The LowCards.com Weekly Credit Card Rate Report October 29, 2009

The LowCards.com Weekly Credit Card Rate report is based on
our Complete Credit Card Index which tracks the advertised rates
of 1060 credit cards in the United States.

Our index showed that the Annual Percentage Rates for credit cards
was 12.60% which was higher than 12.56% from last week.

Here are the averages from the LowCards.com Complete Credit
Card Index for the previous ten weeks:

Oct.29 12.60%
Oct. 22 12.56
Oct. 15 12.45
Oct. 8 12.44
Oct. 1 12.33
Sep. 24 12.30
Sep. 17 12.09
Sep. 10 12.09
Sep. 4 12.12
Aug. 27 12.12
Aug. 20 12.11
Aug. 13 12.11
Aug. 6 12.10

The average cash advance rate for this week was 20.64%
which was higher than last week at 20.62%.

The credit cards with the lowest interest rates in the nation this week are:

1. 6.15% ISPFCU Credit Card
2. 6.24% MINI Platinum Visa Credit Card
3. 7.24% AARP Platinum Visa

The LowCards.com credit card rate report is compiled weekly
using data from 1060 credit cards which are tracked on the
LowCards.com website. The Complete Credit Card index is
available here:
http://www.lowcards.com/CreditCardIndex.aspx

Rates may occasionally change due to the number of cards
being tracked.

About LowCards.com: LowCards.com ( http://www.lowcards.com )
simplifies the confusion of shopping for credit cards. It is
a free, independent website that helps consumers easily
compare credit cards in a variety of categories such as
lowest rates, rewards, rebates, balance transfers and lowest
introductory rates. It also gives an unbiased ranking and
review for each card.

The LowCards.com Complete Credit Card Index
( http://www.lowcards.com/CreditCardIndex.aspx ) is the most
objective and comprehensive resource on the Internet which
allows consumers to compare rates for all 1060 credit cards
offered in this country. Created by Hampton & Associates,
the company has been analyzing the credit card industry
and supplying objective websites on various consumer
expenses for eight years.

A new study confirmed what cardholders and Congress already know: credit card issuers are in no hurry to implement the regulations of the CARD Act. Instead, some of the most harmful practices are even more widespread.

Today, the Pew Charitable Trust released “Still Waiting: ‘Unfair or Deceptive’ Credit Card Practices Continue as Americans Wait for New Reforms to Take Effect”. The study examined almost 400 credit cards advertised by banks and credit unions offered in July 2009 and December 2008.

The study found that 100% of the credit cards continue practices that will be outlawed by the CARD Act. The lowest advertised interest rates have increased by more than 20% in the past year. None of the 12 largest banks currently issue cards that would meet the requirements of the CARD Act.

“It seems that a credit card issuer could gain a distinct competitive advantage by the early implementation of the provisions of the CARD Act. But that is not being done. It seems that issuers are turning their back on the public outcry for reform and instead want to raise rates as much as possible before these interest rate provisions go into effect in February 2010,” said Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook.

The Pew study found that cardholders have not benefited from the historically low interest rates, even though the Federal Funds rate is almost 0%. The lowest advertised rates increased by more than 20% from December 2008 to July 2009 while the highest advertised rates increased 13% during that time period. Discover had the biggest jump in the lowest advertised rates, going from 9.99% to 12.99%. Bank of America had the largest increase in the highest advertised rates, increasing from 14.99% to 18.24%.

The report is also one of the first credit card comparisons between banks and credit unions. It confirms that credit unions offer lower rates and lower penalties than banks. The findings from the Pew study:

* Advertised rates were 20% lower at credit unions. These rates ranged from 9.9% to 13.75% annually at credit unions, compared to 12.29% to 17.99% annually for banks.

* Penalty charges at credit unions are less frequent and less severe than at banks. Credit union penalty interest rates averaged 17.99% compared to 28.99% at banks. In addition, these penalty interest rates at credit unions were less likely to last indefinitely; one-third would terminate after three to twelve months of on-time payments. They could last indefinitely at banks, even after on-time payments.

“If you are a member of a credit union and are looking for a new credit card, be sure to look at those offered by your credit union. Compare those cards to others on the market and you could be pleasantly surprised,” said Hardekopf.

A new study confirmed what cardholders and Congress already knew: credit card issuers are in no hurry to implement the regulations of the CARD Act. Instead, some of the most harmful practices are even more widespread.

Today, the Pew Charitable Trust released “Still Waiting: ‘Unfair or Deceptive’ Credit Card Practices Continue as Americans Wait for New Reforms to Take Effect”. The study examined almost 400 credit cards advertised by banks and credit unions offered in July 2009 and December 2008.

The study found that 100% of the credit cards continue practices that will be outlawed by the CARD Act. The lowest advertised interest rates have increased by more than 20% in the past year. None of the 12 largest banks currently issue cards that would meet the requirements of the CARD Act.

