. They argue that the current government financial regulators are already well established and are up to the task. Their opposition against the new agency is best exemplified by the $2 million ad campaign that the U.S. Chamber of Commerce launched against the new agency.

A key issue that the president and administration officials have constantly been high lighting as a key protection for consumers is the ability of the new agency to review financial institutions. However, this particular issue has proven to be very difficult to swallow, even for Democrats who make up a majority of the legislation’s supporters. Ultimately, it was not even the major financial companies that bent the issue but lawmakers who were influenced by their own particular business leaders such as auto dealers and bankers who make up their particular piece of local politics.

The result was Democrats in the committee exempting more than a thousand banks from being liable for examination by the planned consumer protection agency, although they are still required to comply with the agency’s rules. The general argument is that small community financial institutions would get overburdened by regulators if they were made to be liable to the protection agency. In any case, these small community financial institutions were not the cause of the current financial crisis anyway.

These exemptions have not helped the case of the new agency at all. As Democrat Emanuel Cleaver from Missouri put it, “In the end, we have weakened legislation that the opposition is not going to support”.

In the past few months, credit card companies have been engaged in raising their interest rates and fees to astounding levels while dropping available credit to a mere fraction of its original value. They’ve also hiked their minimum amount due rate and even added new fees, some of which penalized credit card holders for being prudent in their credit usage.

Credit card companies are following these actions as they prepare for the activation of the Credit Card Accountability Responsibility and Disclosure Act of 2009, a controversial set of legislations that aims to change the credit industry to be more friendly to consumers. A lot of the legislation in the Act would severely hamper many of the current profit sources of credit card companies. Because of this, credit card companies are now doing what they can to maximize their profits while they still have some control over their profit sources, regardless of the financial difficulties of their customers.

The Credit CARD Act was signed into law last May of 2009. Activation of the elements of the Act was staggered across several months, however. The major legislations in the Act were set for Activation on either February or August of 2010. Currently, some minor legislations of the credit card act are already active. These have more to do with credit card companies releasing timely information to credit card holders such as the legislation requiring 21 days notice before a bill gets penalized with interest fees and 45 days notice before any interest changes are made. However, given what credit card companies are doing at the moment, many feel that simply giving notice of changes is not enough.

Senator Charles Schumer said that the disclosure of any new fees is not enough for credit card holders. “You have to have some protection for consumers. You can’t let them do whatever they want as long as they disclose it. You can’t expect people to be lawyers”, he said.

As such, Senator Charles Schumer said, the Federal credit card legislation which is scheduled to become law on 2010 needs to be enacted earlier than scheduled. This is to stop the practice of credit card companies of hiking their interest rates before the Act takes effect.

Schumer went on to cite a study from Pew Charitable Trusts which showed that credit card interest rates hiked up to 20% during the first six months of this year, 2009. This happened while the federal interest rates dropped. He accused credit card companies of basically gouging consumers before the Act goes into play and changes the credit industry, introducing several prohibitions for a number of credit card company practices such as rate hikes on existing balances and fees charged for bills paid on time.

The popularity of credit cards is currently waning largely due to the continuing efforts of credit card companies to maximize their profits at the expense of their customers. In the past few months, credit card holders have seen their fees and interest rates skyrocket, their available credit fall, their minimum monthly rates become almost unbearably high and their credit cards get slapped with new fees. No wonder consumers are backing away from credit cards.

The fall of credit cards have given rise to alternative plastic payment methods. One of the most popular are debit cards. Unlike credit cards, debit cards offer less of a risk. This is primarily because debit card purchases are based on an existing bank account’s deposit whereas credit card purchases are actually mini loans to be paid later on. As such, debit cards will not penalize cardholders with interest fees, one of the biggest costs in using credit cards.

Now, a new type of debit card is seeing major distribution among consumers. These are called debit cards and they are everywhere. Consumers can now simply walk into any major store or even a major drug store and already access prepaid debit cards ranging from $25 to $100 to $500 dollar amounts. All a consumer needs is enough cash to buy the credit card and he or she can already use the card for any card-type purchases, ATM withdrawals and online transactions.

Prepaid debit cards definitely have their own advantages. Card holders need not worry about interest fees or going over their limits. They don’t even have to go through all the motions of applying for a card. As a matter of fact, prepaid debit cards are very attractive for consumers who do not have their own bank accounts or who cannot access traditional credit or debit cards.

All the advantages that a prepaid debit card brings also come with a catch, however. Prepaid debit cards also bring many hidden fees for their card holders. For instance, the MiCash Prepaid MasterCard issues a $9.95 activation fee right off the bat. Aside from that, there are also several recurring fees such as a $1 fee for ATM balance inquiries, $1.75 fee for ATM withdrawals, $4 monthly maintenance fee, $2 60 day inactivity fee and $0.50 for every purchase made with the card. Even calling customer service will dock the card holder a $1 fee.

It seems that prepaid debit card not only bring a lot of benefits, it’s also fully loaded with fees. As Jean Ann Fox, the financial services director of Consumer Federation of America says, “It’s a very expensive way to bank”.

Reloadable prepaid cards were basically a niche product several years ago. Now, it has become one of the most lucrative card businesses for financial institutions.

The reloadable prepaid card has its roots in the internet. During the rise of credit cards and the rise of the Internet, several financial institutions saw a lucrative and untapped market in teenagers who were interested in purchasing things through the Internet but who could not get credit cards which were, and still remains, the most used payment method in the internet. Soon enough, these institutions realized that they could expand to a much larger market, people who could not get credit and people who did not use banks.

Since then, usage of reloadable prepaid cards has slowly risen. Some have even gone to celebrity branding to bring in more customers. Celebrities such as Carmen Electra, Usher and Vince Young have endorsed reloadable prepaid cards. Notably, Russel Simmons has been quite active in marketing the card RushCard primarily to African-Americans, calling it a better alternative to credit cards and banks.

