breaking news on credit cards.
Americans are falling behind on their credit card
payments at an alarming rate, sending delinquencies and defaults
surging by double-digit percentages in the last year and prompting
warnings of worse to come.
An Associated Press analysis of financial data from
the country's largest card issuers also found that the greatest rise
was among accounts more than 90 days in arrears.
Experts say these signs of the deterioration of
finances of many households are partly a byproduct of the subprime
mortgage crisis and could spell more trouble ahead for an already
"Debt eventually leaks into other areas, whether it
starts with the mortgage and goes to the credit card or vice versa,"
said Cliff Tan, a visiting scholar at Stanford University and an expert
on credit risk. "We're starting to see leaks now."
The value of credit card accounts at least 30 days
late jumped 26 percent to $17.3 billion in October from a year earlier
at 17 large credit card trusts examined by the AP. That represented
more than 4 percent of the total outstanding principal balances owed to
the trusts on credit cards that were issued by banks such as Bank of
America and Capital One and for retailers like Home Depot and Wal-Mart.
A. Pappas writes:
Name your passion, and the credit card companies
probably have designed a rewards card for it. Bank of America has more
than 5,000 partnerships worldwide, offering customers points for
everything from travel to merchandise to one-on-one meetings with
Chase bubbles about the benefits of its Freedom card,
which allows customers to switch between points or cash back. And
newcomer Barclays touts its DirectTV Rewards Card for giving "Rewards
Money Can't Buy," such as backstage passes to "The Tyra Banks Show" or
a chance to meet CNBC "Mad Money" host Jim Cramer.
"We see rewards programs as an important part of our
product offerings," says Ric Struthers, North America Card Services
executive for Bank of America.
"Almost every offer out there has some type of rewards
component," says Megan Basilio, managing director for marketing at
Barclaycard US. "Consumers expect rewards for what they spend."
But are reward cards really all that rewarding? "A lot
of times the sizzle is not as good as the steak," says Bill Hardekopf,
CEO of Lowcards.com, a site that compares credit card offers. "You have
to be very careful and study the offers that you are considering."
The first lesson from our experts: Know the game.
Rewards cards are created to make people spend more. "Rewards cards
aren't free," says Emily Davidson, a credit card expert at Credit.com.
"Credit card marketers are very, very smart. . . . They make a lot of
money just by having you use the card."
I always cancel credit cards I’ve stopped using, even
if closing the accounts hurts my credit score by raising my
debt-to-credit ratio. Why keep unneeded accounts open and risk identity
theft? I don’t follow the advice to split charges evenly among cards.
The idea is to use only a small portion of each card’s credit limit to
boost our credit score. But since the only two cards I use offer
rebates, I’d rather pick the one that gives the most cash back for each
purchase (one does at grocery stores, for example, and the other at gas
stations). Naturally, I always pay my card bills in full. Your e-mails
show many of you carry a balance because you think doing so improves
your credit score. It doesn’t. Even if it did, I’d rather save on the
My credit score? The last time I checked two years ago
it was over 800 (760 or above generally qualifies for the best credit
terms). I don’t know my score now and can’t think of any compelling
reason to find out, not if I have to pay for it. To be sure, monitoring
our credit history is important, and improving our credit score can
save us thousands of dollars through lower interest rates. But in
making our financial decisions, “we should not be ruled by credit
scores,” said Craig Watts, spokesman for MyFico.com. That’s a
remarkably candid statement considering MyFico.com is the consumer
division of Fair Isaac Corp., the company that invented — and markets
and sells — the widely used FICO credit scores.
It's hard to beat a trip to Europe. You get scenery,
history, different cuisines, museums, shopping, new friends to make,
and more. Your trip can quickly become a bummer, though, if the credit
card you brought with you keeps getting rejected. That's increasingly
happening to Americans in Europe, because many countries there are now
using a different kind of card than we use over here. The new system
requires purchasers to enter a PIN instead of signing a receipt, and
the European cards have extra information embedded on a chip within
them. In other words, your card just might not work in many places.
Especially troublesome are self-serve card-reading machines at places
such as gas stations and train stations.
MASTERCARD was warned by European regulators yesterday
to drop its cross-border card fees within six months or face huge daily
fines. The company has been told to change how it sets its fees for
international transactions on credit or debit cards as they are
unfairly inflating costs for both retailers and customers.
The European Commission says that, for 15 years, the
fees have violated the rules on fair competition.
The fees – known as multilateral interchange fees
(MIFs) – apply to both MasterCard credit cards and Maestro debit cards,
and range from 0.4 per cent to 1.2 per cent of a transaction.
MasterCard has been warned that if it does not get rid
of the fees within six months, then the commission will impose daily
fines worth up to 3.5 per cent of the company's global turnover, which
amounted to £2.5 billion last year.
On Friday's Houston Business Show (M-F at 11 AM on CNN
650), Host Kevin Price interviewed new Houston Business Show Advisor,
Calvin Brown on the five worst credit card companies.
Here’s a quick run down of the five companies that
have a reputation of destroying a client’s credit: * Bank of America *
Discover Financial * Capital One * World Financial Network National
Bank (WFNNB) * Washington Mutual/Providian
These companies’ are noted for being unforgiving, rude
customer service, overextending credit, and weak ID theft controls.
to the Onion: "Mom-And-Pop Loan Sharks Being Driven Out By
Big Credit-Card Companies."
PHILADELPHIA–Frankie "The Gorilla" Pistone leans
wistfully on his bat. Then, without warning, he picks it up, swinging
it furiously toward his deadbeat client's leg. Just before the
Louisville Slugger makes contact with the man's kneecap, he pulls back,
as only a real pro can, leaving the $250-in-the-hole man gasping in
fear and relief. "Just get it to me by tomorrow, because next time, I
ain't gonna let up," Pistone says.
...Frank Pistone is part of the dying breed known as
the American Loan Shark. Not so long ago, the loan shark flourished,
offering short-term, high-interest loans to desperate people with
nowhere else to turn. Today, however, Pistone and countless others like
him are being squeezed out by the major credit-card companies, which
can offer money to the down-and-out at lower rates of interest and
without the threat of bodily harm.
says: "A credit card is a system of payment named after the
small plastic card issued to users of the system. A credit card is
different from a debit card in that it does not remove money from the
user's account after every transaction. In the case of credit cards,
the issuer lends money to the consumer (or the user) to be paid to the
merchant. It is also different from a charge card (though this name is
sometimes used by the public to describe credit cards), which requires
the balance to be paid in full each month. In contrast, a credit card
allows the consumer to 'revolve' their balance, at the cost of having
interest charged. Most credit cards are the same shape and size, as
specified by the ISO 7810 standard."
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