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We’re “borrowing” this topic from our friend Mitch over at TopFinanceBlog.com. While Mitch’s latest post is titled “Why I Say Credit Scores Are Worthless,” we’re taking a somewhat different approach.

Banks and credit card companies have been jacking up interest rates and fees (if not simply canceling cards) more and more these days — sometimes without warning — as they prepare for the new business landscape that will be created by Congress’ upcoming credit card reform.

Personal finance blog “FiveCentNickel” asks their readers to imagine a world where cash is king in a recent post titled “Is It Possible to Live Without Credit Cards?”

The notion may seem unrealistic to some, especially in this uncertain economic environment where thousands of Americans are unemployed or under-employed and rely on their plastic to get them through each month.

Lawmakers may have thought the new credit card rules — some which have already taken affect, and others that will begin in February — would be able to, in some respects, save borrowers from themselves. But if Congress thought that the Credit Card Accountability, Responsibility & Disclosure Act of 2009 (CARD Act) could save consumers from the credit card companies, they were wrong.

Late last month we already informed you of one loophole the card companies found in the “45-days notice before a rate change” rule. Now personal finance blog WalletPop.com says the companies have found even more.

Some say it was inevitable. First came the wave of mortgage defaults, in which some borrowers essentially just mailed in the keys and stuck the lender with the mortgage… and the property.

Perhaps it was just a matter of time until some credit-card borrowers did the same thing:

Those on the front lines of the debt industry say there is a small but increasingly noticeable group of strapped consumers who, like Ms. Birks, are deciding they will simply stop paying. After loading up on debt eagerly provided by the card companies during the boom times, these people now find themselves trapped in an endless cycle where they are charged interest on interest and fees upon fees while the lenders get government bailouts.

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As expected, President Obama today signed into law a slew of new rules and limits on credit-card issuers:

Under the bill, credit-card companies will have to take several steps, including posting their credit rules on the Internet and giving cardholders a written statement explaining pending interest-rate hikes 45 days in advance.

Credit-card companies won’t be able to increase interest rates on existing balances except in limited circumstances, such as the expiration of a promotional rate or failure by a customer to make a payment within 30 days of the due date.

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After reading our recent post on the credit-card changes coming our way, I came across this interesting observation in a NY Times article:

“There will be one-size-fits-all [credit card] pricing, and as a result, you’ll see the industry will be more egalitarian in terms of its revenue base,” said David Robertson, publisher of the Nilson Report, which tracks the credit card business.

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Along with their diplomas, many college students are graduating with debt. According to a study by Sallie Mae, the nation’s largest provider of student loans, the average amount of credit-card debt among graduating seniors rose to $4,100 last year from $2,900 in 2004. The study also found that nearly 85% of students have at least one credit card.

Why target college students? College-age students represent a credit-card company’s dream come true:

We all know the swift and severe penalties credit card companies can place on delinquent customers. Now, even being a responsible customer won’t save you from feeling the effects of the credit card companies’ latest restrictions.

Despite paying their bills on time each month, many responsible cardholders are experiencing rate increases and cuts to their credit line, as well as being declined when they apply for additional cards.

Financial expert Peter G. Miller says “in a word, no.”

“Imagine that over the years you have applied for a bunch of credit cards — you know, to get 10 percent off at a department store, or a gas card or maybe a major credit card that you no longer use,” explains Miller.

“While such cards may be dormant, they are listed on your credit report…”

Some holders of American Express credit cards might find a reason to lighten their wallet:

American Express Co, battered by mounting credit card losses, is offering $300 to a limited number of U.S. card holders who pay off their balances and close their accounts, the company said on Monday.

“We sent the offer out to a select number of card members,” said Molly Faust, a company spokeswoman. “We are looking at different ways that we can manage credit risk based on the costumers overall credit profile.”

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