Credit Cards Rates Increase Despite Payment History

Feb. 12, 2008 — -- Though the Federal Reserve's recent move to cut the interest rate was meant as a reprieve for the stifled economy and consumers, some people are finding their credit card rates actually increasing.

Drastic jumps in interest rates have occurred even when a cardholder has had a record of paying on time, like in the case of Carita Marie Gamble.

The 72-year-old grandmother, who lives on a fixed income, was shocked to see her rate jump from about 16 percent to more than 26 percent last month.

"This has put me over the top financially," said Gamble, who has emphysema and had a tracheotomy.

Her monthly income of $1,100 has taken a huge hit now that her credit card bill has increased more than $400.

"I worry that she's not going to make it or she's going to have to sell her home. And we've looked into that," said Gamble's daughter Carita Marie Gamble.

The elder Gamble said she has always paid her Chase bank bill on time, even if it was just the minimum amount. The Gambles were shocked to learn the interest had increased because the mother had opened a new credit card. The bank told Gamble the new rate was permanent.

While Chase bank would not speak to ABC News on camera, Gamble's interest rate did decrease after "Good Morning America" contacted the bank. The rate is lower than it was before the hike and Gamble said she was told the interest she paid would be refunded.

"I'm not asking to make my bill go away. I did not like the way I was treated. And I feel they're money grubbers. That is not the way business is to be conducted," Gamble said.

Radical rate hikes like Gamble's are perfectly legal. In fact, since 2003 banks' penalty fees have jumped from more than $11 billion to $18.1 billion last year — a 65 percent increase.

But Sen. Carl Levin, D-Mich., is trying to change that by leading a charge in the Senate to conduct hearings and introduce legislation to stop banks from raising interest rates on customers who have paid their credit card bills on time.