Herb Weisbaum • Profile • E-mail

It has been more than six months since Congress began looking into what Sen. Carl Levin, D-Mich., called the “unfair or abusive” practices of the credit card industry.

In March, bank executives were called to testify before the Senate Permanent Subcommittee on Investigations. So much public attention was focused on the issue at that time that several big banks announced they would modify or eliminate a few of their most egregious practices. Committee members vowed to write legislation to protect American consumers.

So far Congress has done nothing to reduce or limit the exorbitant fees and sky-high penalty interest rates being charged to cardholders. And even though the Federal Reserve cut a benchmark interest rate this week, consumers are about to take it on the chin yet again.

“Credit card issuers continue to make subtle changes to squeeze a little bit more out of their customers,” says Bill Hardekopf of lowcards.com. “We’re seeing it in late fees, cash advance fees, and default fees.”

Hardekopf provided the following examples. Discover just boosted its cash advance rate from 20.99 percent to 22.99 percent.  At the end of September, the penalty for a late payment will also go up.

Right now, the late fee on a Discover card is $15 on balances up to $500 and $39 on balances over $500. For billing periods after Oct. 1, the late fee will be $19 on balances up to $250 and $39 on balances over $250.

Unhappy credit card customers Consumer Reports asked 36,000 readers about their credit cards. “There were big differences in how satisfied people were,” says the magazine’s Amanda Walker. Many cardholders said they had a lot of trouble with customer service. That was not the case with credit unions, which also tend to have lower fees and better rates. Credit unions were the clear winners among 21 cards rated in the survey. Visa cards issued by retailers Cabela’s and Nordstrom were next, followed by American Express and Discover. The five big banks that issue most Visa and MasterCards — JPMorgan Chase, Bank of America, Citibank, Capital One, and HSBC — had "undistinguished" scores. "People were a lot less happy at the big banks," Walker says. "They tended to have more problems with their bills. They tended to have more problems with getting the help they need and they paid higher interest rates." How to pick the right card If you have an unresolved problem with a credit card company, you should file complaints with: Federal Trade Commission Office of the Comptroller of the Currency (for national banks) Consumer Action

Hardekopf says some credit card issuers have figured out another way to generate even more money from late fees. They have added a third tier.

Chase, for example, now charges $15 on balances up to $99.99, $29 on balances between $100 and $249.99, and $39 on balances over $250.

“That’s a real stiff penalty to pay for being as little as one day late,” says Linda Sherry of Consumer Action, a San Francisco-based consumer group. “And when consumers mail in their payment seven to 10 days in advance and they still get hit with a late fee, something is really wrong.”

The Fed's half-point rate cut will eventually trickle down to borrowers who use variable-rate credit cards, says Greg McBride, senior financial analyst at bankrate.com. "But the bad news is that this won't happen overnight, as issuers are much slower to pass along a lower rate than they are to pass along a higher rate," he said.

In any cases, lower base rates will have little or no impact on penalty rates and fees.

One of the most punitive fees created by the credit card industry is called “universal default.” If you make a late payment on any bill or loan reported to the credit bureaus, you could see your interest rate skyrocket to the default rate — even if you have a perfect payment record with that card.

Days before the March congressional hearing, Citibank announced it was eliminating universal default. Capital One testified it did not have a universal default penalty. But many other banks do.

Until now, the top default rate was a ridiculously high 30 percent. Chase just bumped it up to 32 percent. Before long, you can expect to see other banks boost their default rates.

How would you describe an interest rate of 28 percent to borrow money through your credit card? That is what Chase now charges for a cash advance on its standard accounts – 28.24 percent.

Hardekopf calls it “outrageous … almost a legal robbery.”

Other cards are not far behind. The Household Bank MasterCard has a cash advance rate of 25.15 percent. Blue from American Express and Sun Trust’s Visa charge 23.34 percent.

And remember, there is usually a transaction fee of 3 percent or more on top of that outrageous interest rate.

Use your Chase card to get a $1,500 cash advance, and in one year you would pay $465 in interest and fees.

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