Issuers of reloadable prepaid cards consider them to be an excellent deal for consumers, allowing them to avoid getting charged with fees on low-balance accounts and on check-cashing merchants. Network Branded Prepaid Card Association Chairman Gary Palmer said, “If you look at these products today compared to even a checking account, many consumers have found that they can be far less expensive”.

Prepaid cards are not without its penalties however. Buried within the fine print of their agreement are fees to be issued when the card is activated, when the consumer uses a service such as ATM queries and transactions and other recurring fees. In most cases, when a prepaid card holder uses the card for any service, a fee is usually charged. Everything from ATM withdrawals to using the card for payment purchases to checking the card’s balance through the ATM has a corresponding charge amount.

Because of the relative newness of the prepaid cards, there isn’t any legislation which controls the industry. Consumers and consumer advocates are quite rightly worried about the situation and, already Congress is looking into the matter. Industry practitioners are, however quick to point out that there is no need for any legislation and that any legislation will actually increase the prices of these cards.

Consumer advocates are pushing for regulation, however. They believe that the lack of any regulation for prepaid cards would result in card users continuing to get blindsided by the many hidden fees that prepaid cards bring. Also, a lack of legal protection is problematic for card holders in cases when there are charges to be disputer or when cards are lost.

As the economic crisis and unemployment rise continues, American consumers are becoming smarter consumers. Focusing more on savings than on consumption, consumers are now doing their best to keep an eye on their finances and avoid debts.

Nowhere is the migration from unchecked spending to conscientious saving more apparent than in the case of credit card holders. When the economic crisis hit, one of the hardest hit were credit card holders. Burdened by years of buying on credit, revolving their credit card debts and having little to no workable financial plan to get out of debt, credit card holders suddenly found themselves with debt that needed to be paid quick and that was growing more expensive everyday. Many found themselves financially in trouble. Some were able to recover, some are still recovering. As a result of this experience, credit card holders have learned the value of properly managed credit.

Ironically, in a time when credit card holders are finally becoming responsible and focusing on being “good” credit card holders, the credit card industry badly wants them not to be. San Jose State University assistant professor of finance Marco Pagani, PH.D. said, “Good consumers will be hit by fees”. It’s no surprise and these actions are a direct reaction to the crackdown  of the feds on the ability of credit card companies to raise their interest rates, Pagani believes.

Recently, Bank of America announced that annual fees are making a comeback. Credit card holders, whether balance-carrying or balance-free, will get hit by annual fees. Thus, even if a card holder does his best and maintains a good credit card standing, he will still get penalized by annual fees. Bank of America isn’t the only credit card company doing this either.

Citigroup has also announced that it will be charging fees to credit card holders who charge less than $2,400 on their credit cards in a year. These “inactivity” fees are aimed at encouraging credit card holders to charge more on their credit cards. Clearly this new policy discourages credit card holders who lookout for their credit card debts and try to avoid unnecessary credit usage.

According to Pagani, “Since they have less flexibility on the rate they can charge you, they’re going to try new structures for fees and pricing”.

Maria Enomoto of Surepath Financial Solution also had this to say: “they are pushing you to spend the way they want you to spend”.

The activation of the Credit CARD Act isn’t until February of next year but, consumers, consumer advocates and members of the Congress are looking at activating the Act sooner. This comes as credit card companies continue to engage in practices, which are seriously hurting credit card holders.

As a reaction to the Credit CARD Act, credit card companies have been busy hiking fees and interest rates, introducing new fees, cutting down on credit and increasing minimum monthly payment rates, among other things, to boost profits and protect their profits from the limitations that the Credit CARD Act will bring.

The Credit CARD Act was drafted and signed earlier this year with overwhelming support from consumers and lawmakers. The Act aims to curtail the more predatory practices of credit card companies. Among other things, it will limit the capabilities of credit card companies to increase interest rates as well as charge fees, it will encourage transparency on credit card practices and it will protect sub prime consumers from credit card companies. The changes that the Credit CARD Act brings cuts heavily into the profit sources of credit card companies which is why they are doing what they are doing now.

Representative Barney Frank, unimpressed by what credit card companies are doing, recently introduced legislation that would move up the activation of the Credit CARD Act to December 1 instead of on February 22, 2010. If signed into law, this could mean earlier credit card protection for credit card holders. However, not everyone is convinced that this is such a good idea.

Ben Bernanke, Federal Reserve Chairman says that making the activation of the Act earlier maybe a double edged sword. True, earlier activation of the Act would mean credit card holders would get protection from abusive credit card company practices sooner but, there may be unwanted consequences, Bernanke believes. For instance, it would prevent consumers from voicing out their opinions regarding the new regulatory practices. It might also lead to problematic implementation of the new protections among credit card companies, Bernanke said. Bernanke expressed these opinions in a letter he sent to Alabama Representative Spencer Bachus who is the House Financial Services Committee’s highest ranking Republican.

In the letter, Bernanke wrote that an earlier activation of the Act “would mean that consumers would receive important benefits and protections earlier. Greater transparency will enhance competition in the marketplace and improve consumers’ ability to find products that meet their needs.” However, credit card companies also need enough time “to allow for an orderly transition and to avoid unintended consequences, compliance difficulties and potential liabilities”, Bernanke explained in the letter.

The credit card industry right now is in the middle of a massive change up in policies. Credit card companies are busy changing their business models, adapting to the current economic climate and preparing for the new set of legislations called the Credit CARD (Card Accountability, Responsibility and Disclosure) Act.

The Credit CARD Act was one of the quickest passed legislations in Congress. It was drafted and signed only in a matter of months early this year. The Act was an answer to growing discontentment among consumers of the predatory practices of credit card companies. When it was passed, consumers and consumer advocates rejoiced, expecting fairer treatment from their credit card companies. Unfortunately, just the opposite happened.

