Consumer

Credit Card Co.'s Taking Advantage Of Hard Times

Americans Have $975 Billion In Credit Card Debt

MIAMI (CBS4) ― Another sign the economy has hit hard times as more and more people are relying on credit cards to survive.

But be warned. CBS4 I-Team Consumer Investigator Al Sunshine has discovered some credit card companies are taking advantage of their customers.

According to the most recent Federal Reserve Board, Americans have racked up more than $975 billion in credit card debt; a record high and 8-percent higher than at this time last year.

"I'm finding more and more readers say to us 'I'm using my credit card because I have to make ends meet; gas, groceries, etc', it's the same thing," said Ellen Cannon, a managing editor with the South Florida based financial tracking company Bankrate.com.

While recent Federal Reserve cuts have slashed the cost of borrowing for big banks, those lower interest rates have not being passed along to credit card customers.

"They say it costs them more money to lend and to borrow money so they are raising rates across the board," added Cannon.

Late fees and other charges too are also being increased.

Like the so-called "universal default charge" hidden in your monthly credit card statement.

"That means if you are late on a payment to your FPL bill, to your AT&T you can have your credit card interest raised even if you pay your bill on time all the time," said Cannon.

Congress is now debating limiting all those extra fees.

But until that happens experts like Cannon agree that some consumers would be better off finding the lowest rate credit cards and then transferring high-interest balances to those cards.

"Our most recent survey of fixed cards found they were at about 13 to 13.5 percent, a variable rate of about 11.75 percent. But again that's the average rate, it varies depending on your credit report, credit history," said Cannon.

Also, don't forget about those so called 'cash-back' cards which reward holders for paying off charges promptly.

"Blue Cash (from American Express) is an excellent card, you only earn like one to 3% up to $6,500 annually but after $6,500 it's 5 % cash back," said Cannon.

Financial experts agree that for the best deals, credit card users have to pay off balances as soon as possible, know exactly when payments are due and avoid late or over-balance fees.

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