Consumer Debt up 5.5% in 2007

Recent statistics by the The Federal Reserve show that Americans' consumer credit increased 5.5 percent in 2007, the biggest annual jump in three years. The rapid rise in credit was a further indicator that economic activity slowed significantly at the end of last year.

One of the factors leading to increased credit card spending was the slowdown in housing over the course of 2007. As banks tightened their mortgage lending standards, consumers unable to borrow money against their homes turned to credit cards. Analysts predict that the trend will continue in 2008 as increased unemployment, a falling housing market and slower economic growth force consumers to put more and more purchases on their credit cards.

Mortgage Meltdown Affects Your Credit Card

According to USA Today, banks such as Chase, Citigroup and Bank of America are boosting interest rates on credit cards in an effort to make up for the money they are losing on bad mortgage loans, even as the Federal Reserve continues to slash rates.

"Advocates say they fear that as employers shed jobs and housing values sink, more people will see their credit card rates raised to as much as 32%.Such penalty pricing can kick in if consumers pay late by just one minute or exceed their credit limit once. "

To protect yourself, please make sure that you are reading the fine print on your credit card statements. Banks are typically required to inform consumers of generally "material" changes in terms, such as interest rate, but too often consumers are unaware of how much they are actually paying in interest until it is too late.