In an unexpected surge of consumer spending over the 2009 holidays, Americans left many retailers’ shelves empty post-holiday season. Credit card usage was observed to have increased as well

Unlike last year’s mentality that was inclined more towards saving, the past month’s trend could be indicative of a change in spending habits of consumers for this year, one that may also involve increased credit card usage. And with that, a possible fresh wave of card delinquencies and defaults could come in.

Effects of the CARD Act

But it’s also worth noting though that by February 22, 2010, provisions of the sweeping Credit CARD Act of 2009 will also take into effect, supposedly to provide more protection for consumers from abusive fee-charging of credit card companies. These include changes in how issuers can raise interest rates or how payments will be applied to the cardholder’s outstanding balance

With these factors in mind, what should the credit card industry, and in particular credit card users, anticipate in the year ahead? Here are some possible developments that could be in store for the millions of credit card users in the country:

1. Interest rate hikes and sudden cuts in credit limit may taper

So many consumers went under last year after being imposed with sudden rate hikes that went up to as high as almost 30%. Further, card owners were caught unaware with cuts in credit limit without prior notice. Under the CARD Act, card issuers are not allowed to indiscriminately raise rates without certain considerations first and without informing the cardholder 45 days in advance

2. Say hello to new fees and increases to existing ones.

According to Bill Hardekopf of, only about 20% of cards currently charge annual fees. This year however, this number is expected to significantly increase. Bank of America had already announced in October last year that it plans to test run annual fees ranging from $29 to $99 to selected customers this year. Chase has issued a similar statement

Other than annual fees, a host of other charges could be imposed by credit card companies in order to make up for the revenue they stand to lose with the restrictions enforced by the new policies. Or, financial institutions could simply raise current fees such as those charged for cash advances or balance transfer.

3. Credit cards will be more difficult to obtain.

With the continued rise in card delinquencies, banks are expected to be more selective with the card applications they approve. In fact, some industry experts like Ken Lin of Credit Karma and Oddyseas Papadimitriou of predict that secured credit cards will become a more popular option for those who want to obtain a credit card but fail to meet certain requirements

4. Credit cards rewards program may also slow down

Because of the expected decline in card companies’ income from credit cards, these institutions could also cut down on the rewards they are offering to cardholders. While rewards programs will still be around, issuers could decrease the number of points earned from a certain amount spent, or lower the value of the corresponding reward items given

5. Excellent customers will have the best offers from credit card companies

Consumers with excellent history will have access to lower interest rates and possibly better offers from other companies, while those with less-than-stellar history may find limited credit

“As we look to 2010, creditors will be competing for the best customers as the economy improves. We should see new features and more competitive pricing for excellent credit consumers,” Credit Karma’s Lin said.

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