Credit card in wallet
Credit card in wallet - 
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KAI RYSSDAL: The government's done its bit to get consumers spending again. President Bush signed the stimulus package today, called it a booster shot for the economy. Look for that rebate check to come along about May sometime. The Federal Reserve's been trying to help as well, cutting interest rates and pumping cash into the system, but despite its best efforts, many credit card users are finding their rates and fees heading up, not down.

Marketplace's John Dimsdale reports from Washington, that banks are putting a new price tag on lending.

JOHN DIMSDALE: When stocks were rising and homes were appreciating, lending was easy business. No more, says Greg McBride of

GREG MCBRIDE: As we've seen the unwinding of the subprime mortgage market and now an economic slowdown that is sure to breed higher unemployment and higher delinquency on other forms of credit, lenders are reevaluating that stance.

As banks lose money on mortgages, they're making up for it by charging more for credit. That makes consumers more reluctant to borrow and the economy suffers. It's what former bank regulator Eugene Ludwig calls a vicious cycle.

EUGENE LUDWIG: Which is a recessionary cycle where because folks have had trouble paying, institutions become more conservative in lending and raise rates, and that more conservative bias makes credit less available and makes it actually more difficult for individuals to get the kind of credit they need to stay afloat.

Raising interest rates and fees can hurt credit card companies in the end, generating more delinquencies and defaults, but Ludwig says don't blame the lenders.

LUDWIG: From a social policy, a macro perspective, we want to support that borrower as much as possible, but from an individual company's perspective, it's pretty hard when you look at their income stream and you say "Well, I can't lend them more. Their income is less."

As if struggling customers weren't bad enough, Jim McTague, the Washington editor of Barrons, says lenders are also feeling pressure from investors.

JIM MCTAGUE: A lot of the department stores that have their own credit cards, even ones that haven't yet experienced an exaggerated rate of default, are being pummeled by Wall Street, because Wall Street's so afraid of the subprime situation spilling over into the credit markets, that they're knocking down the prices of these stocks.

So far, the Federal Reserve Board's policy of making cheaper money available to credit card lenders isn't trickling down to everyone. Consumers with the slightest hint of credit risk are paying a higher price for debt.

In Washington, I'm John Dimsdale for Marketplace.