Credit Card Rates: Banks Plan To RAISE Rates, Annual Fees

Note from Greetings:
Greedy.. with help from their friends in the GOP, who blocked Senator Dodd's bill to freeze these same increases. Whose side are they on? Not yours or mine.

by Jeannine Aversa, AP and Huffington Post, November 11, 2009

WASHINGTON — Banks expect to tighten terms on credit cards in response to a new law that aims to protect consumers from sudden rate hikes, the Federal Reserve said Monday.

A quarterly survey by the Fed found that many banks expect to increase rates, reduce credit limits and raise annual fees for both prime borrowers – those with sound credit histories _as well as more risky "non-prime" borrowers, who have tarnished credit. Banks also expected to raise minimum credit scores for non-prime borrowers, the Fed said.

Banks already have been pushing through rate increases in anticipation of the new rules. Because of that, the House recently approved legislation to speed up the law's effective date and have the provisions take effect immediately, although prospects are dim for Senate passage.

Most of the new credit card provisions are slated to take effect on Feb. 22.

Many people and businesses are still having trouble obtaining loans, a force that is likely to restrain the economic recovery.

It's a delicate dance for policymakers in Washington. They want banks to boost lending, but no one wants a return to the lax standards that many blame for contributing to the worst financial crisis since the 1930s.

The Fed's survey also found that nearly 26 percent of banks said they tightened standards over the past three months on home mortgages for prime borrowers. That was up slightly from almost 22 percent in the survey released in August, but is significantly below the peak of about 75 percent that reported tightening standards for such loans in July 2008.

For the third straight quarter, banks reported that demand for such loans grew, the Fed said.

Just over 30 percent of banks reported tightening standards on nontraditional mortgages, such as adjustable-rate loans with multiple-payment options. That's down from nearly 46 percent in the previous survey.

Information about what impact the new credit card law will have on banks came from a special one-time question in the new survey.

Banks, in another special question, said they were extending commercial real-estate loans more often than refinancing them. They cited lower originations and decreased draw on revolving credit lines as main reasons for a decline in commercial and industrial loans this year.

Commercial and industrial loans fell to $1.37 trillion at the end of October, from $1.48 trillion in July, according to a separate Fed report. Commercial real-estate loans dropped to $1.66 trillion, from $1.69 trillion in July. Consumer loans fell to $847 billion, from $852 billion.

Last-Minute Credit Card Tricks

The Credit Card Accountability, Responsibility and Disclosure Act, signed into law in May, gave credit card companies a leisurely timetable — as long as 15 months — to phase out predatory practices used to bleed consumers. Not surprisingly, the companies have exploited this generosity by driving already outrageous interest rates still higher and imposing fees that are pushing struggling families further into debt.

Congress can end this injustice by moving up the deadline, accelerating reform and helping consumers.

Some of the worst (and most common) abuses are now scheduled to be outlawed in February. These include the practice of arbitrarily raising interest rates, penalizing customers when they are late paying a bill unrelated to the credit card — so-called universal default — and charging customers interest on debt that they paid off a month or more earlier.

The banks claimed that they needed the long lead time to rework their computer processing system. Consumer advocates warned that this would invite banks and credit card companies to wring as much as possible out of consumers before the law finally took effect.

They were right.

A forthcoming study from the Pew Charitable Trusts’ Safe Credit Cards Project shows that credit card interests rates — already too high — rose by 20 percent in the first two quarters of this year, even though the cost of lending went down as a result of low federal interest rates. In testimony before Congress earlier this month, one consumer advocate cited case after case of struggling consumers who had seen their credit card rates more than double for no apparent reason, even when they had faithfully paid on time.

A House bill introduced by Representative Carolyn Maloney, a Democrat of New York, and Representative Barney Frank, a Democrat of Massachusetts, would halt this exploitation by making the act effective on Dec. 1. The Senate needs to take the same approach.

