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Even good customers like Abigail Duly of New London, Minn., are getting hit with credit card interest rate hikes.

Duly has an outstanding credit score of about 800, a low balance on her Capital One credit card and a perfect payment history. 

"Doggone it all," she said. "I have done everything correctly."

Two weeks ago, Duly said Capital One told her it will hike the interest rate on her card from 9.9 percent to 16 percent.

"I'm in a good job," she said. "I have paid for my car. I've done everything that you're supposed to do. So, I feel like I deserve my 9.9 [percent]."

Duly is hardly alone. Card companies are closing accounts, cutting credit lines, slashing reward programs and, of course, raising interest rates and fees for many consumers.

Run afoul of a credit card company's rules these days and you risk severe punishment. Miss a payment on some credit cards, and your annual interest rate jumps to 30 percent or higher.

Credit card issuers admit their customers might be bit peeved about such changes.

"We hope our cardholders will stay with us," said
Pam Girardo, a spokeswoman for Capital One. 

She says the company has to raise rates, even for people like Abigail Duly, given the risks faced in this recession.

With unemployment rising and hundreds of thousands of jobs disappearing each month, credit card companies are really worried about a big jump in customers not paying their bills. 

Girardo said it's no secret the credit and lending environments are challenging. 

"So account changes like this are necessary for us to appropriately account for the increased risk of lending in an economic downturn, since these are unsecured loans," she said.

An unsecured loan means there's no house, car, boat or other thing a credit card company can quickly grab if a customer doesn't pay up.  

Credit card companies usually enjoy fat profits, but now they're looking at big profit drops -- or maybe even losses. 

"Big lenders are projecting that by the end of the year, 9 percent of their accounts won't be paying them back," said Terry Plath, who teaches banking and finance at the University of North Carolina at Charlotte.

That's not pocket change. Americans owe about $1 trillion on their credit cards. 
 
But the economy may not be the only reason credit card companies are raising rates and fees. They're freer to do that now. Next year, they face new federal limits on hiking rates and changes terms.

There is also pressure in Congress to put even more limits on card rates and fees -- and do it this year.
 
The card industry argues interest rates for most people remain quite reasonable, averaging between 13 and 14 percent. And bankers warn restrictions on the credit card business will hurt consumers.

"The rules will reduce credit availability and increase the price of credit," said Kenneth Clayton  of the  American Bankers Association, who testified last month at a U.S. Senate hearing on credit cards.
  
But industry critics say credit card companies have historically overcharged customers.

Georgetown University law professor Adam Levitin told the Senate Banking Committee that further regulation of the card industry is warranted.

"The card industry has been ingenious in creating tricks and traps to squeeze extra revenue out of unsuspecting consumers," Levitin said. "Those billing tricks cost American families over $12 billion a year."

Indeed, many consumers are increasingly fed up with credit card companies, and they're giving cards the heave-ho, if they can't persuade their card issuers to roll back a rate or fee hike.  

Abigail Duly tried that but had no luck. Now she's planning to get rid of her Capital One card.

"It's a shame you have to close an account you've had for 11 years," she said. "But within the next couple of weeks, I suspect I'll be going elsewhere."

Experts say there are still some good credit card deals out there, but they're getting harder and harder to find.

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Martin Moylan

Author

A lot of credit card companies are jacking up interest rates and fees these days for things like missing payments. Even people who've used their cards sparingly and never miss a payment are getting nailed.

Credit card companies raising rates, even for ideal customers

Photo by Jeff J Mitchell / Getty Images

Abigail Duly isn't happy with her credit card.

Credit card companies raising rates, even for ideal customers

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