Experts make the observation that a credit card issuer could gain a distinct competitive advantage by the early implementation of the provisions of the CARD Act; instead, it seems that issuers are turning their back on the public outcry for reform and instead want to raise rates as much as possible before these interest rate provisions go into effect in February 2010.

The Pew study found that cardholders have not benefited from the historically low interest rates, even though the Federal Funds rate is almost 0%. The lowest advertised rates increased by more than 20% from December 2008 to July 2009 while the highest advertised rates increased 13% during that time period. Discover had the biggest jump in the lowest advertised rates, going from 9.99% to 12.99%. Bank of America had the largest increase in the highest advertised rates, increasing from 14.99% to 18.24%.

The report is also one of the first credit card comparisons between banks and credit unions. It confirms that credit unions offer lower rates and lower penalties than banks. The findings from the Pew study include:

* Advertised rates were 20% lower at credit unions. These rates ranged from 9.9% to 13.75% annually at credit unions, compared to 12.29% to 17.99% annually for banks.

* Penalty charges at credit unions are less frequent and less severe than at banks. Credit union penalty interest rates averaged 17.99% compared to 28.99% at banks. In addition, these penalty interest rates at credit unions were less likely to last indefinitely; one-third would terminate after three to 12 months of on-time payments. They could last indefinitely at banks, even after on-time payments.

Members of a credit union who are looking for a new credit card are advised to look at those offered by their credit union, comparing those cards to others on the market.

Today, Senate Banking Committee Chairman Chris Dodd introduced new legislation that would immediately freeze credit card rates on existing balances through February of 2010. Dodd felt this bill would prevent issuers from further interest rate hikes that have taken place since the Credit CARD Act was signed into law in May of this year.

“No sooner had it been signed into law, credit-card companies were looking for ways to get around the protections this Congress and the American people demanded,” said the Democratic Senator. “This bill would end those abuses and further protect customers today.”

Since the beginning of the year, LowCards.com has recorded almost 60 changes made by nine different credit card issuers, many of which are APR increases. In the last two weeks, Bank of America added an annual fee to some cards and Citi has raised the APR to 29.99% for many cardholders as well as cancelled the accounts of customers holding some of their co-branded cards.

The changes in terms and card closures are hot issues for consumers. Congress is reacting by trying to move up the effective date of some provisions of the CARD Act from February 22 to December 1. Last week, the House Financial Services Committee approved this but analysts predict that this will not pass in the Senate.

“The actions of the credit card issuers should not be a surprise to anyone, especially Congress. When the CARD Act was being discussed, the issuers said they would have to raise rates and make changes to make up for lost revenue. They warned Congress that these changes would affect a broad spectrum of customers. That is exactly what they have done. They have raised rates, increased fees, added annual fees, moved fixed rate cards to variable rates, and cut rewards,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook.

“The banks and issuers are not philanthropic organizations. They are for-profit companies that have already lost billions of dollars and have struggled for over a year to rebound from the financial crisis. The high delinquency and default rates in September show that credit card issuers are still facing difficult times and this will probably continue into 2010. Issuers will still have to find ways to increase revenue and reduce risk. If Congress put a freeze on interest rates, you can bet that issuers would find other ways to make up for this lost revenue.”

This new legislation would also require credit card companies to review all rate increases on credit card holders since the beginning of this year to see if they were justified.

Today, Senate Banking Committee Chairman Chris Dodd introduced new legislation that would immediately freeze credit card rates on existing balances through February of 2010. Dodd felt this bill would prevent issuers from further interest rate hikes that have taken place since the Credit CARD Act was signed into law in May of this year.

“No sooner had it been signed into law, credit-card companies were looking for ways to get around the protections this Congress and the American people demanded,” said the Democratic Senator. “This bill would end those abuses and further protect customers today.”

Since the beginning of the year, LowCards.com has recorded almost 60 changes made by nine different credit card issuers, many of which are APR increases. In the last two weeks, Bank of America added an annual fee to some cards and Citi has raised the APR to 29.99% for many cardholders as well as cancelled the accounts of customers holding some of their co-branded cards.

The changes in terms and card closures are hot issues for consumers. Congress is reacting by trying to move up the effective date of some provisions of the CARD Act from February 22 to December 1. Last week, the House Financial Services Committee approved this but analysts predict that this will not pass in the Senate.

Experts don’t seem to be surprised by the actions of the credit card issuers. During discussions regarding the CARD Act, issuers said they would have to raise rates and make changes to make up for lost revenue and warned Congress that these changes would affect a broad spectrum of customers.

Among the changes through the passing of this act: rates have been raised, fees have been increased, annual fees have been added, fixed rate cards have been moved to variable rates, and rewards have been cut.

Because both banks and issuers are for-profit companies that have already lost billions of dollars and have struggled for over a year to rebound from the financial crisis, they are seeking to find ways to increase revenue and reduce risk. Based on the high delinquency and default rates in September, experts say that credit card issuers are still facing difficult times and that this will probably continue into 2010.

