Credit card users beware: How the crisis will affect you and your bills

Ain’t that America?

Just as Washington hands over the biggest bailout in history to Wall Street in what is ostensibly a way to free up credit markets, banks are looking for ways to collect more money from debt-submerged consumers. Along with adding climbing rates, inconspicuous charges, and adjusting credit-card terms, credit card companies like American Express are now penalizing customers based on where they shop and who holds their mortgage.

American Express spokeswoman told MSNBC that the company is reevaluating its exposure to risk. “We are looking at some other factors, too, in light of the economy. We are looking at consumers holding subprime mortgages (and) those living in areas where there has been a greater deterioration in home prices.”

The changes to credit-card terms include a major cut in credit limits, among other things, and mean that small businesses that rely on increased credit for operating costs will take a serious hit. But it’s the average consumer and family who needs to be keenly aware of shifting and nefarious credit card fees and rules.

As a glaring example of serious American ills and a country that believes spending is patriotic, credit-card debt increased more than 315 percent from 1989 to 2006. The nation has a collective debt of around $800 billion, which means that every man, woman and child is carrying a debt of around $2,900, with the average family holding about $10,000. In other words, the majority live on the edge, under water, and stuck in a revolving door of debt.

For banks that have gone deep in the hole as a result of the subprime crisis, industry analysts agree the easiest way to make money is to raise rates on existing card holders. In May of this year, Consumer Reports issued a warning to credit-card holders to watch for changing terms, including shorter grace periods and rates almost doubling even for cardholders who never had a late payment.

So what can you do about it? Scour your mail. Look for any changes in fees, rates, or credit limits. Hunt for hidden fees. And call and complain when you find them. And there might be recourse for some, thanks to the Credit Cardholders’ Bill of Rights. The bill would eliminate things like any-time, any-reason rate increases, due-date gimmicks, and retroactive interest rates without the opportunity to cancel the card.

The House passed the bill last month, which still needs approval from the Senate. Representatives Michele Bachmann and John Kline voted against the bill. Bachmann serves on the Financial Services committee and counts TCF Bank as her largest donor.