Credit Card Companies Raise Rates and Fees, Even as Consumers Seek Debt Relief

PHOENIX, AZ, Feb 09 (MARKET WIRE) --
With the economy in a recession and unemployment skyrocketing -- the
number of jobs lost in 2008 is the most that have disappeared in a single
year since 1945 -- debt-laden consumers are struggling to make their
credit card payments as never before, increasingly looking to debt relief
programs and services for help.

Approximately 12 million Americans are still paying off holiday debt from
2007, a recent Consumer Reports survey found, and 5 percent of all credit
card holders are 30 days or more behind on their payments.

If current trends continue, according to projections from Innovest, as
more consumers turn to bankruptcy and debt relief programs to help them
discharge some of their debt, it will become impossible to collect $1 out
of every $10 owed on credit cards, and credit card companies will be
forced to write off nearly $100 billion in unpaid credit card debt over
the next year.

In response to these record numbers of current and projected defaults,
credit card companies are raising interest rates to increase their revenue
while reducing credit lines to mitigate their risk.

American Express and Citigroup have already bumped up interest rates for
thousands of "high-risk" cardholders by as much as 2 to 3 percent.
American Express and others are also scaling back credit lines or
cancelling them altogether, even for consumers with good credit scores
and solid credit histories.

"Most banks are cutting their credit limits," says Carol Kaplan,
spokeswoman for the American Bankers Association. "People with credit
scores of at least 720 ... are not immune. [Banks] are doing it to
everyone."

By federal estimates, says Dean Wegner, a consumer credit counselor,
credit card issuers will be cutting credit limits by as much as $1
trillion -- or by about $2,000 per consumer -- in 2009.

But higher rates and fees may actually be causing cardholders to fall
behind on their payments instead of encouraging them to keep their account
current, some industry experts feel.

"You raise their monthly payments," says Robert Manning, author of Credit
Card Nation. "[T]his is going to drive people straight into bankruptcy."

About Think Debt Relief

Think Debt Relief, www.ThinkDebtRelief.com, is an experienced debt relief
company offering debt settlement, credit counseling, and mortgage loan
modification services.

Copyright 2009, Market Wire, All rights reserved.

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