This new legislation would also require credit card companies to review all rate increases on credit card holders since the beginning of this year to see if they were justified.

Today, the House Financial Services Committee approved the creation of a Consumer Financial Protection Agency (CFPA) by a vote of 39 to 29. This is the first step in creating a new regulatory agency that will protect consumers. The CFPA is an important piece of the Obama administration’s plan to tighten lending regulations and help prevent future financial failures.

The bill would give states more authority to regulate large national banks with their own stronger consumer protections on interest rates and fees associated with credit cards and mortgages. However, it would allow federal regulators to exempt banks from state laws on a case-by-case basis.

The CFPA would enforce provisions in the CARD Act that protect consumers from sudden rate increases on unpaid credit card balances. It would also create rules that would make credit card terms more transparent and easy to understand.

“Consumers feel they need some type of protection right now. This week, many Citi customers received a large rate increase to 29.99% for no apparent reason,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. “Cardholders are angry because issuers have significantly increased their rates and there is nothing consumers can do about it. Their only option is to accept the changes or close the account. However, it is difficult to get a new card because many issuers have reduced their risk of loans and are very selective about the new cards they issue.”

The new agency would take some of the consumer protection duties from the Federal Reserve and oversee financial lending such as credit cards, payday loans and terms on savings accounts. Those exempted include retailers, lawyers, real estate brokers, accountants, auto dealers, cable companies, and credit, mortgage and title insurers.

The CFPA does not include two of the priorities of the Obama administration. It leaves out the requirement that lenders offer standardized “plain vanilla” products. It also does not include the requirement that banks take reasonable steps to ensure that customers understand what they are receiving.

The House is expected to vote on this in November. However, the future of the agency will be determined by the vote in the Senate in 2010. Banks are strongly opposed to this bill and are lobbying Senators to dilute or reject it. Some legislators are also opposed to the idea of creating a new regulatory body.

Today, the House Financial Services Committee approved the creation of a Consumer Financial Protection Agency (CFPA) by a vote of 39 to 29. This is the first step in creating a new regulatory agency that will protect consumers. The CFPA is an important piece of the Obama administration’s plan to tighten lending regulations and help prevent future financial failures.

With this bill, states have more authority to regulate large national banks using their own stronger consumer protections on interest rates and fees. Alternatively, it would also allow federal regulators to exempt banks from state laws on a case-by-case basis.

The CFPA would enforce provisions in the CARD Act that protect consumers from sudden rate increases on unpaid credit card balances. It would also create rules that would make credit card terms more transparent and easy to understand.

Consumers need some type of protection right now. This week, many Citi customers received a large rate increase to 29.99% for no apparent reason. Cardholders are angry because issuers have significantly increased their rates, seemingly with no cause and no change that customers can request. A cardholder’s only option is to accept the changes or close the account; however, new cards are harder to come by as many issuers have reduced their risk of loans and are very selective about the new cards they issue.

The new agency would take some of the consumer protection duties from the Federal Reserve and oversee financial lending such as credit cards, payday loans and terms on savings accounts. Those exempted include retailers, lawyers, real estate brokers, accountants, auto dealers, cable companies, and credit, mortgage and title insurers.

The CFPA does not include two of the priorities of the Obama administration. It leaves out the requirement that lenders offer standardized “plain vanilla” products. It also does not include the requirement that banks take reasonable steps to ensure that customers understand what they are receiving.

The House is expected to vote on this in November, although the future of the agency will be determined by the vote in the Senate in 2010. Banks are strongly opposed to this bill and are lobbying Senators to dilute or reject it. Some legislators also oppose the idea of creating a new regulatory body.

The LowCards.com Weekly Credit Card Rate Report October 22, 2009

The LowCards.com Weekly Credit Card Rate report is based on
our Complete Credit Card Index which tracks the advertised rates
of 1060 credit cards in the United States.

Our index showed that the Annual Percentage Rates for credit cards
was 12.56% which was higher than 12.45% from last week.

Here are the averages from the LowCards.com Complete Credit
Card Index for the previous ten weeks:

Oct. 22 12.56%
Oct. 15 12.45
Oct. 8 12.44
Oct. 1 12.33
Sep. 24 12.30
Sep. 17 12.09
Sep. 10 12.09
Sep. 4 12.12
Aug. 27 12.12
Aug. 20 12.11
Aug. 13 12.11
Aug. 6 12.10
July 30 12.11

The average cash advance rate for this week was 20.62%
which was higher than last week at 20.60%.

The credit cards with the lowest interest rates in the nation this week are:

1. 6.15% ISPFCU Credit Card
2. 6.24% MINI Platinum Visa Credit Card
3. 7.24% AARP Platinum Visa

The LowCards.com credit card rate report is compiled weekly
using data from 1060 credit cards which are tracked on the
LowCards.com website. The Complete Credit Card index is
available here:
http://www.lowcards.com/CreditCardIndex.aspx

Rates may occasionally change due to the number of cards
being tracked.

