Consumers hoping for relief from credit card interest rate hikes will have to wait a few months longer. On Wednesday, Senate Republicans put a “hold” on a bill to freeze credit card interest rates immediately, in order to avoid further rate hikes before February 22, 2010 when the new Credit CARD Act steps into effect. The hold on the bill effectively freezes it, and for the time being, prevents further debate and a vote on the measure.

The bill was co-sponsored by Senators Chris Dodd (D.-Conn), Chairman of the Senate Banking Committee and Mark Udall (D.-Colo) in response to recent consumer outcry over aggressive credit card rate hikes over the past six months. Under the new Credit CARD Act, which was signed into law in May of this year, credit card companies can only raise interest rates on existing credit card debt if the cardholder is more than 60 days behind with payments. Card issuers can still raise rates on future charges, but they would have to give cardholders 45 days notice of the rate hike.

Unfortunately, Congress gave credit card companies nine months to comply with the new curbs on rate increases. That gave card issuers plenty of time to jack up credit card interest rates across the board. According to a recent telephone survey by Rasmussen Reports, in just the past six months, half of Americans have seen interest rate hikes on their credit cards. That number may actually be higher, since 19 percent of those polled were not sure whether their rates had been raised. Only 31 percent said their interest rates had not been increased.

“We gave card issuers nine month to comply with the new laws, Senator Dodd said in his speech urging support for the new bill. “They have taken that window and used it to jamb in on consumers in this country, particularly at a time when consumers are losing their jobs, their home, their health care and retirement.”

In the beginning of November, a bill to move up the effective date for the new credit card legislation passed the House with strong support, 331-92.  With the companion legislation now put on hold in the Senate, cardholders will likely have to wait until next year to get a break.

“This has been a classic case of David vs. Goliath situation,” said the co-sponsor of the bill, Mark Udall. “I say it’s time to take on Goliath and stop credit card companies from gaming the system at the expense of the American consumer.”

The Republicans, it appears, thought differently. The vote on the bill was blocked by Sen. Thad Cochran (R.-Miss), acting on behalf of other Republicans to stall the proposed legislation.

It is as certain as death, taxes, and Florida hurricanes in the fall: Come January, millions of consumers will be struggling with a bad case of holiday hangover as the pile of unpaid credit card bills begins to heap up.

For stores, credit cards and retailing is a match made in heaven. Retailers are experts at stacking their shelves with not-to-be-missed wonderful stuff that we never knew we wanted, and then to seal the deal with offers that can’t be refused. Credit cards are willing partners in this devil’s bargain, providing us with the magic wand to instantly make our newfound dreams come true. A quick swoosh and swipe, and you and your new purchase are well on your way to happily ever after.

Rinse and repeat. By the time January rolls around, if you’re like most consumers, you have long since forgotten just how much you charged. And this, of course, is the time when the pied piper has to be paid.

Will this year be different? Numerous consumers are determined to make it so. According to a survey of more than 3,800 consumers by the National Foundation for Credit Counseling (NFCC), more than two thirds (68 percent) of holiday shoppers plan to leave their credit cards at home and use hard, cold cash for Holiday shopping this year; only 22 percent said they will use their credit cards, and of these, more than half said they would not spend more than they would be able to pay off the bill in full when it arrived.

How well will our Holiday resolutions bear out? Unfortunately, the psychology of credit cards, researchers tell us, is such that it predisposes us for spending. Credit cards separate us from the pain of paying. It delays that agonizing moment when we actually have to part with money, and shifts it into some remote, abstract future. Using credit cards also makes it more difficult to keep track of how much you’ve spent. Not surprisingly, research has shown that people paying with credit cards tend to spend more; it’s just a fact of life.

In short, to prevent your resolve to dodge Holiday overspending from going the way of your January weight loss resolutions, you may need to pave the road with more than good intentions. Here are five tips to prevent overcharging on your Holiday shopping this year.

