Posts Tagged ‘credit cards’

Credit card defaults keep climbing

Default rates in May continue to rise as borrowers struggle with the weak job market. Banks continue to write off credit card debt as consumers hurt by record high unemployment default at an increasing rate. Regulatory forms filed this week by some of the nation's largest banks showed default rates on credit cards rose in May. The default rate is a measure of loans that the bank does not expect to be repaid. "Data from May showed continued signs of stress for card issuers, reflective of worsening unemployment trends and deteriorating macro [economic] conditions," analysts at Bernstein Research said in a report Tuesday. Bank of America (BAC, Fortune 500), the nation's largest bank, said its default rate jumped to 12.5% in May from 10.5% the month before. Other major banks, including Citigroup (C, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Capital One (COF, Fortune 500), also reported increases in May default rates. However, delinquency rates, which reflect the number Continue Reading

New law may help you get out of debt

Congress recently passed the Credit Card Accountability, Responsibility and Disclosure, or Credit CARD, Act of 2009. The law goes into effect Feb. 22, but many pieces of the legislation have other effective dates. For Americans who carry a balance, which is about 40 percent of people who use a credit card, some of the protections will be welcome news. The bill does away with a prevalent credit card practice called the Universal Default Clause. This practice allowed credit card companies to increase interest rates to consumers based on credit report activity on other debt held by the consumer. When this part of the law goes into effect, August 2010, your credit card issuer will be able to raise your interest rate only if the account in question is past due by 60 days or more. Once you get the account back on track and make six timely payments, your interest rate must go back to the lower normal rate for your account. There are some nuances, including rules about promotional rates and Continue Reading

U.S. bill could help merchants cut credit card fees

Merchants and retailers would be able to negotiate with banks to reduce costs associated with credit card purchases, according to legislation introduced on Thursday by lawmakers in the U.S. House of Representatives. The measure, called the Credit Card Fair Fee Act, focuses on the so-called interchange fee that restaurants, service stations and other stores pay banks for credit card-related purchases. Merchants and some lawmakers have complained that merchants and retailers have been blocked from being able to negotiate a fee structure with credit card networks Visa Inc and MasterCard Inc, whose members are banks. Visa and MasterCard set the fee structure and control almost three-fourths of the volume of transactions on general purpose cards. American Express Co and Discover Financial Services have their own systems. Store owners and retailers have also complained that banks collude to set the fee structure and block them from being able to negotiate lower fees, even going as far as Continue Reading

Fewer Credit Card Offers in the Mail, But More Fees

There's mixed news on the credit card front. U.S. households are receiving far fewer credit card offers, which could be a good thing for those who might easily fall into the debt trap. But for those receiving offers, the cards increasingly come with annual fees. In the first quarter, U.S. households received 372.4 million offers, a 67 percent drop from the same time period last year, according to Mail Monitor, the direct mail tracking service from market research firm Synovate. Twenty-seven percent of the cards carried an annual fee, up from 18 percent one year ago. The mean annual fee is $74, Direct Mail found. Credit card companies have been reeling from a record number of write-offs, or debts they have to give up on, making them leery of lending to riskier borrowers. Last month, President Obama signed a law that would ban many consumer-unfriendly industry practices, such as arbitrarily raising interest rates, beginning in February. Card issuers have said the new law could force Continue Reading

Credit card firms make money on all

It is disappointing to see the credit card companies spread propaganda that credit card holders who pay their balances in full monthly are somehow "subsidizing" those who choose to carry a balance and incur fees ("New credit card restrictions put an end to subsidies funded by the less fortunate," May 24). Merchants who accept credit cards must pay an interchange fee of 1 percent to 5 percent plus a transaction fee of 50 cents or more. These costs are passed onto the consumer as part of the purchase price. As a result, someone like me who charges over $25,000 per year, pays $600 to $1,000 per year that goes to the banks and credit card companies. I'm sure this is far in excess of what it cost to handle these transactions. The credit card companies may be greedy but they're not stupid. I'm sure they would cancel my card in an instant if they were losing money on me. Instead they are using news of the legislation concerning credit card fees to spread the myth that they will have to Continue Reading

How To Manage Debt And Credit – Banking And Budgeting Guide

Avoiding credit card overload increases your opportunities to save and invest for important goals. 1. Managing Debt and Credit Credit was once defined as "Man's Confidence in Man." But in fact, the definition of credit today is more like "Man's Confidence in Himself." Using credit today means you have confidence in your future ability to pay that debt. Forty years ago, your parents may have paid cash for their homes and their cars, a largely unheard-of event today. If they borrowed money at all, chances are it was from a relative or friend, and not a financial institution. Today debt and instant credit are part of our everyday lives. The convenience of instant credit, however, has taken its toll. Many individuals use credit cards to spend more than they earn, and a few of these people actually build themselves a debt prison from which some never emerge. On the other hand, those who never use credit can be denied a loan or credit when they have a justifiable need or use for it. Using Continue Reading