About LowCards.com: LowCards.com ( http://www.lowcards.com )
simplifies the confusion of shopping for credit cards. It is
a free, independent website that helps consumers easily
compare credit cards in a variety of categories such as
lowest rates, rewards, rebates, balance transfers and lowest
introductory rates. It also gives an unbiased ranking and
review for each card.

The LowCards.com Complete Credit Card Index
( http://www.lowcards.com/CreditCardIndex.aspx ) is the most
objective and comprehensive resource on the Internet which
allows consumers to compare rates for all 1060 credit cards
offered in this country. Created by Hampton & Associates,
the company has been analyzing the credit card industry
and supplying objective websites on various consumer
expenses for eight years.

In the past week, Citi has increased the interest rate on a number of its cardholders to 29.99% and cancelled the accounts of customers holding some of their gas partner co-branded cards. Bank of America notified some of its cardholders that beginning February 2010, it will charge an annual fee ranging from $29 to $99 on its cards.

These actions follow last week’s earnings reports that revealed that banks and credit card issuers are still losing millions of dollars due to credit card defaults and delinquencies. Issuers and analysts expect this to continue into next year.

Credit card issuers are desperately trying to rebound after the collapse of the economy and consumer lending, but unemployment, the CARD Act and the possibility of new regulations are restricting traditional areas revenue. Issuers must make changes, even if it angers Congress and their cardholders. Credit card issuers warned there would be changes if Congress passed new rules regulating them and have since proved that they were not bluffing.

Here are the latest changes that have taken place and some consumer tips for responding to the changes:

* Citi is notifying a number of cardholders of APR increases up to 29.99%, a variable rate that can escalate once the prime rate increases.

Customers with good credit histories are blindsided with interest rates increased to 29.99% for no apparent reason. 29.99% sends a message that Citi does not want consumers to use that card, and it is a strong motivation to close the account.

If your rate increases and you carry a balance, call and ask them to reduce the rate. If that doesn’t work, you now have a right to opt out of the rate increase by the deadline outlined in your notice. By opting-out, you can pay off the balance at the current interest rate for up to five years, but you cannot make any further charges on the account. Opt-out and pay off the balance as soon as possible, but first redeem your rewards. You may forfeit the rewards once you have opted-out.

This rate increase comes at the beginning of the holiday season. If your rate is 29.99% and you keep the card, do not use this card during the holiday season unless you are sure you can pay off the balance immediately.

* Last week, Citi cancelled a substantial number of their MasterCard accounts, most of which were gas partner co-branded cards. Citi said that these account closings include credit cards affiliated with Shell, Citgo, ExxonMobil and Phillips 66-Conoco.

Some customers have complained that they did not receive notice of this. But issuers do not have to give customers advance notice of an account cancellation. Issuers have the right to close credit lines immediately, so cancellation notices can be sent after the card is cancelled. Even the CARD Act only requires that issuers give advance notice of rate increases.

Citi is also shutting down the Home Depot credit card effective at the end of October. Rewards will be honored through February 2010.

Customers should use their accumulated rewards immediately to avoid loss. If the cancelled card is a rewards card, the issuer may give a deadline for redeeming the rewards. If you don’t see the notification in the mail or forget the deadline, you lose your rewards. In some cases, the rewards are lost when the account is closed, even if the issuer is the one who closed it.

Cardholders should be on the lookout for changes and notices from their issuers. This is a good time to use your reward points for holiday travel or early holiday shopping.

* Last week, Bank of America notified a limited group of cardholders that it will start charging an annual fee on their credit cards beginning in February 2010. The fee will range from $29 to $99 and will be applied to the selected accounts based on risk and profitability.

This action came only one week after Bank of America received attention and praise for promising to put a freeze on credit card rates.

Nearly 80% of the credit cards in America do not have annual fees. Consumers can find a comparable card without an annual fee if they shop around. Be sure to analyze the terms and conditions of each card and if they are similar, choose the one without the yearly fee.

Actions like these are rarely singular events. One issuer takes a new step and the others likely follow. Issuers are trying everything they can to reduce risk and increase revenue, especially since regulations are limiting their options, so consumers must pay attention to their bills and notices.

In the past week, Citi has increased the interest rate on a number of their cardholders to 29.99% and cancelled the accounts of customers holding some of their gas partner co-branded cards. Bank of America notified some of their cardholders that it will begin charging an annual fee ranging from $29 to $99 on their cards beginning in February 2010.

These actions follow last week’s earnings reports that revealed that banks and credit card issuers are still losing millions of dollars due to credit card defaults and delinquencies. Issuers and analyst expect this to continue into next year.

Credit card issuers are desperately trying to rebound after the collapse of the economy and consumer lending, but unemployment, the CARD Act and the possibility of new regulations are restricting traditional areas revenue. Issuers must make changes, even if it angers Congress and their cardholders.

“Credit card issuers warned there would be changes if Congress passed new rules regulating them. They have already proved many times that they were not bluffing,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook.

