Credit card rates hustle higher

— -- Even as the Federal Reserve has cut interest rates, financial institutions have sharply raised rates for credit card customers — even those who pay on time — as they grapple with losses from other bad consumer loans.

All three institutions say they reserve the right to adjust rates when customers become higher risks. Keith Givens, a spokesman for Washington Mutual, also notes that the decision to raise some rates is "an indicator of overall deterioration in the economy."

As banks deal with tough business conditions, their definition of risk is evolving: "It's a lot like beauty; it's in the eye of the beholder," says Greg McBride, senior financial analyst at Bankrate.com.

That's why even responsible consumers whose credit scores haven't changed are being hit, says Joseph Ridout, a spokesman for Consumer Action, an advocacy group.

Bill Hardekopf, CEO of LowCards.com, says the card comparison site is "seeing more aggressive fees come out, and issuers are quicker to change interest rates."

He notes that as banks lose money on mortgage loans, it's logical they would try to boost credit card profits. "If one end of your business is suffering, you look to the other end to pick up the slack."

To boost profits, some banks have also imposed higher fees on consumers for paying late, transferring credit card balances and withdrawing money from an ATM.

The danger for card holders is that as some struggle to pay bills, steep rate or fee increases could nudge them toward default. Credit card delinquencies — a precursor to defaults — have been climbing, and overall consumer loan delinquencies are at their highest since 1992.