Credit-card companies continue to raise customer interest rates and fees despite a record-low target rate from the Federal Reserve and billions of dollars in bailout money that has been pumped in to the financial companies.

Though the Federal Reserve in December slashed its target rate to a range of between 0% and 0.25%, and a cut at the Fed usually means a drop in credit-card rates as well, many credit-card customers are instead seeing increases as companies try to offset increased losses in their card operations.

The problem, the card companies and industry representatives say, is that the weak economy and job losses have left more people unable to pay their credit-card bills, leading to greater losses. The increased rates and fees are necessary, they say, to make up the difference.

But it also means that companies that benefited from infusions of cash from U.S. taxpayers are now turning around and charging many of those taxpayers more for their services.

Reports of increased rates and fees are coming from customers of the likes of Citigroup (C), which has received more than $50 billion in bailout money; Bank of America (BAC), which got $25 billion from the Troubled Asset Relief Program; JPMorgan Chase (JPM), which received $25 billion from taxpayers; Capital One Financial (COF), which took $3.56 billion from TARP; and American Express (AXP), which got $3.39 billion in bailout money.

Those are just some of the biggest players, but there are likely others raising rates as well -- which impacts ordinary Americans, even those who have good credit, during one of the worst economic downturns in recent memory.

“I received notice that the interest on my Chase card will go up from 4.24% APR to 9.24%,” Chase customer John Biek said in an email to FOX Business.

Kathy Nassios, another Chase customer, said that her Chase card had always used the Prime rate, and now was using Prime plus 3.99 percentage points.

Gary Barrett told FOX Business that his Capital One card rate was going to increase from 14.3% to 17.9%.

“This is a card that normally I carry a balance of less than $800, and frequently it has no balance due, and I have never been late on a payment,” Barrett wrote in an email. 

And Patricia of York, Pa., said in an email that her Capital One Visa will see a hike as well: “My current rate of interest is 5.37%. The notice states that [the] rate increase will go to 13.9% on purchases [and] 24.9% on cash advance.”

“Bank of America is doing the most dramatic changes I’ve seen,” said Emily Peters, a personal-finance expert for Credit.com. She said she has heard of cases where BofA card rates have been going up 10 to 20 percentage points.

Citi, BofA, JPMorgan, Capital One and AmEx all said that they have been evaluating customer rates on an individual basis, and noted that they give clear advance notice of all increases to their customers.

Nessa Feddis, vice president at the American Bankers Association, said that according to the most recent Federal Reserve data as of a few months ago, “interest rates on average have actually come down” and are historically fairly low.

But Feddis added that “in an economy where things are getting a little unpredictable, there’s greater risk” to the company to let customers borrow, “and that has to be reflected in higher interest rates.”

She also said that card companies rely on investors to give them money that they then lend to investors, and in such a climate the investors “want to be compensated for that risk” of sending money to the card companies because they know the situation is shakier.

A wide variety of consumers are being hit by the changes, too.

Peters said that people who have revolving balances and low rates are big targets; people who have long relationships with their credit-card companies seem to be vulnerable, especially if they have low rates. Also, she noted that people living in areas with high foreclosure rates seem to be particularly at risk.

So, what is a customer to do when confronted with a notice about higher rates or fees?

If the customer doesn’t want to accept the increase, it’s often possible to opt out. But, that means basically halting use of the card. It doesn’t mean the balance has to be paid off all at once -- it can be paid down over time -- but any further charges made on the card would likely be subject to the new interest rate.

Customers’ first instinct is often to close the account, but that might not be a good idea.

“If you close your account, it’ll hurt your credit score. It’s going to hurt you a lot more than it hurts them” Peters of Credit.com said. “You could easily see a 100-point drop” in a credit score” from closing an old credit card.

Peters gave the example of an old credit-card account that shows a longer credit history; if that account is removed, the credit history looks shorter and could damage a score. Also, customers who pay off their balances every month likely wouldn’t be affected very much by the rate increases, and thus wouldn’t stand to gain from closing the account 

The ones who gain would most likely be people who keep large, revolving balances on their cards, for whom the decline in credit score would be offset by the better rate.

Also, customers “are always free to call and review their account,” noted Mona Hamouly of American Express. “We can see if there’s another product that makes sense for them.”

“Consumers have to remember that they’re still in the driver’s seat,” noted Carol Kaplan of the American Bankers Association. “There are 6,000 credit-card companies in this country, and if people aren’t happy, all they have to do is shop around.”

Consumers are supposed to get some relief from sudden rate increases and other credit-card term changes in the form of new Federal Reserve regulations set to take effect in mid-2010. But some lawmakers are already saying that isn’t soon enough. Sen. Chris Dodd (D-Conn.), the chairman of the Senate Banking Committee, has already proposed legislation that would implement restrictions on card companies more quickly.

Dodd said in a press release that his legislation would “protect consumers from ‘any time, any reason’ interest rate increases and account changes,” as well as “protect cardholders who pay on time” and put in place a number of other consumer protections.

The release was dated Feb. 11, but the bill’s fate, amid the economic-recovery legislation and more, is uncertain.

As for the bailout money, Kaplan of the American Bankers Association says the TARP funds “provide a foundation” for companies to bolster their balance sheets, and aren’t meant to go toward things like helping credit-card customers directly.

“Funds are given to healthy banks to bolster their capital so they are able to lend,” she said. “Credit cards are a different subject. When the interest rates on credit cards are going up in certain cases, it is a reflection of the current risk in the market… Given that’s going on in the economy, you don’t want banks making imprudent decisions.”