Here are the latest changes that have taken place and some consumer tips for responding to the changes:

* Citi is notifying a number of cardholders of APR increases up to 29.99%. To make matters worse, this is a variable rate that can escalate once the prime rate increases.

“We are hearing from customers with good credit histories that their rate has been increased to 29.99% for no apparent reason,” says Hardekopf. “29.99% sends a message that Citi doesn’t want you to use that card. It is a strong motivation to close your account.”

If your rate increases and you carry a balance, call and ask them to reduce the rate. If that doesn’t work, you now have a right to opt out of the rate increase by the deadline outlined in your notice. By opting-out, you can pay off the balance at the current interest rate for up to five years, but you cannot make any further charges on the account. Opt-out and pay off the balance as soon as possible. But before you opt-out, redeem your rewards. You may forfeit the rewards once you have opted-out.

This rate increase comes at the beginning of the holiday season. If your rate is 29.99% and you keep the card, do not use this card during the holiday season unless you are sure you can pay off the balance immediately.

* Last week, Citi cancelled a substantial number of their MasterCard accounts, most of which were gas partner co-branded cards. Citi said that these account closings include credit cards affiliated with Shell, Citgo, ExxonMobil and Phillips 66-Conoco.

Some customers have complained that they did not receive notice of this. But issuers do not have to give customers advance notice of an account cancellation. Issuers have the right to close credit lines immediately, so cancellation notices can be sent after the card is cancelled. Even the CARD Act only requires that issuers give advance notice of rate increases.

Citi is also shutting down the Home Depot credit card effective at the end of October. Rewards will be honored through February 2010.

Customers should use their accumulated rewards very soon or they could lose them. If the cancelled card is a rewards card, the issuer may give a deadline for redeeming the rewards. However, if you don’t see the notification in the mail or forget the deadline, you lose your rewards. In some cases, the rewards are lost when the account is closed, even if the issuer is the one who closed it.

Cardholders should be on the lookout for changes and notices from their issuers. This is a good time to use your reward points for holiday travel or early holiday shopping.

* Last week, Bank of America notified a limited group of cardholders that it will start charging an annual fee on their credit cards beginning in February 2010. The fee will range from $29 to $99 and will be applied to the selected accounts based on risk and profitability.

This action came only one week after Bank of America received attention and praise for promising to put a freeze on credit card rates.

“Nearly 80% of the credit cards in America do not have annual fees,” said Hardekopf. “You can certainly find a comparable card without an annual fee if you shop around. Just make sure to analyze the terms and conditions of each card and if they are similar, choose the one without this yearly fee.

“Actions like these are rarely singular events. One issuer takes a new step and the others likely follow. Issuers are trying everything they can to reduce risk and increase revenue, especially since regulations are limiting their options,” says Hardekopf. “Consumers have to pay attention to their bill and the notices they receive in the mail.”

The September performance numbers from credit card issuers show the economic
recovery may not happen as quickly as politicians are predicting.

The delinquency rates–the percentage of accounts where payments are overdue by at least one month–have increased for five of the six top credit card companies when comparing the September rates to August. (American Express reported an identical delinquency rate.)

In addition, the default rates for issuers are still at very high levels. However, the silver lining in the statistics is that five of the six top issuers reported decreases in their default rates in September (only Capital One posted an increase).

These high delinquency and default rates could mean that consumers might continue to see rate and fee increases in the coming months, as well as credit limit decreases on their credit card accounts.

Bank of America has the highest annualized card write-offs (14.25% in September) and payments at least 30 days overdue (7.53% in September). Bank of America CEO Kenneth Lewis said that the company is looking at changes that need to be made in its credit card infrastructure and other ways it can make money. Just last week, Bank of America announced that it is adding an annual fee to select accounts.

“Issuers can’t continue losing money. They have to find ways to make up the revenue, even if this angers Congress and consumers,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. “To make matters worse for issuers, some fees and rate hikes will be prohibited after certain provisions of the CARD Act goes into effect in February. Congress is also considering changes to the interchange fee.”

Here are the delinquency rates by issuer for August and September. These represent the percentage of accounts where payments were at least 30 days overdue (at least 35 days for Citigroup accounts):

August September
Bank of America 7.47% 7.53%
Discover 5.35 5.57
Citigroup 5.38 5.50
Capital One 5.09 5.38
JP Morgan Chase 4.48 4.69
American Express 4.10 4.10

Here are the default rates by issuer for August and September. These are the
annualized percentages of credit card write-offs:

August September
Bank of America 14.54% 14.25%
Citigroup 12.14 10.15
Capital One 9.32 9.77
Discover 9.16 8.69
American Express 9.00 8.40
JP Morgan Chase 8.73 8.12

The September performance numbers from credit card issuers show the economic
recovery may not happen as quickly as politicians are predicting.

The delinquency rates–the percentage of accounts where payments are overdue by at least one month–have increased for five of the six top credit card companies when comparing the September rates to August. American Express reported an identical delinquency rate.