Guns, Geysers and Mr. Reid

By GAIL COLLINS, NY Times

Whenever life feels dark and difficult, it’s always helpful to think about people who have it worse. Be thankful, for instance, that you’re not one of those co-pilots for regional airlines who make $16,000 a year and have to commute from Seattle to Newark. Or a person currently riding in a plane with a $16,000 co-pilot in the cockpit. Be thankful you aren’t a Chrysler dealer. Or Senate Majority Leader Harry Reid.

Nothing is simple if you’re Harry Reid. This week the Senate was working on a consumer rights bill for credit card holders when Tom Coburn, an Oklahoma Republican, suddenly proposed an amendment to allow people to carry loaded guns in national parks.

This would seem relevant only if consumers are worried that they will not be able to use their American Express at a souvenir stand in Yellowstone, and will need to hold up the cashier in order to bring home a much-anticipated geyser refrigerator magnet.

Coburn said it was not a “gotcha” aimed at forcing the opposition into a corner on a hot-button issue, although when you say you’re offering an amendment “to protect innocent Americans from violent crime in national parks and refuges” I think you are kind of stacking the deck.

But one way or another, the Democrats clearly did feel trapped into placating the gun lobby. Twenty-seven of them wound up voting yes on an amendment that would arm the tourists and make final passage of the credit card bill more complicated. Including Reid.

Then Reid tried to get the Senate to confirm David Hayes, Obama’s nominee to be deputy secretary of the interior. This proved to be impossible even though Hayes was both uncontroversial and a man whose qualifications for the job include having already been deputy secretary of the interior. But no, the Republicans threatened a filibuster because Senator Robert Bennett of Utah was ticked off at the Department of the Interior for canceling the sale of oil and gas leases on public lands in his state.

Secretary of the Interior Ken Salazar told Bennett that he’d review the leases and could probably reinstate some of the sales, but that it would be a lot easier to do all that if he had, um, a deputy. No deal.

This is exactly the sort of procedural roadblock that you need 60 votes to overcome, and people are beginning to ask why the majority leader can’t handle these things since Arlen Specter’s defection gave the Democrats 60 votes. Do not say this to Harry Reid! For one thing, Al Franken is still in court in Minnesota, and when you ask the Republicans how long they’re going to litigate the results of an election that took place last November, they murmur vaguely about how Rome wasn’t built in a day.

Anyhow, Ted Kennedy is sick and Robert Byrd is 91 and it’s a miracle some of the other ones can find their way to the Capitol. Even if you eventually get all 60 Democratic votes in the same room, how do you get them to do the same thing? You will remember that when Specter came over, Democrat Ben Nelson of Nebraska instantly said: “They might have a 60-member majority. That doesn’t mean they have 60 votes.” Reid must have found the point Nelson was making less chilling than the fact that the senator kept referring to his own party as “they.”

Next week, some supporters of Dawn Johnsen are hoping that Reid will take up Johnsen’s nomination to run the Office of Legal Counsel, the place where the president goes for advice on whether whatever he wants to do is legal. This causes the majority leader’s office to hold its collective head and moan.

Johnsen actually is controversial. She was once a lawyer for the National Abortion Rights Action League. Twenty years ago, she put a footnote in a legal brief saying that forcing a woman to give birth to a child against her will was “disturbingly suggestive of involuntary servitude.” This has been creatively translated into the charge that Johnsen, the mother of two, believes pregnancy is akin to slavery.

Also, she has spoken out so forcefully against the Bush administration’s politicizing the Office of Legal Counsel that Republicans are claiming she’d ... politicize the office.

The inevitable filibuster threats have been made. Since the Office of Legal Counsel doesn’t actually have anything to do with abortion, it might be reasonable for Reid to expect that anti-choice Democratic senators could throw him a vote on the procedural issues and then oppose the actual nomination, when Johnsen would only need 51 votes and Reid would not require their help.

That, however, would presume a degree of consistency that is hard to get in a place that holds one important aspect of credit card reform is giving people the ability to pack a handgun at the Grand Canyon.

S.D. senators wary of credit card reform plan

May 14, 2009

LEDYARD KING
Argus Leader Washington Bureau

WASHINGTON - Both of South Dakota's senators are expected to vote against a sweeping credit card reform bill unless significant changes are made to protect industry jobs in the state.