1. Leave your credit cards at home. When you go shopping for the Holidays, bring cash or your checkbook, but leave your credit card at home. If you’re used to shopping with credit cards, you’ll be surprised how many temptations you’ll be forced to pass up on when you only bring cash. With credit cards in your wallet, it’s almost impossible not to spend more than you intended to.

2. Plan your spending. Decide how much in total you can spend on presents and other Holiday expenses, and then create a budget for each category of expenditures: presents, food, entertainment, travel, and miscellaneous. If you already have the money you need to cover your Holiday expenses, simply track your expenses by category each time you go shopping, and subtract them from the total, so you always know how much you have left.

3. Borrow with caution. If you don’t have all the money needed for your Holiday expenses and have to borrow against future earnings, determine how much you can pay back in two to three months. Then create your Holiday spending budget based on that.

4. If you have to use your credit cards. Preferably borrow from a savings account or a home equity line of credit. If that’s not an option and you have to borrow against future earnings using your credit cards, don’t just bring your credit cards when you go shopping. Instead, if you can, make a 0% APR balance transfer into your checking account for the amount you have planned to charge to your credit cards for Holiday expenditures. Then bring some of that cash or use your checkbook when you go shopping. (Don’t take out a cash advance; these come with high interest rates and no grace period.)

Alternatively, bring your credit card, but track your charges in a portion of your check register. Write in the total amount you have decided to put on your card; this will be your starting balance. Then, each time you swipe your plastic, subtract the amount from the total. That way, you will always know where you are and won’t unconsciously overspend.

5. Use only one credit card. Use only one credit card, so you won’t lose track of what you’ve spent. Check your cards to find the one with the lowest rate; card issuers have hiked rates over the last twelve months, and the APR for some cards is well over 20 percent. Check your credit card statement or call your card issuer to ask about the current APR for your card.

The latest data on credit card defaults and delinquencies show few signs of improvement. Several major U.S. credit card companies are still facing double-digit defaults, suggesting that the high rates of unemployment continue to weigh down consumers.

While credit card defaults came off their highs of the last few months, they remain elevated compared to the average of years past. Worse, delinquencies rose from September to October, a harbinger of further losses ahead. Delinquency rates are a measure of credit card payments that are more than 30 day late, and hence an indication of future credit card charge-offs, i.e. payments more than 60 days late.

Bank of America continued to have the highest level of charge-offs at an annualized 13.22 percent, down from 14.25 in September. Citigroup saw the highest drop in credit card write-offs, from 10.15 percent in September to 8.79 percent. Other card issuers reported modest declines in defaults from September to October: Chase cards from 8.12 percent to 8.02 percent; Capital One from 9.77 percent to 9.04 percent, and Discover from 8.69 percent to 8.54 percent.

The slight decrease in credit card defaults resulted from a slowdown in delinquencies over the past few months. Unfortunately, delinquency rates rose in October for most credit card companies, an early warning of more trouble ahead. With the holiday shopping season just around the corner, cash-strapped consumers may turn to their credit cards to make the season bright, possibly setting the stage for more delinquencies down the road.

Capital One saw 30-day delinquencies rise from 5.38 percent in September to 5.72 percent in October, and for Discover card delinquencies rose from 5.57 percent to 5.72 percent. The one exception was American Express, which continued to buck the trend, reporting the lowest delinquencies of all major card issuers at 4.1% in October, unchanged from September.

Credit card default rates are tied to unemployment rates, and unfortunately, so far there are no signs of an improving job market. On the contrary, unemployment levels reached a record 10.2 percent in October, its highest level since the economic recession in 1982, and almost double the target unemployment rate of 5 or 6 percent.

Under the best of circumstances, it typically takes several years of strong economic growth for unemployment rates to decrease in any significant way. Unfortunately, with the Fed funds rate already at near zero, the Fed has exhausted its traditional weapon for stimulating economic growth, and economists predict that we might have to wait years for a substantial recovery in the job market.