The default rates for issuers are still at very high levels. A silver lining can be found in the statistics: five of the six top issuers reported decreases in their default rates in September; only Capital One posted an increase.

These high delinquency and default rates could mean that consumers might continue to see rate and fee increases in the coming months, as well as credit limit decreases on their credit card accounts.

Bank of America has the highest annualized card write-offs (14.25% in September) and payments at least 30 days overdue (7.53% in September). Bank of America CEO Kenneth Lewis said that the company is looking at changes that need to be made in its credit card infrastructure and other ways it can make money. Just last week, Bank of America announced that it is adding an annual fee to select accounts.

Because issuers cannot continue losing money, they have to find ways to make up the revenue, even if this angers Congress and consumers. Certain fees and rate hikes will be prohibited after certain provisions of the CARD Act goes into effect in February. Congress is also considering changes to the interchange fee.

Here are the delinquency rates by issuer for August and September. These represent the percentage of accounts where payments were at least 30 days overdue (at least 35 days for Citigroup accounts):

August September
Bank of America 7.47% 7.53%
Discover 5.35% 5.57%
Citigroup 5.38% 5.50%
Capital One 5.09% 5.38%
JP Morgan Chase 4.48% 4.69%
American Express 4.10% 4.10%

Here are the default rates by issuer for August and September. These are the annualized percentages of credit card write-offs:

August September
Bank of America 14.54% 14.25%
Citigroup 12.14% 10.15%
Capital One 9.32% 9.77%
Discover 9.16% 8.69%
American Express 9.00% 8.40%
JP Morgan Chase 8.73% 8.12%

On September 29, the Federal Reserve proposed 841 pages of rules designed to protect consumers from costly credit card practices. These proposed rules represent the second stage of the Federal Reserve’s implementation of the Credit CARD Act signed into law by President Obama in May.

In this document, the Federal Reserve requires credit card issuers to include a number of new disclosures beginning with the February statements sent to their customers:

* Issue a warning about the hazards of only making the minimum payment. Paying only the minimum payment increases the interest you will pay and the time it takes to pay it off. This warning must be placed in a table and shown in a prominent location.

* Disclose the total cost and the time it will take to pay off the entire balance if you only make the minimum payment.

* Disclose the monthly payment amount required to pay off the balance in 36 months and the total cost of paying off the balance in that three-year period.

* Disclose the fee and the penalty APR that the cardholder could receive after a late payment. Issuers must also include the earliest date on which the late fee can be charged.

* The due date must be the same numerical day and month for each billing cycle. This predictability makes it easier for cardholders to make their payment on time. If the due date is on a holiday and a mailed payment arrives on the day after the holiday, the payment is to be considered on time.

* Prohibits fees for making a payment, except payments involving expedited service.

* Credit card issuers must provide contact information for at least three debt counseling services that have been approved by the U.S. Trustees.

The Federal Reserve consumer tested these disclosures to help make them easier for cardholders to understand. Issuers are required to use specific language in these warnings.

The Federal Reserve develops and administers regulations that carry out major federal laws that govern consumer credit protection, such as the CARD Act, the Truth in Lending Act, or the Equal Opportunity Act.

On September 29, the Federal Reserve proposed 841 pages of rules designed
to protect consumers from costly credit card practices. These proposed rules
represent the second stage of the Federal Reserve’s implementation of the Credit CARD Act signed into law by President Obama in May.

In this document, the Federal Reserve requires credit card issuers to include
a number of new disclosures beginning with the February statements sent to their customers:

* Credit card companies must issue a warning about the hazards of only making the minimum payment. Paying only the minimum payment increases the interest you will pay and the time it takes to pay it off. This warning must be placed in a table and shown in a prominent location.

* Disclose the total cost and the time it will take to pay off the entire balance if you only make the minimum payment.

* Disclose the monthly payment amount required to pay off the balance in 36 months and the total cost of paying off the balance in that three-year period.

* Disclose the fee and the penalty APR that the cardholder could receive after a late payment. Must also include the earliest date on which the late fee can be charged.

* The due date must be the same numerical day and month for each billing cycle. This predictability makes it easier for cardholders to make their payment on time. If the due date is on a holiday and a mailed payment arrives on the day after the holiday, the payment is to be considered on time.

* Prohibits fees for making a payment, except payments involving expedited service.

* Credit card issuer must provide contact information for at least three debt counseling services that have been approved by the United States Trustees.

“The Federal Reserve consumer-tested these disclosures to help make them easier for cardholders to understand. Issuers must use specific language in these warnings,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook.

The Federal Reserve develops and administers regulations that carry out major federal laws that govern consumer credit protection, such as the CARD Act, the Truth in Lending Act, or the Equal Opportunity Act.

The LowCards.com Weekly Credit Card Rate Report October 15, 2009

The LowCards.com Weekly Credit Card Rate report is based on
our Complete Credit Card Index which tracks the advertised rates
of 1060 credit cards in the United States.

