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Credit-card deals become harder to find

Recent reforms make credit-card deals more difficult to negotiate with card companies. Here's how Americans are coping.

This file photo from November 2009, shows a pile of MasterCard and VISA credit cards in Frankfurt, Germany. Despite the lowest prime rate since 1955, borrowers can expect high credit card interest rates. With credit markets still tight, many credit issuers feel less pressure to negotiate to keep current customers.

Jochen Krause/AP/File

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Seen your credit-card statement lately? The prime rate, which credit-card rates are supposed to track, is at 3.25 percent, its lowest level since 1955. But the interest charged by the average credit-card company is already more than 13 percent – and rising.

That's the largest gap in more than six years (see chart) and a measure of the impact that the recent recession has had on lenders. More important, it's an indication of how the options have narrowed for borrowers, especially for those who carry a balance on their card month to month.

For some of those borrowers, the new environment can be a shock.

When the interest rate on his Discover card shot up four percentage points a few months ago – to just over 17 percent – Kyle Schroeder called to ask for a lower rate, as he'd successfully done in the past. This time, Discover wouldn't play ball. Nor would American Express agree to raise the limit on a card he has with them.

Mr. Schroeder, an entrepreneur who manufactures and sells shaving cream in Los Angeles, is usually in a position to pay his balance in full, but he will calculate which of his four cards would be best to use if he has to make a large business purchase. After his experience with Discover, he paid off the balance and stopped using the card.

This is the new norm for many consumers. With credit markets still tight, many credit issuers feel less pressure to negotiate to keep current customers.

Mel White, a marketing executive based in Portland, Ore., couldn't get Capital One to lower the rate on a card he's had with them since 1999, currently at 15.9 percent. Instead, they offered him an interest-free cash advance for the amount he's currently carrying on his card for one year and a $150 fee.

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