As consumers look forward to new credit card rules intended to make their lives easier, many are also finding that the cost of using their cards is rising.
Efforts to compensate for the losses expected from the new federal credit card rules -- some of which take effect Thursday -- are part of what's driving card companies to raise interest rates and fees, some say.
"Conventional wisdom says that if one of your large revenue sources is threatened in the future," said Samir Kothari, the co-founder of credit card analysis site BillShrink.com, "you may choose to find other ways to make up that money."
Some credit card industry and company representatives, meanwhile, downplay the impact of the new rules -- included in the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 -- on card rates.
"It's not the leading factor, it's not the only factor, it's a factor," said American Express spokeswoman Desiree Fish.
Scott Talbott of the Financial Services Roundtable, the trade group that represents some of the country's biggest credit card companies, said that rising rates are due to the treacherous economy, higher borrowing costs for banks, and consumers with riskier profiles.
The idea that banks are raising their rates in response to credit reform is "a red herring," he said.
No one disputes that rates are on the climb.
A recent study of 150 credit cards by BillShrink found that interest rates on purchases and balance transfers for card holders have grown nearly 20 percent from January to July of this year.
Among the companies raising rates the most, according to the study, were:
Capital One, raised purchase and balance transfer rates by an average of 50 percent, cash advance rates by 20 percent and penalty rates by 30 percent.
Citi, which increased its purchase and balance transfer rates by an average of 27 percent. Citi card holders with poor credit have seen their rates increase at least 50 percent.
Discover, which increased its purchase and balance transfer rates by an average of 30 percent. (Discover told ABCNews.com that the company's online balance transfer rate is zero for the first 9 months following the transfer.)
US Bank has increased its purchase and balance transfer rates by an average of 33 percent.
In an e-mail to ABCNews.com, Discover framed its rate hikes more in terms of business "soundness" than revenue. Rate increases in response to changes in the law "allows us to preserve the safety and soundness of our business while continuing to lend to credit-worthy consumers," said company spokeswoman Laura Gingiss.
Capital One said its rate hikes were due to "external challenges" and the economic downturn, while Citi attributed increases to regular reviews of customer accounts as well as "the dramatically higher cost of doing business."
Bank of America and American Express were found by BillShrink to have raised their rates the least, though it's unclear how AmEx would fare were the study updated to include August information: Some American Express customers received letters earlier this month informing them that the company was raising their rates on purchases and cash advances as well as raising late fees.
AmEx declined to disclose how many customers had received the letters. Rates, AmEx spokeswoman Desiree Fish said, increased by an average of 4 percentage points for proprietary American Express cards and 2 percentage points for its "co-branded" cards -- cards offered in partnership with a specific company, such as Delta Airlines, Costco and Starwood Hotels.
New Rules Mean Losses for Credit Card Companies
The rules being implemented Thursday are the first phase of the new credit card regulations signed into law this past spring by the president. Most of the rules included in the legislation won't take effect until this February.
Experts say that even the few rules taking effect tomorrow will cost credit card companies money. One new card company requirement stipulates that card holders be given at least 45 days' notice before a rate hike. Such advance warning may allow some card holders enough time to pay off or at least pay down more of their balance before they're hit with a costlier, higher rate -- meaning less interest rate revenue for the card company.
Another rule requires companies to send bills at least 21 days before they're due. This, some say, could make it easier for consumers to pay on time and avoid late fees or pay off larger portions of their balances, thus shrinking their interest payments down the road.
It's unclear how much companies stand to lose from the law -- it's especially difficult to estimate that because card company losses are so steep already, said Peter Garuccio of the American Bankers Association.
The companies, he said, are being crunched by their own borrowing costs.
A major source of funding for the companies and banks that issue cards was once the securitization market, where banks packaged and sold off assets -- including credit card loans -- to investors. Today, that market is dry and "getting money from investors is a much more expensive proposition," he said.
In the meantime, there's no question that the card companies have been aggressive in trying to find ways to raise revenue, said Adam Levin, of the credit education site Credit.com.
Levin noted that American Express announced it was dropping its over-the-limit fees -- a move the card company made in response to the reforms governing such fees -- at the same time that it notified consumers of rate hikes.
"Even when they do something that looks like good PR move, they're doing something else (too)," he said. "You always have to keep your eye on the entire fee landscape. Just because one is altered doesn't mean they don't make it up with others."