NEW YORK (Fortune) -- When John Dykstra got his September credit card bill from Advanta, a small-business card issuer, he was shocked: Dykstra says he has a good credit score and has never missed a payment, but his interest rate had jumped from 7.99% to 26%.
He was even more shocked by the explanation: A brochure in the mail told him he needed to be aware of the "continually changing business environment."
He's not alone. Card issuers from Bank of America to Capital One are using the economic crisis as a reason to raise rates. According to Consumer Action's 2008 survey of card companies, Bank of America, Citi, and Capital One have recently said that "market conditions" could cause them to increase APR's.
Emphasis added by me.
And:
The survey revealed that 37% of banks have increased rates, compared to 24% in April and 10% in January. They may be raising rates to compensate for losses. Advanta saw an 83% decrease in earnings in its second quarter, due in large to provisions for credit charge-offs. Capital One's profits dropped 40% and American Express saw a 38% decrease. And while Bank of America's 41% dip in earnings beat estimates, the company incurred $2.75 billion in credit card losses -- 31% more than last year.
And finally:
The timing has caused some analysts to ask if the recent slew of rate bumps isn't a response to the economic slowdown but rather a preemptive strike. "It's likely that the Fed will produce a resolution by the end of the year," says Michael Taiano, a financial services analyst at Sandler O'Neill. "The companies are trying to move in front of that."
Sherry agrees. "With the companies facing limits of being able to raise your rates, it would be surprising if they didn't increase them now," she says.
As if people didn't have enough robbery facing them daily with food and energy, now this.
There is no escape.
What's particularly ominous to me, is that earlier this week during the live televised hearings of Paulson and Bernanke, one of the representatives asked, "And what's next? I've heard the next crisis is credit cards."
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