Activation for the Credit CARD Act was not scheduled until February 2010. This was done to give credit card companies enough time to adjust to the changes that the Act will bring. Unfortunately, for American credit card holders, legislators did not foresee that what credit card companies would do to adapt to the Credit CARD Act would be disastrous to consumers and, in some cases, would completely go against the intentions of the Act.

Bank of America, for instance, just sent notifications to some of their credit card clients informing them of a new annual fee which ranges from $29 to $99. The fee needs to be paid regardless of whether the card holder maintains a balance or not. Bank of America isn’t the only credit card company doing this either. Citigroup has also introduced a similar program, albeit with a different spin. The company will now charge some if its clients annual fees if their credit card spending does not exceed $2,400 per year. This is an odd ruling which is akin to punishing card holders who try to maintain good credit standing and avoid credit card debt.

The continuing changes in credit card policies are worrying for credit card holders but they are hardly a surprise. Credit card companies have always been focused on making a profit and it is no surprise that the adaptation of credit card companies to the Credit CARD Act would prioritize profits even at the cost of hurting consumers.

Linda Howland who serves as the Executive Director of Consumer Credit Counseling Services in Rochester said, “Be careful what you wish for. People wanted this legislation; but they don’t realize what it’s going to do”.

Faced with the limitations that the Credit CARD Act will bring, credit card companies are looking at everything that could potentially bring them profit. “So they’re looking at options that they have and fees are definitely one of them, interest rates are one of them”, Linda Howland explained.

Recently, Congress created the Credit Card Accountability, Responsibility and Disclosure Act or Credit CARD Act, aiming to protect consumers from arbitrary rate hikes issued by credit card companies.

The Credit CARD Act was not scheduled for immediate activation however. The entirety of the Act was scheduled for activation on February of 2010, though some parts of it were activated last August. The delayed activation was to allow credit card companies enough time to adapt to the new requirements of the Credit CARD Act. This turned out to be an over optimistic expectation.

As evidenced by their recent actions, credit card companies took the grace period allowed to them as their chance to generate as much profits as possible, even at the expense of their clients, instead. Examples are the extravagant hikes on interests, fees and monthly minimum rates. Credit card companies have also opted to circumvent the requirements of the Act instead of complying with it. An example of this is the recent move of major credit card companies to transfer their fixed rate interest credit cards to variable rates. Variable rate interest credit cards are exempt from the requirement of credit card companies to give 45 day notice to any interest changes and allowing credit cardholders to opt out of the said changes.

The government has taken notice of these practices and, recently, Barney Frank, the Chairman of the House Financial Services Committee voiced accusations against banks of abusing the grace period allowed to them before the Credit CARD Act takes full effect.

The actions of the credit card companies will most likely have a disastrous effect among credit card holders, depending on their financial situation. According to research and advocacy organization Démos, a nonpartisan group, households with low to middle income levels that have a high debt-stress level generally rely on their credit cards to cover expenses for household necessities and medical expenses as well in a time of job loss. A household’s debt-stress level is the ratio of the credit card debt of the household and the annual income it generates.  Démos’ research shows that, when credit card companies introduce major changes in credit card policies, the hardest hit will be low to mid income households with credit cards.

As credit card companies continue to make credit much more expensive, many credit cardholders have decided to reduce their debts resulting in the decline of revolving debt. However, for many low to middle income households, this is just not an option. What is even more distressing is that many of the changes happening in credit card policies are making it difficult for credit card holders to protect themselves.

As the economic crisis continues, it seems that it is not only the regular American consumer who is finding it difficult to manage their finances. Credit card companies are also facing a very dim financial outlook. While some of the major credit card companies were saved from the brink of bankruptcy early this year with government bailouts, complete financial turnaround is still a long way off.

Proof of the continuing problems that credit card companies are facing is Bank of America’s announcement of their plans to overhaul their credit card business. This comes after the company posted quarterly losses for the fifth continuous period. The company’s total losses amount to a total of $4.7 billion and there is no sign of profit in the immediate future.

Kenneth D. Lewis, Chief Executive Officer of Bank of America said to analysts, “We have a lot of people looking at the business and looking at the changes that need to be made both in infrastructure and other ways we can make money”. This came after the North Carolina based company posted another quarterly loss, its second in less than a year.

The obvious culprit of the difficulties that Bank of America in particular and credit card companies in general are facing is the continuing economic recession and the increasing unemployment rate of the United States. These conditions have contributed greatly to the losses that Bank of America is seeing. Bank of America is the second largest credit lender in the U.S. and their losses have grown to $1.04 billion during the third quarter of this year from the $167 million loss the company saw during the same period last year. This is according to executives in the company. They also said that a peak from consumer defaults will not come until the economy gets better.

FBR Capital Markets Corp. analyst Paul Miller said, “A lot of people are having trouble making money in credit cards, and that is going to put a lot of pressure on the banks”.

For September, Bank of America’s annualized write offs rate was 14.25 % and payments due for at least 30 days was at 7.53%. These figures were the highest among the six credit card issuers that reported securitized loan data recently. Bank of America, however, announced that delinquencies for all their card loans dropped from the second period for the entire quarter.

Chief Financial Office Joe Price said, “We continue to be cautiously optimistic that delinquency trends signal a stabilization in losses”.

Credit card companies are once again facing legislation for their credit card practices. This time around, it’s for overdraft fees.

It is a common practice for credit card companies to charge overdraft fees whenever a credit card holder charges in excess of his or her available credit. Back when credit cards were still a new concept, charging over a credit card’s limit was not allowed and the transaction would be denied. However, as credit cards became mainstream, credit card companies saw the potential profits of charging overdraft fees instead. Thus, credit card companies began defaulting to charging overdraft fees instead of denying transactions whenever a transaction would go over a card’s limits.