Democrat Tim Johnson and Republican John Thune told reporters Wednesday they've been talking with Senate banking committee leaders about the need to ensure that the roughly 20,000 workers in South Dakota tied to the industry don't lose their jobs.

"I'm hopeful that there will be language that protects South Dakota jobs," Johnson said. "This is a bipartisan bill, so the possibility of blocking this is not great."

Johnson and Thune sided with 58 other senators Wednesday in a procedural vote against an amendment to cap interest rates on credit cards at 15 percent.

The Senate bill is considered to have stronger protections for consumers than legislation that passed the House last month and than Federal Reserve regulations that would take effect July 1, 2010.

It would give consumers 45 days' notice before rate increases and allow them to pay by phone without additional fees. It would prohibit rate increases in the first year after an account is opened, prohibit interest charges on paid-off balances from billing in the previous cycle and protect young people from aggressive solicitations.

President Obama strongly supports credit card reform and wants legislation on his desk by Memorial Day weekend.

Thune, Johnson and Rep. Stephanie Herseth Sandlin, the lone Democrat to vote against a House credit card reform bill last month, say the Federal Reserve rules should be given a chance to take effect because they were crafted after years of careful study and treat both lenders and borrowers fairly.

Thune said the plan in Congress is "swinging the pendulum too far in one direction. It will put a lot of jobs in South Dakota in jeopardy if it passes in its current form. We're trying to work with the sponsors of the bill to see if we can get some of those issues addressed."

The three members of South Dakota's delegation also say the Senate and House versions would penalize responsible consumers and restrict access to credit at a time when America's struggling economy needs a boost.

Contributing: Nicole Gaudiano, Gannett Washington Bureau. Contact Ledyard King at lking@ gannett.com.

Carper helps banks kill credit card rate cap

Kaufman also votes against 15% limit to protect consumers

By NICOLE GAUDIANO
News Journal Washington Bureau, Delawareonline

WASHINGTON -- A plan for a national cap on credit card interest rates was defeated Wednesday by the Senate.

The proposal to cap rates at 15 percent would have been a significant change for Delaware, which hasn't had usury laws on the books since they were abolished in 1981.

"In a free-enterprise system, I'm not sure that [interest rate caps are] what we need to do," said Sen. Tom Carper, D-Del. He and Sen. Ted Kaufman, D-Del., were among 60 senators who voted to block a vote on the measure, offered as an amendment to a larger credit card reform bill.

However, Democratic Sen. Chris Dodd of Connecticut, chairman of the Senate Banking Committee, said Wednesday's vote shouldn't be interpreted as a rejection of the concept. An analysis of which rate caps would be appropriate for which institutions under which financial circumstances would be helpful, he said.

"It's a confusing issue, except for the fact that most of our constituents and millions of Americans would like to see some restraint," Dodd said. "I don't know how you possibly could explain why some institutions get away with rates that are literally triple digits."

The American Bankers Association opposes rate caps, as well as the overall credit card reform legislation, expected to come up for a vote in the Senate this week. It says the bill would jeopardize access to credit. But consumer groups say it would put an end to abusive practices.

The Senate bill is considered to have stronger protections for consumers than either legislation that passed the House last month or Federal Reserve regulations. It would give consumers 45 days' notice before rate increases and allow them to pay by phone without additional fees. It would prohibit rate increases in the first year after a credit card account is opened, prohibit interest charges on paid-off balances from billing in the previous cycle, and protect young people from aggressive solicitations.

Unlike the House bill or Fed regulations, the bill would prohibit retroactive interest rate increases until an account is 60 days past-due. It also would be implemented in nine months. The House bill would take effect in a year. The Fed's regulations would take effect by July 1, 2010.

