Credit Cards' Holiday "Reign of Terror"

Your credit card company may be about to send you a holiday greeting. The cost of using your credit card is going up. Half of lenders plan to raise interest rates and reduce credit limits on their most qualified borrowers according to a recent survey by the Federal Reserve, reports CBS News correspondent Anthony Mason.

Sandy Knight of Dallas just received a letter from Citibank, increasing the interest rate on her card to 29.99 percent. She tried to fight it. But Citibank wouldn't budge.

"It's a crime. It's crazy. Total crime," Knight said. "So I said 'I really hope you sleep at night.'"

Says Adam Levin of Credit.com: "The reign of terror continues. They're doing what they do 'cause they can."

Levin says the banks are rushing to raise rates and fees before new federal guidelines on credit card lending go into effect next February. Fifty percent of Americans say their credit card interest rates have been hiked in the past six months.

"And the way the economy is, if you have a job and you make your payments and they jack up your rate, you will never get paid off. You will always be chasing the hamster," says credit card user Melinda Shelton.

So what is the lesson for the consumer?

"Well, the first lesson is pay attention. Anytime you get a notice on anything read it," Levin says.

Many are heeding that advice. The National Retail Federation expects credit card usage to fall 10 percent this holiday season.

"Many people are really coming to stores with the amount of money they have in their wallet, saying 'this is all I have to spend.' And that's going to affect the impulse buy," says NRF's Ellen David.

That could make it a tougher holiday for borrowers and retailers both.

So what can you do if you get one of these letters raising your interest rates?

You have the right to opt out - meaning you can pay off your balance at the old interest rate. But, Mason says, you have to give up the credit card and that could affect your credit rating.