Credit card holders, consumer advocates and, recently, lawmakers see overdraft fees as too predatory, especially in a time when consumers in general are facing great financial difficulties. The practice of charging overdraft fees, credit card companies argue, is a form of protection for credit card holders. Instead of having their transactions denied at the cashier, potentially causing embarrassment and inconvenience, card holders would be allowed to continue with the transaction – for a fee. Credit card companies, however, automatically enroll their credit card holders to overdraft protection, a misleading practice which has found many card holders surprised with receiving large overdraft fees merely for not keeping track of their credit limits.

Now, Senate Banking Committee Chairman Christopher Dodd and four other Senators have introduced legislation, which would restrict the fees that credit card companies can charge on their clients. In particular, credit card holders would specifically have to apply for overdraft protection. The amount and the frequency of the fees that credit card companies can charge would also be limited as well.

This comes as credit card companies continue to follow aggressive tactics, such as raising interest rates and fees, for profiting from their consumers. Lawmakers have expressed their continued frustration over such practices from companies, which benefited greatly from the government’s financial intervention early this year.

In a statement, Senator Dodd said, “Banks should not be trying to bolster their profits at the expense of their customers”.

Last September, major U.S. financial institutions Bank of America, Wells Fargo & Co. and J.P. Morgan Chase & Co. announced a roll back on overdraft fees in an apparent attempt to placate the growing resentment over overdraft fees.

The coming legislation is going to do more than that, however. Specifically, the legislation will require credit card companies to charge fees that are reasonable and proportional to the actual cost of overdraft processing. It will also place a limit on the number of fees that may be charged for every year and month.

Interchange fees are now one of the hot issues in the credit card industry. Merchants are doing their utmost to forward their efforts of having interchange fees regulated by law. Visa Inc, one of the major credit card issuers has found itself on the spot to fight off these efforts and preserve the particularly lucrative profit source: interchange fees.

Interchange fees are fees every merchant is charged whenever they accept credit cards or debit cards as payment for transactions. Typically, a merchant pays a flat fee and an additional 1.6% to 2.5% of the purchase amount as interchange fees. Considering the rising number of credit and debit card transactions in the country, profits from interchange fees are very considerably. The U.S. alone saw profits of up to $48 billion last year, an increase of 14% from 2007’s figures. Merchants, on the other hand, see interchange fees as a large expense, one which they believe is unnecessarily high. They are therefore, lobbying hard for Congress to create legislation controlling interchange fees.

At this point, there are three bills being considered in Congress aimed at limiting the impact of interchange fees on merchants.

One of the biggest movements among merchants is retailer 7-Eleven’s collection of 1.6 million signatures petitioning congress for interchange fee legislation. According to the retailer, they have very limited options when it comes to interchange fees. For instance, they are not allowed to set minimum purchase limits for credit or debit card purchases.

While 7-Eleven’s campaign may seem to overwhelm, many see that Congress may not be as supportive of interchange fee legislation as they were with the Credit CARD Act. The issue does not directly affect consumers and Congress still has a full agenda, what with the health care and other major issues it is currently considering.

Moshe Orenbuch, analyst for Credit Suisse noted in his research notes that: “We believe that this legislation has no chance of passing this year”.

Some still remain hopeful that Congress may still consider the issue and that attention to the issue may force credit card issuers to reduce interchange fees. Currently, 75% of credit card payments are handled by MasterCard and Visa networks.

Visa is reacting strongly to the movement for interchange fee legislation. It recently started an ad campaign this month in Washington where it promotes its role as a network for “digital currency” payment and the benefits that it brings.

CEO and Chairman Joseph Saunders had this to say about the campaign: “Because of the reliability and speed of Visa digital currency, people often take it for granted. Few understand that Visa is a global payment technology company that enables our financial institutions and merchants to deliver the value of electronic payments. The more we communicate what Visa is and what exactly we do, the better we will be understood”.

Credit card companies recently gave way over the issue of overdraft fees, a huge win for consumers though it required little adjustment in the part of credit card companies. Basically, credit card companies stopped automatically enrolling their credit card holders to overdraft protection programs and made the service optional, a very simple change in policy, which potentially saves consumers millions in overdraft fees. Inversely, the millions in overdraft fees that consumers dodge translate to millions in lost profits for credit card companies.

Now, credit card companies are trying to deal with an attack against another major profit source: interchange fees.

The issue of interchange fees has long been a sore area between merchants and credit card companies. Interchange fees are a major profit source for credit card companies and a serious profit sink for merchants.

According to the Nilson Report, merchant fees overall collection, including those collected by processing middlemen and by banks, increased by 78% from the $25.5 billion collected in 2003. The Federal Deposit Insurance Corp. places the total revenue that banks saw from service charges on deposit accounts at $39.5 billion for last year.

For merchants, interchange fees are a huge business expense. Typically, interchange fees are composed of a flat transaction charge and a certain percentage of the purchase amount. This varies depending on the type of merchant and on the type of card. Generally, debit cards have lower interchange fees than credit cards. However, the continuing popularity of debit cards has also been accompanied by a rise on their interchange fees.

The fight between merchants and credit card companies over interchange fees has been going on for some time. It has intensified now as merchants take advantage of the increased consumer awareness over credit card practices, which led to the passage of the new Credit CARD Act. Credit card companies also took bailouts from the government, which are essentially the taxpayer’s money, while still engaging in consumer-unfriendly practices has also increased consumer resentment against credit card companies, further fueling the chances of merchants to win the fight against interchange fees.

Both camps are now busy jockeying for support from consumers. 7-Eleven Inc. recently collected 1.6 million signatures for a call to congress to address the issue of interchange fees. Major credit card issuers Visa and MasterCard have been quick to attack this petition saying consumers were ignorant of what they were signing.

As the interchange fee debate continuous, it is clear that consumer opinion about it is going to be a major driving force. Whether any interchange fee legislation will prosper or not depends greatly on how strong voice consumers can bring for or against it.

Many credit card holders met an unpleasant surprise when they tried using their gas linked credit cards last week.

