There is no disguising the fact that financial institutions are tightening purse strings and reducing the amount of credit available to consumers and businesses.

Credit card companies have started making changes to the way they do business which reflects the lack of available credit.

Many consumers have recently experienced credit card interest rate rises some by nearly 10% (from a rate of approximately 15% up to nearly 25%).

It appears that credit card companies are targeting people with outstanding balances. This is how they will make the most money. There’s no point putting the rate up on a 0 balance.

What this also means is people with outstanding balances who may not financially be in a position to reduce the debt significantly are now paying even more and stretching their finances further still. In some cases this will result in more credit card spending to meet expenses and spiralling further towards a debt crisis.

Some card companies have been offering the cardholder an ‘opt out’. This effectively freezes the card so that it can no longer be used and fixes the interest rate.

Not all consumers are finding their rates are increasing gradually without being given the option to opt out and fix their rate.

Rate increases such as these are of no benefit to anyone but the credit card companies themselves so if could be argued they are not ‘treating customers fairly’ which is something the FSA insists they do.

Credit card companies will however listen more closely now to people experiencing financial difficulty and in a reactive attempt to appear to be treating the customer fairly they are able to lower interest rates.

Treating customers fairly is a concept more than a set of rules and as such financial institutions must tread very carefully. Combine this with the media focus on credit and lending and the consequence is credit card issuers are now more prepared to be flexible and avoid negative publicity and potential fines.

People experiencing difficulty keeping up with their credit card payments should speak to the card issuer as soon as possible.