Our index showed that the Annual Percentage Rates for credit cards
was 12.44% which was higher than 12.44% from last week.

Here are the averages from the LowCards.com Complete Credit
Card Index for the previous ten weeks:

Oct. 15 12.45%
Oct. 8 12.44
Oct. 1 12.33
Sep. 24 12.30
Sep. 17 12.09
Sep. 10 12.09
Sep. 4 12.12
Aug. 27 12.12
Aug. 20 12.11
Aug. 13 12.11
Aug. 6 12.10
July 30 12.11
July 23 12.14

The average cash advance rate for this week was 20.60%
which was lower than last week at 20.61%.

The credit cards with the lowest interest rates in the nation this week are:

1. 3.25% Fifth Third Bank Platinum Prime MasterCard
2. 6.15% ISPFCU Credit Card
3. 6.24% MINI Platinum Visa Credit Card

The LowCards.com credit card rate report is compiled weekly
using data from 1060 credit cards which are tracked on the
LowCards.com website. The Complete Credit Card index is
available here:
http://www.lowcards.com/CreditCardIndex.aspx

Rates may occasionally change due to the number of cards
being tracked.

About LowCards.com: LowCards.com ( http://www.lowcards.com )
simplifies the confusion of shopping for credit cards. It is
a free, independent website that helps consumers easily
compare credit cards in a variety of categories such as
lowest rates, rewards, rebates, balance transfers and lowest
introductory rates. It also gives an unbiased ranking and
review for each card.

The LowCards.com Complete Credit Card Index
( http://www.lowcards.com/CreditCardIndex.aspx ) is the most
objective and comprehensive resource on the Internet which
allows consumers to compare rates for all 1060 credit cards
offered in this country. Created by Hampton & Associates,
the company has been analyzing the credit card industry
and supplying objective websites on various consumer
expenses for eight years.

Yesterday, the Federal Reserve released the monthly Consumer Credit report for August that shows credit card debt is down for the 11th consecutive month. It declined at an annual rate of 13.1% to $899.44 billion, a drop of $9.9 billion. This was the largest decline since February.

One factor in this decline is the decrease in credit card limits. Credit card companies slashed the limits for almost 58 million cardholders during the 12-month period that ended in April. But consumers also appear to be cutting back in charging items on their credit cards.

These are concerning trends for credit card issuers. Several other recent reports reinforce these concerns.

* Delinquency Rates.
In August, credit card delinquencies were up again for several major issuers. Bank of America delinquencies increased to 14.54% from 13.21%. Citigroup delinquencies increased to 12.14% from 10.03%. Discover delinquencies increased to 9.16% from 8.43%.

* Third Quarter Earnings
Banks will release their third quarter earnings next week. Some analysts are expecting an 11th consecutive quarter of lower profits.

* Consumer Response
In a recent Consumer Reports survey, more than a third of consumers polled said they’ve paid off and closed a credit card account since January 2008. Of those that did, more than half said this was in response to the actions of the banks such as raising rates, imposing fees and cutting limits.

* Further Rate Increases
Another issuer is significantly raising rates before the CARD Act provisions go into effect. Wells Fargo & Co. is currently notifying some of its cardholders that it will raise interest rates by three percentage points starting November 30.

“These numbers are not good news for credit cards issuers as they struggle to regain profitability,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. “They are trying to restore revenue by raising rates and fees. This angers cardholders and some are cutting back on their credit card spending while others react by closing their accounts. Increased payments have forced some into delinquency, and the issuer is left with unpaid balances that they cannot collect. And this cycle continues.”

The LowCards.com Weekly Credit Card Rate Report October 8, 2009

The LowCards.com Weekly Credit Card Rate report is based on
our Complete Credit Card Index which tracks the advertised rates
of 1060 credit cards in the United States.

Our index showed that the Annual Percentage Rates for credit cards
was 12.44% which was higher than 12.33% from last week.

Here are the averages from the LowCards.com Complete Credit
Card Index for the previous ten weeks:

Oct.8 12.44%
Oct. 1 12.33
Sep. 24 12.30
Sep. 17 12.09
Sep. 10 12.09
Sep. 4 12.12
Aug. 27 12.12
Aug. 20 12.11
Aug. 13 12.11
Aug. 6 12.10
July 30 12.11
July 23 12.14
July 16 12.12

The average cash advance rate for this week was 20.61%
which was lower than last week at 20.63%.

The credit cards with the lowest interest rates in the nation this week are:

1. 3.25% Fifth Third Bank Platinum Prime MasterCard
2. 6.15% ISPFCU Credit Card
3. 6.24% MINI Platinum Visa Credit Card

The LowCards.com credit card rate report is compiled weekly
using data from 1060 credit cards which are tracked on the
LowCards.com website. The Complete Credit Card index is
available here:
http://www.lowcards.com/CreditCardIndex.aspx

Rates may occasionally change due to the number of cards
being tracked.