The high credit card default rate is bad news for cardholders. Credit card issuers are likely to continue to shore up risk and take steps to stem the tide of losses. For cardholders across the board, this means that the era of tougher credit card terms, reduced credit limits, tougher lending standards, and higher interest rates is not likely to be over anytime soon.

Beginning October of this year, Discover and American Express cardholders can breathe a sigh of relief as their credit card over-the-limit fees are laid to rest. Amex and Discover took the plunge to eliminate the fee in response to the Credit CARD Act of 2009, which mandates that card companies cannot charge over-the-limit fees unless consumers give their consent.

After doing the math, both card issuers independently arrived at the same conclusion: establishing a system through which cardholders could decide whether or not to have over-the-limit privileges (and pay the accompanying fees) would cost lenders more than they would rake in through fees.

As for the other big credit card issuers, such as Chase, Bank of America, Citi, and Capital One, it remains to be seen how they handle the new provision, which steps into effect in February of 2010. One thing is for sure though: without the income from overdraft fees, credit card companies will come up with other ways to increase their revenue.

In notifications sent out to its cardholders, American Express gave some indication of how it intends to compensate for the loss: increasing credit card interest rates and raising other fees. This is hardly welcome news for cardholders who have always stayed well within their credit limit. Nonetheless, the countless Americans charged a hefty $39 for overdrafts as low as $1.96 can breathe a collective sigh of relief.

Over the years, card companies and banks have raked in phenomenal sums through over-the-limit and overdraft fees. What began many decades ago as a not-so-friendly “reminder” to stay within one’s credit limit turned into a cash cow for card issuers. In 2008, credit card companies alone collected approximately $19 billion in penalties and fees. This year, banks are projected to make out with a whopping $38.5 billion for customer overdrafts.

Not surprisingly, those hardest hit with the fees are those most strapped for cash. Cardholders who most frequently tip over their lines are the ones who can only afford to keep a single card.

Most pundits saw it coming: a wave of frenzy as credit issuers scramble to get their ducks lined up before the new provisions called for in the CARD Act of 2009 kick in.

Once the provisions of the new law steps into effect in August of 2010, card issuers will no longer be able to raise interest rates retroactively on existing credit card balances. In response, card issuers are doing one of two things, according to The U.S. News and World Report: Many card issuers are simply raising interest rates before the new law steps into effect. In addition, card issuers are switching many of their fixed-rate credit cards over to variable cards. This will allow them to take advantage of a loophole in the law, which continues to allow interest rate changes on cards with variable interest rates.

Although many experts feel it was the new bill that lit the fire beneath the card companies, card issuers blame the current economy and argue that the increase in rates is necessary to compensate for an increasingly risky lending environment.

Whatever the true motives may be, expect card issuers to continue to tighten terms and the credit card landscape to be increasingly perilous to navigate. More than ever, it’s important for cardholders to be proactive and take measures to protect themselves. Here are three ways to protect yourself against unfavorable changes to terms:

1. Keep your credit solid: A high credit score is an asset in any economic climate, but these days, it is a must. If you can maintain a high credit score and keep your credit reports impeccable, you should be able to remain, for the most part, immune to the cyclone of changes

2. Be selective about where and how you use your card: Card companies watch for certain purchase behaviors. When you use your card for a cash advance, it triggers a red flag. Also, avoid purchases with what creditors call “questionable merchants:” places such as pawn shops, tire retreaders, and marriage counselors; even charging all your grocery purchases to your card may not be such a good idea.

3. Vote with your feet: There are hundreds of banks and financial companies issuing credit cards, and if you don’t like the terms your card issuer are offering, you can always apply for a new credit card. In addition to applying for a credit card online, also condider looking into credit cards issued by small credit unions, which often offer cards with more cardholder-friendly terms and greater service.

Credit card and identity theft strikes in all sorts of places, ranging from the mundane to the bizarre. One of the more peculiar instances of stolen credit cards involved a Nashville, Tennessee man who hired homeless to dig thru the garbage dumpsters of hotels near the Nashville airport to find disposed receipts with credit card numbers.