President Barack Obama has strongly advocated credit card reform and has asked to have legislation on his desk by Memorial Day weekend

Senate Rejects a 15% Ceiling on Credit Card Interest Rates

So.. the Democrats and Republicans want to LOOK like they're looking after you. But really.. they're still looking after the banks. Democrats and Republicans alike... are bowing to Wall Street and not the working person. In years past.. 30 percent was considered loan sharking, and a crime. Now, both parties have made it legal. I will look for the 33 Senators who voted for it, to give them credit.. and for the rest who voted against it... the ones who are clearly still in the pocket of the banks and credit card companies. Kudos to Senator Sanders for sticking up for the working person. (From Greetings)

By CARL HULSE, NY Times

Despite complaints that banks and credit card companies are gouging customers by charging outrageous interest rates, the Senate on Wednesday turned back an effort to cap interest rates at 15 percent.

The proposal by Senator Bernard Sanders, the Vermont independent, drew only 33 votes and needed 60. A bipartisan group of 60 senators opposed it, though the Senate pushed ahead with other restrictions on credit cards. Some Democrats and consumer groups have said that an interest cap is needed to put real teeth into an otherwise solid bill.

The bill still contains provisions that would prohibit companies from raising interest rates on existing balances unless a card holder was 60 days behind, and then would require the rate to be restored to its previous level if payments were on time for six months. Consumers would have to be notified of rate increases 45 days in advance. Companies would not be allowed to charge late fees if they were late in processing a payment.

Other backers of the measure calculated that an interest rate ceiling would doom the popular legislation. The banking industry, which had some heavyweight representatives monitoring the vote, warned that an interest rate limit could cause a sour reaction in the financial markets. But Mr. Sanders said the card companies and banks were engaged in conduct that could get others hauled into court. He said one-third of all credit card holders are paying interest above 20 percent and as high as 41 percent.

“When banks are charging 30 percent interest rates, they are not making credit available,” said Mr. Sanders. “They are engaged in loan sharking.”

Curbing Credit Card Predators

NY Times Editorial

Federal regulators are finally doing something about the unfair and deceptive credit card practices that have helped to keep millions of Americans permanently mired in debt. New rules issued last week will limit or prohibit some of the most blatant abuses. But the next Congress must do more if Americans are to get fair, clear credit card rules that allow them to make informed spending decisions.

In recent years, credit card companies have stealthily adopted a variety of billing strategies that are designed to maximize penalties and fees, meanwhile driving up interest rates to 25 percent or higher. The companies hook cardholders with attractively low teaser interest rates — while reserving the right to raise those rates at any time and for any reason.

To make matters worse, credit card contracts are often 30 pages long and written in language even lawyers find hard to understand.

The billing strategies are designed to lure cardholders into the debt trap and keep them there. Under a strategy known as universal default, for example, rates can be raised — even retroactively, on old purchases — when cardholders fail to pay bills not related to the credit card account. Congress, which is considering several bills to curtail unfairness, should outlaw this.

The new rules don’t forbid universal default. But they would at least prohibit retroactive rate increases, unless the cardholder is more than 30 days late on the credit card payment itself. Another change announced last week prohibits the widespread practice of charging cardholders interest on debts they have already paid.

Another important change limits the usurious fees that companies often charge to cardholders simply because they have poor credit histories. These fees, consumer advocates say, can amount to half of the credit these cardholders are offered.

The new rules do not take effect until 2010. That’s not soon enough. Congress could make these and other changes immediate by promptly passing a credit card reform package.

Stop Being Stupid

By BOB HERBERT

I’ve got a new year’s resolution and a new slogan for the country.

The resolution may be difficult, but it’s essential. Americans must resolve to be smarter going forward than we have been for the past several years.

Look around you. We have behaved in ways that were incredibly, astonishingly and embarrassingly stupid for much too long. We’ve wrecked the economy and mortgaged the future of generations yet unborn. We don’t even know if we’ll have an automobile industry in the coming years. It’s time to stop the self-destruction.

The slogan? “Invest in the U.S.” By that I mean we should stop squandering the nation’s wealth on unnecessary warfare overseas and mindless consumption here at home and start making sensible investments in the well-being of the American people and the long-term health of the economy.