About LowCards.com: LowCards.com ( http://www.lowcards.com )
simplifies the confusion of shopping for credit cards. It is
a free, independent website that helps consumers easily
compare credit cards in a variety of categories such as
lowest rates, rewards, rebates, balance transfers and lowest
introductory rates. It also gives an unbiased ranking and
review for each card.

The LowCards.com Complete Credit Card Index
( http://www.lowcards.com/CreditCardIndex.aspx ) is the most
objective and comprehensive resource on the Internet which
allows consumers to compare rates for all 1060 credit cards
offered in this country. Created by Hampton & Associates,
the company has been analyzing the credit card industry
and supplying objective websites on various consumer
expenses for eight years.

Yesterday, the Federal Reserve released the monthly Consumer Credit report for August that shows credit card debt is down for the eleventh consecutive month. It declined at an annual rate of 13.1% to $899.44 billion, a drop of $9.9 billion, which was the largest decline since February.

One factor in this decline is the decrease in credit card limits. Credit card companies slashed the limits for almost 58 million cardholders during the 12-month period that ended in April. But consumers also appear to be cutting back in charging items on their credit cards.

These are concerning trends for credit card issuers. Several other recent reports reinforce these concerns:

* Delinquency Rates
In August, credit card delinquencies were up again for several major issuers. Bank of America delinquencies increased to 14.54% from 13.21%. Citigroup delinquencies increased to 12.14% from 10.03%. Discover delinquencies increased to 9.16% from 8.43%.

* Third Quarter Earnings
Banks will release their third quarter earnings next week. Some analysts are expecting an 11th consecutive quarter of lower profits.

* Consumer Response
In a recent Consumer Reports survey, more than one-third of consumers polled said they’ve paid off and closed a credit card account since January 2008. Of those who did, more than half said this was in response to the actions of the banks such as raising rates, imposing fees and cutting limits.

* Further Rate Increases
Another issuer is significantly raising rates before the CARD Act provisions go into effect. Wells Fargo & Co. is currently notifying some of its cardholders that it will raise interest rates by three percentage points beginning November 30.

Experts say these numbers are not good news for credit card issuers struggling to regain profitability by raising rates and fees. Cardholders are angered, causing many to cut back on their credit card spending, while others have reacted by closing their accounts. Increased payments have forced some into delinquency, leaving the issuer with unpaid balances that they cannot collect, thus continuing the cycle.

Tomorrow, the House Financial Services Committee will be conducting hearings to move the effective date for the next provisions of the Credit Card Act from February 22, 2010 to December 1, 2009.

Speeding up the implementation date for the next stage of these credit card reforms by 12 weeks won’t be easy for a bureaucratic government. However, the timing would benefit cardholders.

“Starting these provisions on December 1 would be great for consumers since that is the beginning of the holiday shopping season when credit card spending is highest,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. “December and January are traditionally the biggest months for credit card applications. So December 1 would be a good time to start prohibiting rate increases during the card’s first year. This earlier date would also accelerate
the restrictions on marketing cards to college students under 21 so they take place before the second semester begins in January or February.”

When the CARD Act passed in May, issuers were given nine months to implement the changes that restrict some interest rate hikes, over-the-limit fees and marketing cards to people under 21.

“Congress purposefully created a long implementation period so that all parties had time to make the changes. Instead, many issuers used this time to increase interest rates, change terms, and make changes to protect themselves,” says Hardekopf. “This has hurt and angered cardholders. It has also provoked some members of Congress, and they are reacting by proposing an earlier effective date on some of the major provisions of the CARD Act. If nothing happens, members of Congress can at least say they tried to speed up the bill.”

While bumping up the date sounds like a good idea, it isn’t as simple as writing a new date in on the calendar. Banks, issuers, and federal agencies must make changes to comply with regulations. Most say they will not be able to do this by December 1.

Moving the date could also force the Federal Reserve to act faster. The Federal Reserve administers the regulations that are in the CARD Act as well as any major federal law that governs consumer credit protection. The Fed has its own process to follow.

Last week, the Federal Reserve Board released an 841-page proposal for rules that amend the Truth in Lending Act. This amends the regulations adopted by the Federal Reserve in December 2008 and incorporates the provisions of the Card Act. Comments on the proposal must be submitted 30 days after it is released.

The CARD Act gives the Federal Reserve rulemaking authority and it is implementing the major provisions of the Act in three stages on the timeline set by Congress.

* The first stage went into effect on August 20, 2009 and addressed three elements: issuers must mail the monthly bill 21 days ahead of the due date instead of 14; issuers must give consumers at least 45-days notice before increasing rates rather than 15 days; and all issuers have to give consumers the opportunity to “opt out” of a card should the rate increase.

* The second stage of the ACT is scheduled to go into effect on Feb. 22, 2010. These include regulations for rate increases, over-the-limit fees, and restrictions on applicants under 21 years of age.

* The third major stage goes into effect Aug. 22, 2010. These provisions include dealing with penalty fees and changes in gift cards.