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Not all issuers are yet following Citigroup Inc. and American Express Co. in making broad cardholder interest-rate increases, but one analyst says most issuers probably will raise their rates, penalty amounts and fees next year in response to the tough economic climate. "Issuers tell us that reviewing interest rates and fees is one of the things they are looking at doing in the next 24 months," Adil Moussa, an analyst with Boston-based Aite Group, tells CardLine. As the economy decelerates, card issuers will be forced to raise rates and fees to offset losses from charge-offs and an overall decline in credit card spending, Moussa says. "Issuers may even return to charging annual fees as they try to find a pricing strategy that allows them to stay profitable when losses are rising and they are losing interchange-fee income from fewer overall transactions," he says. The average annual percentage rate for U.S. credit cards was 13.86% in the first week of November, according to the Web site indexcreditcards.com. Capital One Financial Corp. has not raised cardholders' interest rates recently, according to a spokesperson. And though JPMorgan Chase & Co. routinely changes credit card prices, terms and credit lines based on individual borrowers' risks, the company has not initiated any broad rate increases this quarter, a spokesperson says. Bank of America Corp. also periodically reviews borrowers' risk profiles and changes rates and terms as necessary, according to a spokesperson, but BofA declined to comment on any recent interest-rate increases.
