Let The Borrower Beware

Just in time for the annual shopping bonanza, credit card interest rates are declining for the first time in three years, down near 18 percent on average with some as low as eight percent, CBS News Correspondent Jerry Bowen reports.

Good news for the typical American family, which is expected to spend an average of $500 on gifts this holiday season. Bad news when you discover the grinch behind the numbers:

"We estimate the banks are collecting more than $10 billion and as much as $15 billion in fee income from consumers. Most of that represents fees that are imposed for making late payments, missing payments or going over the credit limit," said Stephen Brobeck, executive director of the Consumer Federation of America.

Not only are penalty fees rising, but the grace period between the billing and due dates is shrinking from 25 to 20 days at many banks.

"This really doesn't give you much time," said Linda Sherry of Consumer Action. "You're already into the billing cycle when you get your bill and you have to allow for the U.S. postal service. So you've really got to turn around and pay your bill right away or you could get hit with a late fee."

There's even a penalty fee for not using your credit card. Bank of America hit Larry Mowrey with a $25 charge and increased his interest by three percent for failing to use his Mastercard.

"I feel like I've been lied to cheated and now they're trying to steal my money," Mowrey said.

Bank of America says it costs money to service even inactive accounts. But in Mowrey's case, they decided Wednesday to waive the penalty fee.

Industry spokesmen say three percent of consumer fall prey to the fees. The rest pay on time. But consumer advocates argue the total is much larger. The warning this holiday season is: spenders beware.

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