Credit card companies: As rough as ever

NEW YORK (CNNMoney.com) -- There are some things you can control with your credit card bill, including how much you charge every month and how much you pay back on time.

Beyond that, though, the ball is in your credit card issuer's court. And, according to the latest credit card survey from Consumer Action, a nonprofit consumer education and advocacy group, the issuers are hitting plenty of overhead smashes at consumers.

For instance, Consumer Action found that if you opt to pay by phone, you could be hit with a fee as high as $15. If you pay at the very last minute either by phone or online, at some banks you may have to pay a convenience fee, which run as high as $29.

If you happen to be late - even by a couple of hours or because your due date fell on a holiday or a Sunday - many issuers are charging late fees that range between $25 and $39. In addition late payers are likely to be subject to a higher interest rate.

Consumer Action found that of the 83 cards from 20 banks surveyed, 85 percent impose penalty rates on late payers, up from 79 percent in 2005, the last time the survey was conducted.

Penalty rates averaged 24.51 percent but the top rate Consumer Action found was 32.24 percent. Even if you're late with only one payment, the penalty rate may apply for up to 12 months or more of consecutive on-time payments.

One widely criticized policy that has grown scarce in the past year is universal default. That's where you could have a perfect payment history with your card company but still be penalized with a higher rate for being late on other cards or credit accounts.

Consumer Action found that general language in the majority of major issuers' credit card agreements still gives them the right to change the terms for any reason at any time, including a check of a cardholder's credit report, which likely would reflect slip-ups in your payments on other accounts.

Consumer Action found that almost half of the banks surveyed practiced what the group characterizes as "deceptive" methods of calculating interest. One is known as double-cycle billing - say you charge $1,000 one month, and pay off $900 on time, a bank may charge you interest on the full $1,000 in the next month and beyond until the remaining $100 is paid off.

The other is known as residual or trailing interest, where a bank may charge you interest on a revolving balance that you paid in full and on time the previous month. While you may assume your balance would be $0 the next month, assuming no further charges, you would be billed for interest that accrued on your last balance during your last grace period - the time between the end of your billing cycle and your due date.

A report from the Government Accountability Office estimated that about 70 percent of the credit card industry's revenue comes from interest and penalty rates.

Lawmakers have been holding hearings this year to examine the need for credit card reform and Senator Carl Levin (D-Michigan) introduced a bill that would restrict or prohibit certain practices considered unfair to consumers.

Meanwhile, earlier this week, the Federal Reserve issued proposed changes to the disclosure rules governing credit card contracts.

Among the agency's recommendations:

• Issuers would have to provide greater and clearer disclosure of a card's terms, fees and rates.
• Issuers would have to notify cardholders 45 days in advance of any changes they plan to make to a card's terms, up from the 15 days required currently.

Just when and if the changes as proposed go into effect is an open question. The proposals are subject to comments for the next four months after which there will be an indefinite review period.