Lower Credit Limits with Rising Interest Rates

Recently, over 45% of American credit card consumers experienced either a rise in their interest rates, having their credit limit lowered, an increased minimum monthly payment, or reduced user rewards.

Congress is considering upping the compliance date on the CARD Act from February, 2010 to December 1, 2009. This may have a significant impact on retailers and holiday shopping of consumers. Many retailers may have to provide extra incentive for their customers in order to make up for the lag in credit card purchases. Already, consumers are using cash more and credit cards much less. Even with the CARD Act effective before Christmas, consumers dealing with a lowered credit limit and higher interest rates implemented before hand are not likely to charge their holiday purchases.

One recent shows reveals the following statistics:

• 113% rise in consumers facing possible lower credit limits.
• 42% rise in those having their minimum monthly payment increased.
• 33% are seeing their rewards program decline.
• 36% are experiencing increases on various fees.

Understandably, it's these consumers and countless others who agree this bill should be enacted in December not February. Some representatives are angered and acknowledge the fact the numerous credit card companies are abusing this delay by raising interest rates, charging hidden fees, lowering credit limits, or all of the above. This acknowledgement is a start but needs to be followed by swift action.

With the number of consumers resorting to cash over credit increasing every day, credit card companies are searching for ways to keep and please their cardholders. Some are offering zero percent interest rate for six months or increased cash-back rewards for certain credit purchase amounts. As the holidays quickly approach, with the looming possibility of the CARD Act becoming effective, consumers may see credit card offers that are either completely out of the ordinary or absolutely astronomical.