The mind-boggling stupidity that we’ve indulged in was hammered home by a comment almost casually delivered by, of all people, Bernie Madoff, the mild-mannered creator of what appears to have been a nuclear-powered Ponzi scheme. Madoff summed up his activities with devastating simplicity. He is said to have told the F.B.I. that he “paid investors with money that wasn’t there.”

Somehow, over the past few decades, that has become the American way: to pay for things — from wars to Wall Street bonuses to flat-screen TVs to video games — with money that wasn’t there.

Something for nothing became the order of the day. You want to invade Iraq? Convince yourself that oil revenues out of Baghdad will pay for it. (Meanwhile, carve out another deficit channel in the federal budget.) You want to pump up profits in the financial sector? End the oversight and let the lunatics in the asylum run wild.

For those who wanted a bigger house in a nicer neighborhood, there were mortgages with absurdly easy terms. Credit-card offers came in the mail like confetti, and we used them like there was no tomorrow. For students stunned by the skyrocketing cost of tuition, there were college loans that could last a lifetime.

Money that wasn’t there.

Plenty of people managed their credit wisely. But much of the country, including many of the top government officials and financial titans who were supposed to be guarding the nation’s wealth, acted as if there would never be a day of reckoning, a day when — inevitably — the soaring markets would crash and the bubbles explode.

We were stupid in so many ways. We shipped American jobs overseas by the millions and came up with the fiction that this was a good deal for just about everybody. We could have and should have taken the time and made the effort to think globalization through, to be smarter about it and craft ways to cushion its more harmful effects and to share its benefits more equitably.

We bought into the dopey idea that you could radically cut taxes and still maintain critical government services — and fight two wars to boot!

We were living in a dream world. The general public, and to a great extent the press, closed its eyes to the increasingly complex and baffling machinations of the financial industry, which kept screaming that oversight would ruin everything.

We should have known better. It didn’t require a genius (or even an economics degree) to understand a crucial point that popped up some years ago in a front-page article in The Wall Street Journal: “Markets are a great way to organize economic activity, but they need adult supervision.”

Did Alan Greenspan not understand that? Bob Rubin? Larry Summers?

Now that the reality of a stunning economic downturn has so roughly intervened, we at least have the option of being smarter going forward. There is broad agreement that we have no choice but to go much more deeply into debt to jump-start the economy. But we have tremendous choices as to how we use that debt.

We should use it to invest in the U.S. — in a world-class infrastructure (in its broadest sense) to serve as the platform for a world-class, 21st-century economy, and in a system of education that actually prepares American youngsters to deal successfully with the real world they will be encountering.

We need to invest in a health care system that improves the quality of American lives, enhances productivity, puts large numbers of additional people to work and eases the competitive burden of U.S. corporations.

We need to care for our environment (if long-term survival means anything to us) and get serious about weaning ourselves from foreign oil.

And, finally, we need to start living within our means and get past the nauseating idea that the essence of our culture and the be-all and end-all of the American economy is the limitless consumption of trashy consumer goods.

It’s time to stop being stupid.

Usury, or the (New) American Way?

Merriam-Webster's Dictionary
usury
One entry found.
usury Main Entry: usu·ry Pronunciation: \ˈyü-zhə-rē, ˈyüzh-rē\
Function: noun
Inflected Form(s): plural usu·ries
Etymology: Middle English usurie, from Anglo-French, from Medieval Latin usuria, alteration of Latin usura, from usus, past participle of uti to use
Date: 14th century
1archaic : interest
2: the lending of money with an interest charge for its use; especially : the lending of money at exorbitant interest rates
3: an unconscionable or exorbitant rate or amount of interest; specifically : interest in excess of a legal rate charged to a borrower for the use of money

Note from Greetings:
As you read the following article on this holy of times, please bare in mind the above definition of "usury", and think of the credit card companies who are now charging upwards of 30 percent interest on their debts. This, to me, is creating a living "debtors' prison", not seen since the times of Charles Dickens - or at least John D. Rockefeller.

Having grown up in the 50's and 60's, I remember my parents, who grew up in the 20's and 30's, talking about the people who were out of work, losing their homes, and who were in debt to people my parents called "loan sharks"... people, usually criminals, who would give loans to those who could not afford them, and then charge rates my parents found incredible... 30 percent or more! (Hmmm... can you hear me Bank of America, Advanta, and the others?) Then, it was thought to be criminal.