The man used the stolen credit card information to purchase anything from food to automotive parts and sell them to friends at half the price. A Pennsylvania woman, who stayed at a motel in Nashville last month, reportedly ended up with $12,000 in fraudulent charges on her credit card.

That’s chomp change compared to what Apple boss Steve Jobs is facing following a scam involving a gang of U.K. DJs, who used stolen credit cards to purchase their own music on iTunes. The scam involved nine people, who uploaded a total of 19 songs on iTunes, according to the U.K. Daily Mail. Using 1,500 stolen credit cards, the fraudsters then downloaded tracks to the tune of £460,000 ($735,000), netting them about £200,000 ($320,000) in bogus royalties from iTunes and Amazon.com. The number of downloads even boosted the position of the songs in the music charts! The scam was eventually unraveled through a joint investigation between British e-crime police and the FBI.

As colorful as these stories are, they hide the fact that credit card theft and identity theft most often strikes in more mundane places, and often where you least expect it. Almost half of all instances of identity theft originate with relatives, friends and neighbors. This type of fraud costs more time and money; and costs to victims are often higher.

Credit card and identity theft involving family members take many forms. An ex-spouse may, for example, use the social security number of one of his children (living with the mother) to open credit cards and make charges without paying them off. A room mate, cleaning lady, or friend could go through your papers and finds your social security number and use it to apply for new credit cards. A family member might find an unused credit card in a drawer and, unbeknownst to the cardholder, proceed to rake up high credit card charges on the account.

When family members or friends are involved, victims often hesitate to report it, hoping that the family member will make good on the charges and pay them off. The issues confronting victims of credit card theft in such instances are very complex: No one wants to report friends or family members to the police, nor to prosecute them to get them to pay off the debt.

Unfortunately, in such cases, most of the time victims adopt a wait-and-see attitude, hoping that the perpetrator will make good on the debt. In far too many cases, however, this doesn’t happen, and the victim ends up being on the hook for the debt, in many cases creating long-term economic hardship.

If you or someone you know is a victim of credit card or identity theft involving a family member or friends, what should you do? Your best bet, if you want to avoid being on the hook for the debt yourself is to file a police report, just like you would in a regular case of ID theft. Filing a police report is only a first step, and it’s not the same as pressing charges against the perpetrator, but it is an important step to take to clear your name.

The other alternative is to approach the credit card issuer or other companies involved, explain to them what happened, and see if they are will to work with you to reach a resolution without police involvement. Most companies, however, will be less likely to cooperate, if there is not a police report involved.

The benefits of filing a police report are many. It will give you protection under federal and state laws as a victim of identity theft, and this means that you will not be on the hook for the debt. In contrast, if you are aware of the fraud for a while and do nothing to stop it, it will appear suspect. If you eventually then do try to clear the fraud activity, you could run the risk of being considered an accomplice or co-conspirator.

For more information, see this article about How to Protect Yourself from Credit Card Fraud. If need to report identity theft, see the following article:

How to Report Identity Theft

Every year, identity theft strikes almost 9 million Americans. The theft is most typically discovered within the first three months, but in some cases it takes much longer; the victim might only find out when he or she is declined for a new credit card application.

The most common form of identity theft is using someone’s personal information to open a checking account, a credit card account, or a mobile phone account. In 43% of cases, the fraud is perpetrated by someone that the victim knows. On average, the cost to the victim is upwards of $6,000.

Apart from the financial damage, identity theft can damage the reputation of the person affected and create long-term financial difficulties, particularly if not addressed in the right way. If you or someone you know are a victim of identity theft, here are five important steps to minimize the damage:

1. Early reporting is essential. The earlier you discover and report the crime, the better. For this reason, monitor your credit report regularly; at least once a year, but preferably more frequently. You are entitled to a free credit report from each of the credit rating agencies once a year at www.AnnualCreditReport.com.

2. Put a fraud alert on your credit report. If you fall victim to identity theft, immediately contact the three major credit reporting agencies and ask them to put a fraud alert on your credit report. Fraud alerts are typically valid for 90 days, but if you have suffered identity theft, request an extended fraud alert, which lasts seven years.

