Conventional wisdom says credit card holders who repay their debts on time will receive the lowest interest rates and other favorable perks from banks and credit card companies. However, according to a recent BusinessWeek article, credit card issuers are surprisingly (or not surprisingly) gouging responsible consumers as well:

"[Bank of America] sent letters notifying some responsible cardholders that it would more than double their rates to as high as 28%, without giving an explanation for the increase...Fine print at the end of the letter -- headed "Important Amendment to Your Credit Card Agreement" -- advised calling an 800-number for the reason, but consumers who called say they were unable to get a clear answer."

Sneaky Secrets
Historically, creditors raised interest rates in response to a late payment or over-limit fee, but the disturbing aspect of the BusinessWeek story is how these customers are apparently responsible, on-time payers.

On the other hand, as financial advisors, we are privy to inside information, and we're familiar with a long-standing dirty little secret of the credit card industry: Most credit card issuers have the right to raise the interest rate to any amount on any customer for any reason as long as they give the customer 15 days' notice. This "notice" can be fine print at the bottom of your monthly statement, a postcard in the middle of the month, or a letter disguised in the familiar plain envelope.

Mortgage Losses Equal a Credit Card Boon
As banks take a major hit from home foreclosures, they plan to recover a significant amount of their financial losses by collecting more fees and interest from credit card holders. Kathy Chu of USA Today wrote an excellent article about the sneaky tactics employed by our nation's largest banks:

"The [charges aren't] directly linked to delinquencies on mortgages and other consumer loans. But as banks' losses mount, they're jacking up fees and rates and tightening rules on all sorts of consumer loans — from credit cards to auto loans — to cushion their losses.

By raising rates and fees — but not boosting them so high that they push borrowers into default — lenders are seeking a delicate financial balance...They can't squeeze too hard that they're going to kill their client. But they have to squeeze more revenue out of their current portfolios."

How to Navigate the Plastic Jungle
So where do you go? What do you do?

• Understand the terms of your credit card. Call your bank. Ask them about fees, interest rates, and any other charges.
• Keep a close eye on your monthly statements. If any charges or fees look suspicious, call your bank immediately.
• Pay attention. Your credit card company is betting that you won't notice any changes to your account.
  
• Continue reading financial websites. Talk to friends and family. Create a personal network that will allow you to discuss all things personal finance.