Lately, Citibank issued credit cards linked with gas companies have been closed abruptly with little or no notice to credit card holders. As a result, many holders of gas company co-branded Citibank credit cards only found out that their credit cards were closed only when they were already at the pump and using it to pay for fuel. Many credit card holders are affected by this move of Citibank and reports of such experiences are beginning to proliferate in several consumer-focused websites in the internet.

Citibank has confirmed several details about this recent closing of credit card lines. In a statement released by the company, it has “decided to close a limited number of oil partner co-branded MasterCard accounts”. This means that Citibank has closed down their credit card lines co-branded with a number of oil company partners such as Citgo, ExxonMobill, Philipps 66-Conoco and Shell credit cards. Citibank however did not mention how many credit card holders got their credit cards closed and how credit these closed credit card lines accounted for. A spokesman from Citibank said that the closure date of the credit card lines was last Wednesday and card holders were informed with mailed correspondence on Monday.

This isn’t the first time that Citibank closed down several credit card lines co-branded with another company. Citibank also recently closed down its Home Depot branded line of cards. However, unlike its Home Depot card closures, Citibank has not stopped offering gas company co branded cards to credit card applicants. The company is still accepting applications for such credit card lines and is still promoting rewards such as a 3 percent cash back for fuel purchases and 1 percent cash back for other purchases.

Citibank’s actions surprised many of their credit card holders and many may have thought of turning to the law for compensation of the inconvenience that it caused them. However, what Citibank did is completely legal and there is no law, even in the newly activated legislations of the Credit CARD Act that prevents credit card companies from closing credit card accounts at their discretion. All credit card companies implement this as their right as listed in the fine print of their credit card agreements.

For Ben Woolsey, marketing and consumer research director of CreditCards.com, Citibank’s actions is “extraordinary”. However, these are “extraordinary” times, he said.

Forecasts from Credit Suisse Group AG predicts that losses in the credit industry will continue to rise for at least one more year as September sees more credit card holders falling behind on their payments. According to major U.S. Credit card companies Bank of America, Citigroup Inc. and JPMorgan Chase & Co., credit card holders are still struggling with meeting their credit card payments.

Along with Discover Financial Services and American Express Co., these three banks reported that write off rates, debts that credit card companies give up as unpayable, fell for the month of September. However, loans that are 30 days overdue have surged which may signal a future of defaults. This could mean that the credit card industry may be seeing record losses in the future. To note, loans that have not been paid after 180 days are written off by credit card companies.

Of these major credit card companies, only American Express reported no increase in both delinquencies and defaults. At the opposite end, Capital One Financial Corp was the only credit card company to report both an increase in losses and in late credit card payments.

This month, JPMorgan reported an increase of 4.69 percent for loans that are 30 days overdue from August’s 4.48 percent. Bank of America reported in their federal filings that 30 day overdue loans were at 7.53 percent for September, rising from 7.47 percent in August. For Citigroup, loans that are 35 days late, at least, went up to 5.5 percent for last month compared to 5.38 percent for August. Discover also saw an increase to 5.57 percent in September from 5.35 percent in August for late payments. Capital One saw delinquent loans rise to 5.38 percent last month from August’s 5.09 percent.

Historically, it has been shown that the rate of credit card defaults tracks the unemployment rate of the country. In September, the unemployment rate in the United States rose to 9.8 percent. This is the highest it has been since the year 1983. To note, the recorded defaults rate from August of last year, 2008, was at 6.82 percent. At the time, the unemployment rate was at 6.2 percent

According to Moshe Orenbuch who serves as an analyst on Credit Suisse, reports that the stabilization of consumer credit is on the way is highly doubtful. Orenbuch wrote in a research note that the combination of increasing bankruptcies and continuing loss in employment means that credit loss improvements is still more than a year away.

At the moment, not many credit card lines carry annual fees. However, that may not last much longer. Already, Bank of America has announced that they will be testing annual fees on selected customers next year. The fees will range from $29 to $99. Bank of America said that the choice of who gets the annual fees and who does not was based on the company’s assessment of “risk and profitability”. The company has not explained who gets the $29 annual fee, the $99 annual fee or any fee in between.

Bank of America is hardly the first credit card company to announce a return to charging annual fees, a once phased out fee in the credit card industry. Last August, Citigroup also announce to a few of its customers that they were going to be charged annual fees. Citigroup spokesman Samuel Wang was scant on the details, however.

These actions may just be the tip of the iceberg. Analysts foresee that more credit card companies may soon follow suit with their own versions of annual fees. CreditCards.com director of consumer research, Ben Woolsey said, “They’re trying to understand what the market will bear in terms of annual fees. They’re seeing what level (the customers) will endure without going away”.

Bank of America’s “annual fee experiment” comes as hardly a surprise. The credit card industry has been hit hard with the economic crisis, primarily due to payment defaults and charge-offs. It is also looking at a future where their profit making capabilities will be severely limited by the new Credit CARD Act. To note, the Credit CARD Act will limit the capabilities of credit card companies to introduce interest rate hikes and fees, among other things, in an attempt to protect the interests of consumers.

In their efforts to maintain profitability, credit card companies are now looking into their accounts and figuring out which ones are not showing much of a profit. These accounts usually include those that rarely or never carry balances and never incur late fees or other fees besides. In the past, these accounts were pretty much left along by credit card companies as they focused on making profits from credit card holders who were not very good at managing their credit. Credit card companies are, however looking at these accounts very closely now and figuring out how to make profits from them. Thus, credit card holders who have good standing are now seeing their interest rates rise and their credit limits being cut.

Bank of America’s latest test is therefore just the company testing how far they can go in their efforts of making profits from good creditors. According to Woolsey, “If (the test) proves successful, it could become the norm. It is somewhat up to consumer reaction’.

Despite recent headlines, economic recovery for the United States may still be a ways away. According to the latest numbers, American consumers are struggling with the economic downturn and the increasing unemployment rate. Delinquency rates are also still quite high, and rising for the majority of credit card companies. Losses from bad credit card loans also remain high.

