Holding the cards

Credit card rules are changing just as many consumers get ready for the holiday shopping.

Major banks are scrambling to cull their least profitable cardholders by making terms difficult or by raising interest rates before the new credit card reform bill takes effect in February.

Bank of America will start charging annual fees on some cards, while Wells Fargo plans to raise interest rates by the end of November.

"I know people who have 800 credit scores getting their line of credit cut," said Mitch Franklin, an assistant professor of accounting at Syracuse University. A credit score over 750 is generally considered strong.

Aside from higher rates and increased minimum payments, consumers have complained of fixed rates being changed to variable rates; new fees; a decline in new offers; and fewer rebates and rewards, said Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling.

"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," Cunningham said. "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."

Cunningham said that under the new regulations, "issuers won't be able to change the credit terms on a card at all for 12 months, and then only for future balances and after adequate notice is given. This suggests that if they want to make any changes, they'd better do it now."

Some consumer groups have urged Congress to move up the start of reforms to Dec. 1.

Chase spokeswoman Stephanie Jacobson said the bank can legally adjust interest rates on cards in response to economic conditions or legal or regulatory requirements.

"If we do increase a customer's (annual percentage rate), cardholders have the right to decline the change, close their account and pay off the balance at the lower rate over time," she said.

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