Credit-card crackdown socks consumers

Sacramento Bee

Pull out the plastic and you may get your hand slapped.

That’s how a lot of consumers are feeling these days as credit-card companies clamp down.

From American Express to Washington Mutual, card companies are getting tougher on terms: Credit lines are being yanked. Minimum payment amounts have jumped. Interest rates are doubling. Card transactions are being declined. And consumers are fuming. Especially those who say they’ve never been late or missed a payment.

Last month, retired Sacramento, Calif., city employee Terry Moreno got a double whammy on her Chase credit card: The minimum payment more than doubled, to $486, and a new $10 monthly charge was tacked on.

Donald Divelbiss, a retired McClellan, Calif., aircraft mechanic, said his Washington Mutual credit-card interest rate is tripling, going from 9.9 percent to 29.9 percent.

And Sacramentan Karen Nordyke’s credit limit on her Wal-Mart/Sam’s Club card was cut by half to $150.

“I’ve never been late. I’ve never had a problem and all of a sudden, my credit line is down to $150,” said Nordyke. “How can you get good credit when they keep dropping your limit?”

It’s a familiar refrain from consumers across the country. And like everything these days, it’s all about the economy.

Credit-card companies are getting hammered by the same financial pressures affecting their customers. Faced with rising rates of delinquencies and defaults, they’re trying to cover their losses. Meanwhile, cash-strapped consumers and small businesses — battered by job losses, layoffs and rising costs — are tapping their credit cards for even basic spending.

Delinquencies on U.S. credit cards rose to record highs in January, according to a Fitch Ratings survey released last week. It said payments more than 60 days late rose to 3.75 percent, beating the previous record set in 1997.

“Card issuers have consumers on a much shorter leash because of the economy,” said Greg McBride, a financial analyst with Bankrate.com. To protect themselves against mounting delinquencies, he said, credit-card issuers are cutting limits, raising rates and increasing minimum payments.