The three credit reporting agencies have great online resources to facilitate the process of putting a fraud alert on your credit report. Use the links below to find the material and information needed to place the alert with each agency:

January is a month dreaded by all. T’is the season after the Season, a time of reckoning, when we’re left with long dark days, woefully expanded waistlines, and a mounting pile of credit card bills.

Every Holiday shopping season, we Americans go through the same ritual, wowing not to overspend, and then proceeding to swipe away like there is no tomorrow. However, according to a new survey by the National Foundation for Credit Counseling (NFCC), this year may be different. With the biggest spending season of the year just around the corner, more consumers are planning to leave their credit cards at home and pay by cash.

In the survey, which polled more than 3,800 consumers at the end of October, more than two thirds (68 percent) planned to pay in cash for their Holiday purchases, and ten percent planned to utilize lay-away programs. Only 22 percent said they were going to charge their purchases to their credit cards, and out of this group, 12 percent said they would pay off the bill in full when it arrived.

It remains to be seen whether Americans will keep up on that resolve or if it will go the way of the decision not to binge on all that wonderful, luscious Holiday food. Still, there are many reasons why this year may be different.

“Consumers are faced with spending decisions unlike ever before,” says Gail Cunningham, spokesperson for the National Foundation for Credit Counseling (NFCC). “Many have had their access to credit limited by issuers closing accounts or restricting credit lines. Others have self-imposed spending restrictions, instead choosing to pay down existing debt.”

According to previous surveys by the NFCC, consumers have indeed begun to cut back and make lifestyle changes in order to stay afloat. In a July survey, almost three quarters of respondents said that the one thing that would make them feel more financially secure would be to have less debt.

Still, Cunningham notes, the holiday season may well tempt consumers to revert to old spending habits. The holiday season has traditionally been a time when many consumers rack up additional credit card debt, in some cases even as they are still paying off the holiday spending from the previous year.

So will our intentions to wean ourselves off our addiction to plastic translate into reality once we hit the stores? According to the NFCC, one third of Americans has no savings, and let’s face it, without money in the bank, shopping for Holiday gifts and parties presents a challenge—unless, of course, you’re planning to hand out coal this year. Still, as Cunningham points out, in the face of a continuing difficult economy, higher credit card interest rates, and tighter terms, foregoing of those Holiday shopping indulgences may be more important than ever.

“Spending during the next two months can make or break many Americans financially, with the ramifications of poor decisions following them for months or years,” Cunningham notes. “This is likely to be a holiday shopping season unlike any in recent history, with none of us knowing the outcome until the data arrives in January. It is our hope that consumers shop wisely, remembering that digging a financial hole is not a gift to anyone.”

One of the most common credit card mistakes that cardholders make is to get seduced by the beguiling option of paying only the minimum monthly payment on their credit card. It’s easy, it’s simple, and it endlessly postpones the pain of facing up to what we actually spent last month—and the month before, and the months before that.

So what if the card balance is well over $2,000? All you have to do to stay even is to pay a measly $50 or so a month; something that even those on a tight budget can generally manage. However, unbeknownst to most cardholders, our addiction to paying the minimum is a costly one; people who consistently pay only the minimum monthly due on their credit cards end up paying the initial charges two to three times over, depending on the card interest rate.

Worse, most people do this without realizing it. Unless you actually sit down to calculate the true cost of paying the minimum, it’s impossible to know just how much it would cost to pay off the card balance in full by paying only the minimum each month.

The new CARD Act of 2009 is about to change all of that. Effective February of 2010, the new provisions will require card companies to clearly print at the top of each monthly statement exactly how long it will take to pay off the balance making only minimum payments and how much it will cost.

Most cardholders have some awareness of how their monthly interest charges add up over time, but few grasp the big picture in full detail. For example, an $8,000 debt on a card with 22.99% APR, when paid off at a rate of $400 a month, will milk an additional $2,186 from your pockets over the course of the two years and two months it will take to pay off.