An upcoming seasonal trend may also introduce additional financial risks to consumers and credit card companies alike. As the holiday season approaches, there is a high probability that credit card usage among American consumers may once again rise which may ultimately lead to payment problems in the future.

FBR Capital Markets analyst Scott Valentin said, “The companies aren’t out of the woods yet but they are now better able to forecast credit trends, which are more in line with seasonal trends”.

The monthly reports of credit card companies do not lend itself to signs of a recovering economy. Capital one, a card issuer which expanded to banking, said that their charge offs increased by 9.77% last September, a rise from the 9.32% it saw in August. Payments delayed by at least 39 days also rose to 5.38% in September compared to the 5.09% figure from August.

Discover said that their 30 day payment delinquencies on credit card loans packaged into bonds shot up to 5.75% last month from August’s 5.35%. However, write offs were at 8.69% last month, a considerable drop from the 9/16% rate from August.

American Express showed better performance. The company said that their 30 day delinquent payment rate was at 4.1% for both August and September. Their card loan write offs were at 8.4% last month. This already includes card loans packaged into bonds. During the month of august, the write off rate of the company was at 9%.

Among credit card companies, Bank of America reported the highest write off rate for September at 14.25%. The month before, August, the rate was at 14.54% which was also the highest rate among banks during that month.

Citigroup reported a write off rate of 10.15% for card loans during the month of September, an impressive drop from its 12.14% write off rate last August. Still, Citigroup maintains its position as the second highest bank behind Bank of America in terms of write off rates.

The Chase unit of JPMorgan Chase had a credit card charge-off rate of 8.12% for September, dropping from an 8.73% rate in August. According to Jamie Dimon, chief executive of the credit card business of JPMorgan, “Card is having a tough time”.

Rising interest rates, rising fees, new fees, credit card limit cuts and many other changes in their credit cards have credit card holders clamoring for the changes promised by the Credit CARD (Card Accountability, Responsibility and Disclosure) Act to activate sooner.

The Credit CARD Act is a new set of legislation created by Congress and signed into law by the President last May of this year. The Act aims to level the playing field for credit card holders by limiting predatory and unfair practices being done by credit card companies. Full activation of the Act was scheduled for February of 2010.

Credit card companies see the Credit CARD Act as a threat to their profitability. They predict that, once the Act goes live, they will no longer be as profitable as they used to be in the past. Many of their past practices will no longer be allowed under the new Act. They are therefore changing the credit card agreements of their customers now to ensure that they stay profitable even with the Credit CARD Act in place.

Credit card holders are getting angry with credit card companies over their recent actions, however and are clamoring for the Credit CARD Act to be activated earlier.

According to a survey by Credit.com, 45% of consumers said that their credit card issuer made changes in their credit card agreements such as increasing fees, interest rate hikes, cutting available credit and increasing the minimum payment due rate.

Adam Levin, chairman of consumer oriented website, Credit.com said that consumer advocates found hope when the Credit CARD Act was signed into law this May that credit card companies would go easier on consumers but the opposite happened instead. Considering the large number of people affected by what the credit card companies are doing, this is probably one of the major reasons why 56% of respondents in the survey were of the opinion that the activation of the Credit CARD Act be moved to an earlier date. Levin said, “They’re doing what they do and they’re going to continue to do what they do, until their ability to do what they do is curtailed”.

At the moment, the U.S. Congress is considering an earlier date for the Act’s activation, which is on December 1 of 2009 instead of February 22 of 2010. The House Financial Services Committee is now considering a bill changing the activation date of the Credit CARD Act and voting for the bill will be in the next few days.

When the Credit Card Accountability, Responsibility and Disclosure Act (Credit CARD Act) was passed earlier this year, consumer advocates rejoiced at the prospect of finally seeing some fair play in the credit card arena. Industry analysts were a bit more skeptical however and stated that credit card companies would instead find new ways to extract profits from credit card holders to compensate for lost profits caused by the Credit CARD Act.

It seems that the skeptics are being proven right. In the past few months, credit card companies have been busy raising interest rates, limiting available credit and adding new fees to credit card. One particular fee being added to credit card holders is the annual fee.

The annual fee is actually an old fee. During the time when credit cards were still new in the market, annual fees were commonly charged to credit card holders. However, in the past few years, when credit cards experienced massive growth and market competition became quite fierce, credit card companies began phasing out annual fees.

Now, annual fees are making a come back. Bank of America recently announced that it will be test marketing to a selected number of credit card holders a new “membership” fee. Most probably, this “membership” fee is what was once recognized as annual fees. Bank of America will probably be measuring the reaction of the select few who get the “membership” fee and, if the protests are not that loud, they will probably be introducing it to the majority of their card holders.

Bank of America’s announcements is expected to be only the first of many. Other major banks in the credit card business are likely to follow Bank of America’s footsteps. This means that, for the majority of credit card holders, annual fees may be here to stay.

Actually, annual fees are already being charged on a number of credit card holders. For instance, credit card issuers focused on the subprime market generally charge annual fees to their customers. Incidentally, annual fees for subprime credit card holders are usually quite high which makes subprime credit cards generally a bad deal for consumers.

Businesses such as hotels and airlines which offer credit cards in partnership with some of the major credit card companies may also charge annual fees, something which many card applicants of theirs miss.

For regular credit card holders, if they get a notice informing them that their credit card company is going to be charging them annual fees, they can try calling up their credit card company to opt out of it. Chances are fair that the credit card company may agree. If not, then another viable solution is to move to another credit card company, one that does not charge annual fees.

As the economic downturn continues, many credit card holders are finding out that their credit cards are becoming additional burdens instead of conveniences. Credit card companies are also getting hit hard by the economic slow down and, as a result, they have become more conservative with credit, preferring to reserve credit only for consumers with really good credit standing and doing everything that they can to ensure that credit card debts get paid quicker. Unfortunately, for credit card holders this means dropping available credit, rising interest rates and additional fees among other things.

