Credit Cards Rates Rise for Some With Poor Credit

Don't own a home or plan to buy one anytime soon? Well, listen up because the fallout from the country's mortgage problems could still affect you.

Several credit card companies in recent weeks have started to jack up rates for some customers, and other lenders are tightening standards for auto and personal loans.

Banks and lenders, for the most part, are not directly citing the national tightening of credit due to rising mortgage defaults. Most attribute the changes to generally tighter credit for corporations and individuals.

But still, lenders are taking a close look -- whether new or not -- at people's credit, and that is pushing costs higher for some consumers.

The credit cards tie their rates to those set by the Federal Reserve and factor in the number of delinquencies. Since neither of those have changed, neither have credit card rates, McBride said.

Greg McBride, senior financial analyst at Bankrate.com, said that credit card rates have been flat throughout the year. But while overall rates might be flat, it doesn't mean that they're not climbing for some.

"If you start falling behind on payments you're a sitting duck for a higher rate. That's a normal course of business," McBride said. "Unlike the mortgage business, where everybody just woke to the prospect of risk three weeks ago, credit card issuers live credit risk. Their debt is unsecured so they are constantly in this mode of monitoring risk."

McBride said the credit card business has long set different rates based on each individual's credit-worthiness. And while rates for consumers with good credit might not have changed, it is possible that the companies are shifting more people with less-than-perfect credit over to the more-expensive rates.

Source:http://www.abcnews.go.com/Business/LifeStages/story?id=3520885&page=1