How did we get to a point where the banks have now taken on that outlandish rate of interest, and are beginning to foreclose on mortgages? How have we arrived at a time that is starting to remind me of the oncoming of the great depression, which left millions homeless, jobless (or with lesser jobs), and in neverending debt.

And how does one get out of debt at 30 percent interest on WalMart wages? How did Congress and this President allow the banks to first convince the government to pass a bill not allowing Americans to declare bankruptcy, and then to get government to look the other way when the banks raised their interest rates to usurous levels, often depriving people of food and shelter.

And how did they allow jobs of Americans to go overseas (or manipulate them to go overseas), leaving those in debt with paltry wages and often without insurance, giving them only a credit card with which to pay many of those debts?

And ... what will Congress or the next President do about this?

I, personally, look forward to a future where I can wish everyone Merry Christmas, knowing that they have a roof over their heads, food to eat, and a government that will protect them from things we thought only happened in the times of Dickens or the Great Depression. But, still... Merry Christmas... to all...and to all a good conscience. (AP article follows)


Unpaid Credit Cards Bedevil Americans

By RACHEL KONRAD and BOB PORTERFIELD, Associated Press Writers. December 23rd, 2007

SAN FRANCISCO - Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come.

An Associated Press analysis of financial data from the country's largest card issuers also found that the greatest rise was among accounts more than 90 days in arrears.

Experts say these signs of the deterioration of finances of many households are partly a byproduct of the subprime mortgage crisis and could spell more trouble ahead for an already sputtering economy.

"Debt eventually leaks into other areas, whether it starts with the mortgage and goes to the credit card or vice versa," said Cliff Tan, a visiting scholar at Stanford University and an expert on credit risk. "We're starting to see leaks now."

The value of credit card accounts at least 30 days late jumped 26 percent to $17.3 billion in October from a year earlier at 17 large credit card trusts examined by the AP. That represented more than 4 percent of the total outstanding principal balances owed to the trusts on credit cards that were issued by banks such as Bank of America and Capital One and for retailers like Home Depot and Wal-Mart.

At the same time, defaults _ when lenders essentially give up hope of ever being repaid and write off the debt _ rose 18 percent to almost $961 million in October, according to filings made by the trusts with the Securities and Exchange Commission.

Serious delinquencies also are up sharply: Some of the nation's biggest lenders _ including Advanta, GE Money Bank and HSBC _ reported increases of 50 percent or more in the value of accounts that were at least 90 days delinquent when compared with the same period a year ago.

The AP analyzed data representing about 325 million individual accounts held in trusts that were created by credit card issuers in order to sell the debt to investors _ similar to how many banks packaged and sold subprime mortgage loans. Together, they represent about 45 percent of the $920 billion the Federal Reserve counts as credit card debt owed by Americans.

Until recently, credit card default rates had been running close to record lows, providing one of the few profit growth areas for the nation's banks, which continue to flood Americans' mailboxes with billions of letters monthly offering easy sign-ups for new plastic.

Even after the recent spike in bad loans, the credit card business is still quite lucrative, thanks to interest rates that can run as high as 36 percent, plus late fees and other penalties.

But what is coming into sharper focus from the detailed monthly SEC filings from the trusts is a snapshot of the worrisome state of Americans' ability to juggle growing and expensive credit card debt.

The trend carried into November. As of Friday, all of the trusts that filed reports for the month show increases in both delinquencies and defaults over November 2006, and many show sequential increases from October.

Discover accounts 30 days or more delinquent jumped 25,716 from November 2006 and had increased 6,000 between October and November this year.

Many economists expect delinquencies and defaults to rise further after the holiday shopping season.
Mark Zandi, chief economist and co-founder of Moody's Economy.com Inc., cited mounting mortgage problems that began after this summer's subprime financial shock as one of the culprits, as well as a weakening job market in the Midwest, South and parts of the West, where real-estate markets have been particularly hard hit.

