Credit-card deals become harder to find

Instead, he advises paying in smaller increments – $500 to $1,000 at a time. Even then, most credit-card companies won't consider negotiating until you're two payments late, he says. "Unfortunately, the only way [for consumers] to express their unhappiness is to not pay their bills." Nonpayment can lower credit scores, which can make job searches or mortgage applications tougher.

Those with good credit still have several options: a home loan or home equity line of credit, for example. Credit unions also offer credit cards, whose interest rates are capped by the federal government at 18 percent. Some consumers can still get rates below 10 percent.

Few options for weak borrowers now

But weaker borrowers have far more limited options. They're unlikely to qualify for new cards or loans. Based on the severity of their financial situation, they can try negotiating a payment plan with the credit-card company through a registered nonprofit credit counselor or, if things are really bad, file for bankruptcy.

The key is determining whether indebted consumers can afford their payments. If they can, a payment plan is a good option. If they can't, it's better for consumers not to exhaust their limited financial reserves trying to make payments on debts they'll ultimately have to default on, says Mr. Manning.

Credit-card reforms have changed the rules for credit issuers. The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act, which President Obama signed into law in May 2009, introduced new restrictions on credit-card fees and penalties, such as over-limit fees (unless the consumer opts into an over-limit program) and retroactive interest rate increases.

Those reforms were designed to protect consumers. But reform stopped short of capping what credit-card companies can charge in interest. That means that rate increases are companies' primary way to recoup earlier losses and to make up for lost revenues from industry practices now banned by federal law.

The consumers most affected by the higher rates are those who carry a balance from month to month, meaning less-well-off borrowers.

"[Credit issuers] don't know the difference between squeezing [consumers] hard to raise revenues ... and pushing them into bankruptcy," says Manning. With fewer borrowers making payments, there will be less income for issuers, leading to higher interest rates and even more nonpayments – a lose-lose cycle that won't relent until consumers and lenders better understand their debt.

Related:

Debit card fees: Senate votes for limits, seeking to aid consumers

New credit-card rules: How do they affect you?

New credit card laws 2010: How will I benefit?

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