For credit card holders faced with these types of credit card agreement changes, it can be a rude awakening to what the credit card industry has become. The days of easily available credit and easy credit terms are definitely over. Nowadays, credit is tougher to get and more expensive as well, and this is not only for a select few. Regardless of their credit scores, everyone is getting some very unwelcome changes in their credit card agreements, ranging from credit card interest rate hikes to available credit being dropped.

According to survey by Consumer Reports National Research Center, there is currently a high rate of complaints regarding credit cards. The survey shows that, of all complaints, 14% saw their credit limits lowered, 29% got hit by new fees and penalties and 38% saw their interest rates increase.

Dealing with these credit card agreement changes is a very big challenge for credit card holders. Already burdened with a weak economy and a high unemployment rate, consumers are finding themselves severely cash strapped. For consumers who carry credit cards, any unfavorable credit card agreement changes carry the serious threat of destroying their financial stability.

When a credit card holder gets a notice for a credit card agreement change, he or she has the option of refusing the change. However, such an action usually entails the discontinuation of the credit card. For instance, if a credit card holder finds that his interest rate is being raised, he has the option of refusing the interest rate change in exchange for having his credit card line discontinued. The card holder will also be required to pay off any remaining debts within a specified time frame, albeit at the original interest rate, not the new one.

There is another option, though not really applicable to everyone. Credit card holders can call their credit card issuer if they want to be returned to their previous credit card agreement. There is no guarantee that this will succeed, however.

A more viable option is moving to another credit card line that offers better terms. According to Consumer Reports, credit card holders can find better terms in credit unions, professional organizations and community or regional financial institutions.

Credit card companies have been getting a lot of flack lately from credit card holders. For the past few months, credit card companies have continually raised interest rates and fees, introduced new fees, cut available credit and more. Credit card holders, already facing the problems of a weak economy and a growing unemployment rate, have been further burdened by these changes in their credit card agreements. As a result, credit card companies and credit cards in general are showing a major drop in consumer satisfaction.

With the current state of the economy and the high premium of consumer satisfaction among financial companies, the first credit card company to recover from the low consumer satisfaction dilemma would be at a concrete advantage and would, most likely, emerge as an industry leader. At the moment, Bank of America seems to be that company.

With its recent announcement of stopping interest rate hikes, Bank of America has captured the attention of consumers and the national media. Amidst a flurry of credit card companies raising their interest rates and whatnot, Bank of America’s announcement of stopping interest rate hikes is certainly worth a pause and a few lines in the front page in the financial section of the news.

The New York Times headlined the news as “Bank of America Makes Pledge on Credit Card Act”, the Washington Post’s take on it reads “Bank of America Won’t Hike Credit Rates” and the Wall Street Journal proclaims “BofA Holds Lin on Credit-Card Costs.

To the casual reader, it would seem that Bank of America is finally getting in line with the much touted Credit CARD (Card Accountability, Responsibility and Disclosure) Act which was signed into law earlier this year and set for activation on February next year. The Credit CARD Act is a new government effort to reshape the credit card industry into a fairer arena for credit card holders. So far, it has seen plenty of opposition from credit card companies. Credit card companies have not made compliance with the Act a priority agenda and have focused more on circumventing it instead. Because of this, Bank of America’s announcement has made quite an impression among consumers and the news media.

However, some important details are being left out amidst the general furor. One major detail is the fact that, before their announcement, Bank of America was also busy raising their interest rates. Thus, the effect of Bank of America’s announcement is only limited to those who have not seen their rates hiked. It is currently unclear how many credit card holders will be benefited. There is also the matter of the move from fixed to variable rates in card holder interest rates.

As encouraging as Bank of America’s announcement is, its actual benefits to credit card holders may not be as impressive in the long run.

Not many credit card holders are aware that whenever they use their credit cards to pay for their purchases, the merchant or store that who they are dealing with are charged interchange fees. Furthermore, these interchange fees ultimately end up on the price tag of whatever item that the card holder is buying, passing the interchange fee cost to the buyer and increasing the actual price of the item.

The issue of interchange fees is a hotly debated one. On one side are the merchants who see interchange fees as too costly for their business. On the other side are the credit card companies who insist that interchange fees are simply the cost of using their services.

The fact is that, for every credit card purchase that passes through a merchant, around 2% of the total transaction is collected by the credit card companies as transaction fees. The actual amount of the fee varies depending on the credit card used, the company and the rewards system in place. It is important to keep in mind that the 2% transaction fee that credit card companies charge is not made transparent to consumers. They are actually filtered down to the tag price of the items on sale in the shop or store. Thus, every consumer, whether he or she is using a credit card or not, ultimately pays the price for interchange fees.

The Merchants Payment Coalition is a group of businesses and merchants that are lobbying for a change to fairer credit card fees. According to them, during the last year, American consumers shelled out more than $48 billion paying for credit card transaction fees. This is the highest amount paid to transaction fees in any industrialized country.

According to the statements from credit card companies, interchange fees are there to cover for the cost of processing the payment which the credit card companies incur. However, only 13% of the total fees account for the processing cost. The remaining amount goes to other costs from the credit card company such as for marketing costs and rewards payments. After those, the remaining amount is profit for the credit card company.

At the moment, a bill amending the Truth in Lending Act called the Welch-Shuster Credit Card Interchange Fees Act of 2009 has been introduced in Congress and referred to the House Financial Services Committee. The aim of the Act is to “prohibit unfair practices in electronic payment system networks”.

If the bill passes, credit card companies would be forced to disclose their swipe fee rates and the Federal Trade Commission would be empowered to be a power check to credit card companies. There is also a possibility that the bill may allow negotiations between credit card companies and merchants regarding interchange fee rates.

When the Credit Card Accountability, Responsibility and Disclosure Act of 2009 was signed into law earlier this year, it was not yet apparent that a particular legislation in the bill would have a problematic effect on credit unions.

