Now that the

CARD act

is impending, what are credit card companies doing to mitigate the losses that they will incur? An industry insider gives us a picture of what the future holds for credit card customers.

APR Increases

This is the most obvious one. Almost all credit card issuers are raising their APR rates, which hurts anyone who’s holding a balance on their card. The new credit card laws don’t take effect until February 2010, so for now the banks are raising their rates furiously. The new legislation limits when an APR can be changed, and requires that the rate drops after 6 months of timely payments.

By getting their rate increases in now, your new “regular” rate will be considered the “default” rate. For example, if you had a 9% APR and were late on a payment, your rate might have been hiked to 20%. In the future, expect 20% to be more the standard, with rates as high as 25 to 30%.

Fees On Balance Transfers

Fees on balance transfers will go up by a few percentage points.

Shorter Grace Periods

If you currently have a 25 or 28 day period, you’ll find your grace period reduced to 21 days, the new legal minimum.

Increased Minimum Payments

This is part of the CARD act, and while it does hurt a bit more every month, it ultimately will help you pay your balance off faster. So in the long run this is a good thing for consumers.

End of Rewards, Teasers, 0% Rates, Balance Transfers

Rewards programs will be removed for customers who are not profitable. We’ve already started to see that with many current credit cards. There will no longer be 0% intro rates or teaser rates. Balance transfers will be removed or there may be a fee attached.

Reducing Credit Lines

Companies are taking a look at your debt-to-income ratio and lowering credit lines across the board. For example, if you owe 50,000 on a card and your yearly income is only 65,000, it’s pretty unlikely that you’ll ever pay off the entire balance. As a result, it makes sense to drop your credit line so you can’t borrow any more from them. Before, card companies were more interested in collecting the interest on that 50,000. But with people defaulting on cards left and right, it no longer becomes profitable to collect interest on the 50,000 and lose the entire 50,000 when the customer defaults.