Credit cards get their licks in now before consumer law takes effect

Customers such as Dannie Decker, 55, of Lebanon are accustomed to getting good treatment from their credit card company. Decker pays his bill on time each month. He has good credit.
Normally, when JP Morgan Chase raised the interest rate on his credit card in years past, he'd simply complain and the company would back down.

Not this time.

"This time, they said it was non-negotiable,'' Decker said after getting a September letter from Chase saying his interest rate would go from a fixed rate of 7.99 percent to a variable rate of 13.24 percent. "They aren't even going to let you negotiate based on your excellent track record."

RelatedHow to improve your credit scoreList of free or low-cost debt counselors in the Nashville area

Credit card companies are raising rates for many customers and adding fees, even on customers with solid credit histories, as they get ready for sweeping changes in federal consumer protections set to go into effect in February.

Congress gave the industry nearly a year to comply with most of the provisions of a major new law enacted in May that will outlaw most controversial industry practices, such as raising rates on existing balances. But the credit card companies are using the delay until 2010 to make immediate changes to stem losses caused by existing delinquent customers.

Nashville-area cardholders of major lenders may be surprised to see what is about to arrive in the fine print in the mail. A survey by the Federal Reserve published last month found that 50 percent of banks plan to raise interest rates on prime borrowers, those with the best credit. A number of customers have already received such notices here.

A recent report by the Pew Health Group found the lowest advertised interest rates climbed 23 percent from December to July, to 12.24 percent. But some existing customers with good credit are seeing their rates jump well above the 20 percent mark.

Charles Pugh, 63, a truck driver in Crossville, said he plans to cancel his card after Citibank, Citigroup's credit card division, raised his rate from 15 percent to nearly 24 percent. He said he canceled the card to avoid the higher rate and will take a few months to pay off the $700 balance.

(2 of 3)

Uncertainty in Housing Continues as Affordability Hits Record-High Yet Starts DeclineTake Part: Are you facing credit card blues?