According to Federal officials, the Credit CARD Act originally provided several basic provisions to consumers by prohibiting widespread predatory practices in the credit industry such as arbitrary rate hikes, double-cycle billing and tricks involving due dates. However, one specific provision, the one which makes 21 days the mandatory period before credit card companies could issue late fees on their credit card accounts, included not only credit card statements but all statements being sent out by financial institutions, credit unions included.

U.S. Representative Peter Welch immediately heard from credit unions after a few days had passed from the passing of the measure that the 21 day ruling of the Credit CARD Act would prevent credit unions from sending to their members their consolidated statement reports.

Association of Vermont Credit Unions Joe Bergeron said, “This really became a problem for credit unions”.

Bergeron explained that credit unions use a simplified billing practice which already includes all of their member’s open ended loans such as checking accounts, saving accounts and home equity loans in a single statement. This is done so as to save costs for their members.

According to the president and CEO of the River Valley Credit Union, Jeff Morse, “ The rule as written made it impossible for the credit unions to comply in order to have the members payments coincide with the new due dates required under the law previously written”.

Morse explained that the new provision basically destroys the single statement practice that credit unions follow when sending statements for their customers. As a result, it creates a big problem for automatic payments for credit union members who have new due dates placed within the 21 day period.

Fortunately for credit union credit card holders, the Credit CARD Technical Corrections Act was passed last Tuesday through a voice vote in Capitol Hill. Peter Welch was the sponsor of the bill which introduces adjustments into Credit CARD Act. Basically, the bill sponsored by Welch limits the 21 day ruling to credit card bills only.

Welch’s legislation passed relatively quickly through Congress and adjustments in the 21 day limit are now in place. The bill will affect around 92 million American consumers who are members of various credit unions all over the country.

The combination of the economic slowdown and the threat of the Credit CARD (Card Accountability, Responsibility and Disclosure) Act have credit card companies in a mad scramble to maintain current and secure future profitability. For most of them, this means getting rid of the most unfavorable of their clients.

According to Syracuse University’s Whitman School of Management assistant professor of accounting Mitch Franklin, credit card companies are accomplishing the above by introducing more difficult terms for credit card holders and by raising interest rates well before the Credit CARD Act get activated on February of 2010.

Franklin recently said that even people who have credit scores as high as 800 are getting their credit lines are cut. Credit scores are the credit card industry’s standard measure for the desirability of a borrower. Consumers who maintain high credit scores are considered to be more credit deserving. At the moment, a strong credit score is around 750.

Increased interest rates and more difficult terms aren’t the only tricks credit card companies have brought to the table either. A currently popular trend is credit card companies increasing their minimum monthly payment rates. An increase in minimum monthly payment rates forces credit card holders with revolving monthly debts to pay considerably higher minimum payments per month, a budget buster for many credit card holders.

Credit card companies are also currently busy moving credit card holders from fixed rate interests to variable rates. Variable rates are usually tide to the national prime rate. This particular move by credit card companies circumvents the Credit CARD Act legislation limiting arbitrary interest changes from credit card companies and requiring them to give ample notice to credit card holders for interest rate changes.

Other tricks include the introduction of new fees, cutting down of new offers as well as slowing down on their rewards and rebates programs.

Gail Cunningham, National Foundation for Credit Counseling spokeswoman said, “Why is this happening? Some think that the issuers want to get in front of the new rules that will be imposed on them in 2010. Others think that it is due to creditors being on the ropes financially and wanting to decrease their risk while getting any outstanding debt repaid as quickly as possible”.

As these practices continue, credit card holders are getting even more burdened financially. Already burdened by the slow economy and the high unemployment rate, they are clamoring against these burdensome changes that credit card companies are introducing. Already there are movements in Congress for solutions to the problem. The Center for Responsible Lending, for instance, recently cited card issuer “tricks and traps” and urged Congress to move the Credit CARD Act activation to as early as December 1.

The Credit CARD (Card Accountability, Responsibility and Disclosure) Act may be introducing may solve many problems for credit card holders but is also introducing a few of its own as well. It isn’t its fault, however and the new problems are primarily being driven by credit card companies trying to seek new avenues for profit as the Credit CARD Act closes many of their traditional ones.

One particularly problematic side effect of the Credit CARD Act is the introduction of higher monthly minimum payment requirements. Generally speaking, paying only the minimum amount due every month is not really an optimal way to handle credit card debt. Still, many credit card holders rely on the low minimum monthly payment to at least revolve their debts while they try to get a handle on their finances.

Now, as credit card companies prepare for the closing down of many of their profit sources such as interests, credit card holders are seeing an alarming increase in their monthly minimum payment rates. A number of major credit card companies have already issued notices to their clients informing them of re-calculations of their minimum monthly payments.

This increase in minimum monthly payments is proving to be disastrous to many credit card holders. Owing to the economic crisis and the high unemployment rate, many credit card holders have very limited maneuvering room in their finances. Some of these credit card holders are barely hanging on, revolving their debts, relying on a low monthly minimum payment requirement. With the increased monthly minimum payment rate, these credit card holders are finding out that they can no longer keep up with their credit card payments.

Fortunately, there are alternatives. One is to move their balance to another credit card line. However, given the current state of the credit card industry, that is probably easier said than done. Right now, finding a low interest rate balance transfer card is very difficult, which is not to say that there aren’t any out there. There are but it will require quite a lot of looking.

Another solution is a home equity loan. If the card holder can get enough equity out of his or her home, then he or she might be able to pay off the credit card debt completely to negate the effect of the raised minimum monthly payment rate. The problem with this solution is that it puts the credit card holder’s home at risk. Also, given the current status of the property markets, the card holder may not get a high valuation of his or her home.

The best solution will vary from card holder to card holder. However, for most card holders, one thing holds true: paying off their credit card debts as quickly as possible and minimizing on credit card usage is the best thing they can do at the moment.