It appears that the consumer credit crisis that we have been predicting for some time is now finally beginning to hit the market. The housing boom has seen many consumers utilize their home equity lines of credit in order to pay off unsecured credit card debts. Now that that resource has dried up, many Americans are beginning to default on their credit cards. This has caused strain on banks that are now raising their interest rates in order to try and offset the higher defaults. Unfortunately, this will only compound the problem by making it even more difficult for Americans to get out of debt which will force more into default. In the end, someone's going to take the hit - whether it be consumer's with debt or U.S. banks (which are already beaten down) with debt when consumers declare bankruptcy.

From MarketWatch:
Faced with mounting account delinquencies, major U.S. banks are penalizing credit-card customers late on payments by hiking their accounts to maximum default interest rates of 30% and more -- even those with good credit records ... The decline in Americans' home equity due to slumping real-estate values is limiting cardholders' ability to pay off higher-interest credit-card debt with home-equity loans. As that resource becomes unavailable to more borrowers, experts say, lenders are taking aggressive measures to limit their exposure on unsecured credit-card debt.