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Consumers are increasingly dissatisfied with their credit cards, according to a new survey conducted by J.D. Power and Associates. The survey found customer satisfaction at its lowest point since 2007, when data tracking began.

The culprits: higher fees and rate increases. About 20% of survey respondents reported having been hit with a rate increase so far this year, double the number for the same period in 2008, and 14% of customers reported incurring late fees, up from 11% a year ago.

Those charges are making the plight of consumers with credit card debt worse. The survey found that customers carrying balances had the biggest decline in satisfaction.

Consumers struggling to manage debt aren’t the only ones who’ve been hurt by the recent downturn. Credit-card companies have been hurt, too, triggering some of those higher fees and shorter credit lines.

“When the economy turned, not only did it impact [banks’] stock prices — their financial situation — but also their customers all started to suffer, so there were defaults, and there were late payments,” says Bill Hardekopf, the CEO of LowCards.com, a credit-card comparison site. “What credit-card issuers started to do was cut their financial risk,” Hardekopf says.

New legislation passed this year is designed to offer consumers more protection. New regulations setting the notification period for rate changes and the schedule for bill payments went into effect in August, and other rules will take effect in February. Many banks are making changes to customers’ accounts now, before the new rules restrict their ability to do so.

Between the new regulation and the recent credit crunch, the bottom line for consumers is that credit standards are tightening – banks are looking to reduce the risk of lending, and the government is trying to prevent consumers from getting in too far over their heads. That means some rude surprises for some consumers who suddenly don’t have the access to credit they expected. However, consumers taking the long view should see these changes as good news, says Curtis Arnold, the founder of CardRatings.com.

“We’re going to be less likely to get into trouble in terms of credit card debt. We’re going to have more consumer protections,” Arnold says. “It’s going to ultimately lead to a lot better consumer experience.”

Here are a few commonly reported frustrations about the credit-card industry – and a few tips on how to keep them from getting to you:

Late Payment Fees

These fees are taking the biggest bite out of credit card customers’ satisfaction, according to the J.D. Power and Associates survey. The solution? Don’t just pay your bill on time – pay it early, so you can be sure it will be processed in time to avoid a fee, Hardekopf says.

“Pay all your bills on time,” he adds. Late payments on other bills can hurt your credit score, which could leave you vulnerable to other nasty surprises from your credit-card company.

When the CARD Act takes full effect in February, credit-card companies will be required to get a customer’s permission before processing a charge that would incur an over-limit fee. The law also tightens standards on practices that make it easier to get a late fee, like changing the payment due date each month or setting a deadline over the weekend or during the middle of the day. Fees will also have to be “reasonable and proportional,” according to guidelines developed by the Federal Reserve, says Chi Chi Wu, a staff attorney for the National Consumer Law Center, an advocacy group that follows the credit industry.

by Karin Price Mueller

Monday August 31, 2009, 8:00 AM

Q: I checked my credit report and saw an inquiry from the hospital system where my wife recently gave birth. What’s the purpose of a credit inquiry by a health care provider?

Could someone be denied care based on their credit report/credit score?

– Surprised Patient

A: Congratulations on your growing family.

No one can check your credit report or credit score without your permission. When you brought your wife to the hospital, paperwork was probably the last thing on your mind.

“When you signed the paperwork for the hospital admittance you also signed an authorization for the hospital to perform a credit check,” said Reed Fraasa, a certified financial planner with Highland Financial Advisors in Riverdale.

If you don’t regularly read the fine print, there have probably been many other times you’ve given permission for a credit check without realizing it. At a hospital, though, the use of your credit information has nothing to do with the care you will receive.

“Hospitals are allowed to pull your credit reports and credit scores but only under the provisions of the Fair Credit Reporting Act (FCRA), more commonly referred to as ‘Permissible Purposes,’” said John Ulzheimer, president of consumer education at Credit.com.

Ulzheimer said they do not use the information as a determining factor to grant or deny care but they can and do use it to determine your likelihood of paying them back, especially if you have an unusually high deductible or are paying out of your pocket.

Essentially, he said, they are granting you a form of credit and they want to know whether or not you’re going to pay them back, just like any other creditor.

There is a fairly vocal and uninformed minority that believes credit reports and scores are used by hospitals to determine whether or not to provide care.

“That’s absolutely untrue and does more to terrify potential patients than it does to set the record straight,” Ulzheimer said. “Credit data is used by their receivables departments simply to identify, after care has been provided, who is likely and who isn’t likely to pay.”

No matter your score, Fraasa said you won’t be denied care, in part because of the Hippocratic Oath. It says, among other things, that the health of a patient will be a doctor’s first consideration, and that doctors won’t permit considerations of age, disease or disability, creed, ethnic origin, gender, nationality, political affiliation, race, sexual orientation, social standing or any other factor to intervene between the doctor’s job and the patient’s needs.