Credit card APRs rise despite Fed rate cuts
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Why your rate may increase
A clause in your terms and conditions may state that the issuer reserves the right to change your rate at any time for any reason. Some creditors may cite "general market conditions" when raising rates, which Hardekopf translates as "their way of saying it's a tough economy out there."

A falling credit score could also trigger a rate increase. Behavior that could cause your score to suffer includes charging high balances, paying late or missing payments.

Issuers may also analyze the revenue brought in from a customer and consider interest income or money made off interchange fees through card usage. Each issuer applies different criteria to determine customers' value.

Concerned consumers should call their issuers and ask what the policy is for increasing interest rates, says Cundiff. Credit card agreements may also indicate the reasons issuers may increase your rate.

In light of tightening credit standards, experts advise not making any moves that issuers could flag as high-risk behavior, such as applying for numerous cards, charging more than 30 percent of your credit limit -- even if you pay off the balance each month -- or transferring balances frequently.

Why your rate may increase

The interest rate on your credit card may increase because: • Your credit card issuer has a tighter credit situation. • Your credit score has declined. • You've applied for too much new credit. • You are using more than 30 percent of available credit line. • You've transferred balances to new cards too often. • Your credit card company practices universal default.

What to do if your rate rises
In these tumultuous times, read every piece of mail from your card issuer, even if it looks like junk mail. A rate adjustment notice may include an option to decline the increase -- by paying off your balance at the old rate and closing the account. You can also check your statement to see if your rate has climbed.

"If it has increased, get on the phone and negotiate," says Gerri Detweiler, credit adviser for Credit.com and author of "The Ultimate Credit Handbook."

Before calling, shop around for competitive offers that you can cite, and check your FICO credit scores. A significant drop in your scores can cause a rate increase.

If you can't get a reduction, work on paying down the balance or transfer it to another low-interest card.

Those considering balance transfers should watch out for pitfalls, such as balance transfer fees that don't have a maximum cap. Learn about other drawbacks by reading the Bankrate feature "5 balance transfer trip-ups."

What the future holds
Cundiff predicts more tightening of credit standards in the coming months and says the possibility exists for issuers to halt the granting of new lines of credit, and to constrict or stop increasing existing lines of credit.

"The credit card industry is extremely competitive," notes Hardekopf, saying that if one card issuer increases fees or rates, competitors may follow suit.

Make sure that if your rate jumps, you try to negotiate the rate or shop around for a lower-rate card.

In the long term, Congress has proposed bills aimed at credit card reform. Rep. Carolyn Maloney, D-N.Y., introduced the Credit Cardholders' Bill of Rights last week, which would abolish many egregious credit card abuses. Among key revisions, the legislation would prohibit applying rate hikes to prior balances, increase advance written notice to 45 days (from 15) and establish a universal deadline before payments are considered late -- 5 p.m. EST on the due date.

Jeannine Kenney, a senior policy analyst at Consumers Union, the nonprofit publisher of Consumer Reports, called the proposal "an important step forward."

She argues that although people generally know that paying late too often will trigger a rate increase, consumers aren't told that getting too close to the limit or making minimum payments or slightly more than the minimum could also prompt a rate hike. "Consumers think they're playing by the rules and then find themselves stuck with the rate hikes," she says. Kenney seeks reform that would prevent issuers from raising interest rates for arbitrary reasons.