Rosie appear in this month’s FHM UK

Credit Card Companies Find New Ways to Charge Consumers
Credit card companies are finding new ways to get their cut, despite the best efforts of Congress to protect consumers from unfair credit card practices.

The CARD Act, the bulk of which went into effect in February, gave consumers increased protections against unexpected interest rate hikes, over-limit fees and major changes to the terms of a credit card. Other rules, which go into effect on Aug. 22, will cap credit card late fees and ban inactivity fees.

However, limiting how creditors have traditionally earned their bread has forced them to come up with new ways to charge consumers. Here's what's happening:

Interest rate increases. While the CARD Act protects you from unexpected interest rate hikes, it doesn't prevent credit card companies from increasing your interest rate on future purchases as long as they give you 45 days notice.

Under the new rules, if you have a fixed-rate card, you get to hang onto your interest rate on an existing balance as long as you pay your bill on time. If you have a variable-rate card, however, your interest rate is attached to the prime rate and is subject to change anytime prime changes. A creditor can also change the margin it tacks onto prime rate or move you from a fixed-rate card to a variable-rate card as long as it gives you 45 days notice.

New credit cards will also carry higher initial rates. Under the CARD Act, credit card companies can't increase the interest rate on new accounts during the first year, so they're bumping up the initial rate to make up for the loss of revenue. Interest rates are already increasing, with the average interest rate of a new account now at 16.85 percent, roughly two percentage points higher than the average last summer, according to IndexCreditCards.com.

Credit limit decreases. Even if you've paid your bill on time for as long as you've had your card, the creditor may decrease your credit limit. With lower credit limits, credit card companies limit their losses when customers default. A creditor must notify you of a credit limit decrease, so it's important to pay attention to notices you receive.

While a lower credit limit may curb your spending - for better or worse - it can also negatively impact your credit score. A large part of a credit score is credit utilization, or how much credit you use (balances) compared to how much credit is available to you (limits) - the lower the percentage, the better. If you carry a balance, a lower credit limit lessens the amount of credit available to you, thereby increasing your credit utilization, which can take a toll on your credit score.