Lower your monthly payment to $200/month, and you can expect interest payments alone to total $7,331.44 by the time you mail in your last payment, nearly six and a half years later.

Take a look at what paying the minimum will cost you. The minimum payment is calculated as a percentage of the balance on the card, most typically around 2.5%, so the payment amount decreases as the card balance goes down. Payments on a balance of $8,000, for example, will typically start out at about $200 a month, but because of the decreasing monthly payments, if you pay only the minimum, you will be paying off that $8,000 balance for the next 49 years. That’s a lot of time for interest to accumulate, and indeed, in the example of a 22.99% APR the grand total interest paid would be a colossal $25,340. Add that amount to you original debt, and voila: you’ve paid back the initial charge four times over.

By making figures such as these available to cardholders up front, the CARD Act of 2009 hopes that consumers will have the knowledge necessary to make smarter credit choices.

In addition, the Act also mandates that issuers disclose APR rates, fees, and their effective dates in an easy-to-understand table format; that they clearly disclose the sum totals of interest and fees; and clearly state the repercussions of late payments, including exact APR penalty rates and late fees.

Senator Christopher Dodd, the head of the Senate Banking Committee, on Tuesday introduced new legislation, which aims to strengthen consumer protections by creating an independent watchdog agency to oversee financial products, including credit cards and mortgages.

If passed, the bill would strip the Federal Reserve of its powers as the primary financial regulator, and take away bank-supervising responsibilities from the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC).

The Senate bill proposes to instead establish an independent Consumer Financial Protection Agency, whose sole role would be to protect consumers from fraudulent and deceptive financial practices, and make sure consumers get clear disclosures about financial products, including credit cards, mortgages, and other types of loans.

By creating a single watchdog agency, the Senate bill aims to eliminate the current issues arising from the fact that several agencies share responsibility for regulatory oversight. This often makes it difficult to determine which agency is responsible for what, particular when new issues arise, which haven’t been previously tackled by any of the regulatory agencies.

In the press release accompanying the proposal, Senator Dodd comments that the credit crisis and the resulting economic downturn was driven by an across-the-board failure to protect consumers, and states that the new bill aims to restore confidence among Americans in the regulatory system. Taking direct aim at the Fed, Dodd further notes that the Federal Reserve “has repeatedly failed to act despite repeated demands from Congress.”

“When consumer protections are handled by regulators whose primary responsibility is to safeguard the profitability of the companies they regulate, consumer protections don’t get the attention they need,” Dodd notes in the statement. “The result has been unfair, deceptive, and abusive practices being allowed to spread unchallenged, nearly bringing down the entire financial system.”

The new Consumer Financial Protection Agency would consolidate consumer protections currently handled by several regulatory agencies into one, independent commission led by a 5-member board. It would centralize the rule-writing, supervision, and enforcement of consumer protections, and the new watchdog agency would have extensive powers to look into and pursue financial abuses. In particular, the agency would be proactive and have the powers to address bad business practices, without having to wait for Congress to pass new consumer protections.

The bill also proposes to create a new Office of Financial Literacy and introduce regulations for the shadow banking industry, such as mortgage brokers and payday lenders. The bill also seeks to create tighter regulatory oversight for credit rating agencies, executive pay, hedge funds, over-the-counter derivatives, and mortgage-backed securities.

In a news conference, Dodd said that he is expecting debate on the new bill to begin in the Senate Banking Committee in early December. The bill is not expected to gain support from Republicans, and it is unlikely that any version of the bill will be passed by the Senate until sometime in 2010.

Two other proposals for overhauling the financial regulatory system are in the works, the Obama administration and the House are both working on bills, which would introduce a less far-reaching overhaul of bank supervision. The Dodd proposal is in line with a proposal introduced by the Obama administration to create a Consumer Financial Protection Agency that would regulate financial products, including credit cards and mortgages, but it departs from the proposals of both the House and the Obama Administration in its aim to radically consolidate banking regulatory agencies.