"Credit card quality will continue to erode throughout next year," Zandi said.

Economists also cite America's long-standing attitude that debt _ even high-interest credit card debt _ is not a big deal.

"The desires of consumers to want, want, want, spend, spend, spend _ it's the fabric of our nation," said Howard Dvorkin, founder of Consolidated Credit Counseling Services in Fort Lauderdale, Fla., which has advised more than 5 million people in debt. "But you always have to pay the piper, and that can be a very painful process."

Filing for bankruptcy is no longer a solution for many Americans because of a 2005 change to federal law that made it harder to walk away from debt. Those with above-average incomes are barred from declaring Chapter 7 _ where debts can be wiped out entirely _ except under special circumstances and must instead file a repayment plan under the more restrictive Chapter 13.

Personal finance coaches say the problem is most grave for individuals who are months delinquent or already in default _ like Kenneth McGuinness, a postal clerk from Flushing, N.Y.

His credit card struggles began nine years ago, when he charged his son's college tuition and books. He thought he was being clever: His credit card's 6 percent "teaser" interest rate was lower than the 8.6 percent interest on a college loan.

McGuinness, 61, soon began using Citibank and Chase cards for food, dental work and copays on doctor visits and minor surgeries. Interest rates surged to 30 percent. Now he's $37,000 in debt and plans to file for bankruptcy in February.

"I tried to pay what I could and go after the high-interest accounts first," McGuinness said. "But it just kept getting higher and higher, and with late charges and surcharges I was going backward."

In the wake of the jump in defaults on subprime mortgage loans made to borrowers with poor credit histories, banks have been less willing to allow consumers to consolidate credit card debt into home equity loans or refinanced mortgages. That is leaving some with no option but to miss payments, economists said.

Investors also are backing away from buying securitized credit-card debt, said Moshe Orenbuch, managing director at Credit Suisse. But that probably has more to do with concerns about the overall health of the U.S. economy, he said.

"It's been getting tougher to finance any kind of structured finance _ mortgages, automobile loans, credit cards, student loans," said Orenbuch, who specializes in the credit industry.

Capital One Financial Corp. reported that delinquencies and defaults are highest in regions where troubled mortgages are concentrated, including California and Florida.

Among the trusts examined, Bank of America Corp. had the highest delinquency volume, with overdue accounts valued at $5 billion. Bank of America defaults in October were almost 200 percent higher than in October 2006.

A spokesman for Charlotte, N.C.-based Bank of America declined to comment.

Other trusts _ including those linked to Capital One, American Express Co., Discover Financial Services Co. and those containing "branded" cards from Wal-Mart Stores Inc., Home Depot Inc., Lowe's Companies Inc., Target Corp. and Circuit City Stores Inc. _ also reported striking increases in year-over-year delinquency and default rates for October. Most banks and other financial institutions holding credit card debt on their own books also reported double-digit increases in delinquencies.

The one exception in October was JPMorgan Chase & Co.'s credit card trust, which reported declines in both delinquencies and defaults. A Chase spokesperson attributed this to its focus on prime borrowers and aggressive account management.

By contrast, Capital One executives told analysts last month that the company projected 2008 write-offs of credit card debt to be at least $4.9 billion. This projection, analysts were told, took into account growing delinquencies and potential effects if the housing market continued its downward slide.

Capital One spokeswoman Julie Rakes said the increase in delinquencies could be due to an accounting change last summer, which shortened the grace period between when statements were issued and the due date.

Capital One also reported that the number of accounts 90 days or more in arrears had increased between October and November. More than 1.2 million of Capital One's 30 million accounts were either delinquent or in default.

Many personal financial coaches expect this trend to accelerate in 2008 _ particularly among people who took out untraditional loans whose interest rate has risen, requiring owners to pay mortgages several hundred dollars more than just a year ago.

"You're looking at more and more distress _ consumers desperately trying to preserve their credit lines, but there's nowhere else to go," said Robert Manning, director of the Center for Consumer Financial Services at Rochester Institute of Technology. "It's like a game of dominoes."

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.