Credit Blog

All good things...

2008-04-28T17:26:00.001-04:00

To our valued readers at the Credit Blog, Whiskey or What and I are passing the torch to a new blogging team here at the Credit Blog. Eric in Vegas will be joining us as the primary blogger, and will certainly bring new friends and a fresh team to the blog.

Holy Charge Card, Batman!

2008-04-10T07:23:00.002-04:00

What ever happened to the purchasing and approval process? According to CNN, in today's news, and according to a Government Accountability Office study released Wednesday, Federal employees charged millions of dollars to government credit and debit cards. The fraudulent charges included Internet dating services, iPods, expensive clothing, a $13,500 dinner and lingerie to be worn during jungle training in Ecuador. The audit also found that the agencies responsible for the cards could not account for nearly $2 million worth of items, which included computer servers, laptop computers, iPods and digital cameras. Shockingly, almost half of all the transactions made in the 2006 fiscal year with government credit or debit "purchase cards" were, according to the GAO, improper. The purchases were either not authorized or did not meet purchase use requirements. Read the story.

Marc Farber Says it Best

2008-04-07T09:44:00.004-04:00

After meeting and listening to Marc Farber and his friends, I am beginning to wonder about the advisability of investing in the US at all... Compare US investing to the phenominal double digit rates of return in Russian and former "Eastern Block" real estate. Ouch! Check it out. According to Swiss investment guru Dr Marc Faber you should never buy a former boom asset class in an immediate correction. The next boom is almost always in another asset class and it can take many years for former glory to be restored, if it at all. If you really want to feel depressed in the face of recession, check out Marc's GloomBoomDoom Report.

Barack Obama weighs in on college student credit

2008-02-25T12:32:00.003-05:00

According to the Wall Street Journal's Washington Wire Blog, Sen. Barack Obama met with two dozen college students at the University of Texas-Pan American this past Friday. He discussed his proposal to offer a $4,000 college tuition tax credit with students and warned them “Just be careful about those credit cards, all right? Don’t eat out as much..." After the foreclosure crisis, he warned, “the credit cards are next in line.” In reaction to one student who talked about late-night television advertisements that promise easy loans, Obama responded, “I’ve seen those... Those ads are terrible! They’re all like, ‘Hey, this is fun! No problem!’". Read the whole story here.

In the credit card news today

2008-02-24T16:16:00.007-05:00

According to an article in CNN.com/Living, Americans put $2.2 trillion in debt on their credit cards last year. In fact, the percentage of those who pay late was the highest in three years. While some companies will lower your interest rates if you ask, experts say we should use no more than 10 percent of our available credit in today's credit environment. Details here.

In other news, watch out for your neigbors! According to according to the Sarasota Highlands Today, a Sebring woman was arrested Wednesday and charged with 41 fraud and larceny counts for allegedly stealing her neighbors' mail and using their credit cards and checks. Gory credit card details here.

In still more news, the American Chronicle reports on options for consumers with bad credit. Bad credit applicants know that getting a credit card is not an easy task when your credit report shows delinquencies and write offs. The Chronicle recommends that when seeking a new credit card, bad credit applicants should seek alternatives. See Cardpick's section on credit cards for people with bad credit.

Also recommended for monitoring your credit please try our affiliate, FreeCreditReport.com.

All our oldest ideas revisited

2008-02-20T11:24:00.004-05:00

CreditCards.com announced that it was selected by LendingTree to power the credit card channels on LendingTree.com and its sister site, GetSmart.com. Now owned by an Austin TX based group, CreditCards.com was once owned by a small domainer company in Boston that launched about 20 first level domains as businesses in industry parterships and with start-up management teams. When the creditcards.com site was owned by that Boston group, the business team was turned down on a similar LendingTree proposal. One member of the original team was quoted as saying, "Why they are even using one of the logos which certain members of the team rejected even though it was the best one!" Too bad those guys short sold that site... Read more here.

Inflation was up in January

2008-02-20T11:05:00.005-05:00

According to MarketWatch, the underlying rate of U.S. inflation accelerated in January. MarketWatch, reporting on statistics released by the US Department of Labor said that the consumer price index increased 0.4% in January, driven by 0.7% gains in both energy and food prices. The core CPI (Consumer Price Index), which excludes food and energy costs, was also up 0.3% in January. MarketWatch reported that this was the largest gain since June 2006. Economists were expecting the CPI to rise 0.3% in January after a 0.4% gain in December. The core rate was expected to rise 0.2% after rising 0.2% in the previous month. What does this rise in inflation mean for you? In the short term, rising prices may continue to stimulate the Federal Reserve to control interest rates downward. So you can expect your credit card interest to at least stay where it is or go a little later for the moment.

In the credit card news

2008-02-10T12:24:00.000-05:00

It's mostly bad news this time of year, after the dust settles on Christmas, and only a little spending anxiety remains as St. Valentine's Day looms on the nearly forgotten horizon. So now it's time to knuckle down and work and pay, and work and pay.

In an article in the Times Online today, the publication blames the slowdown in the housing market for a recent downturn in the use of credit by consumers. The article also sites a change in the use habits of people using gift cards to make purchases. Seems they are spending on household necessities, like groceries, instead of the usual type of spending spree for gifts or furniture or new dishes... It also seems that credit-card delinquencies and not making minimum monthly payments are growing. Read more here. Tough times ahead?

In other news, DelawareOnline warns today that we better pay our bills quickly now as credit card companies are shrinking the window of time consumers have to pay off their credit card balances, i.e. increasing the minimum payment. The report also notes that late fees are increasing. Get the full story here. Are we depressed yet?

In the UK times are toughening too. In a story today in the Financial Times, there are warnings that lenders are scrutinizing and accessing increasing amounts of personal data when deciding on credit cards and loans. Lapses in good credit behavior that would have had little effect on a credit rating a year ago are being used to deny credit. Get the full story here. Are we immune?

Anyway, there is nothing we can do but work our way through. Now let's get to work. :-

Falling Fed rates make variable rate cards better

2008-02-06T07:33:00.000-05:00

If you have a variable-rate credit card, you may have already seen your rates fall in the last couple of weeks. According to KRIS-TV in Corpus Christi TX, the average interest rate on variable-rate cards has fallen to 13% in late January, from 14% in late September. The full positive effect from the Fed rate cuts may take a few months to be reflected in your variable rate. According to Jessica Austin of CardRatings.com, about 90% of all cards issued today have variable rates that typically move up and down in response to the Prime Rate. According to CardRatings, over the coming weeks and months, interest rates will fall .50% on variable rate credit cards.

Credit crime's are comitted by all kinds of people

2008-02-01T12:51:00.000-05:00

From Newspaper owners, to father and son entrepreneurial con artists the world seems awash in scammers and thieves comitting credit card fraud. According to the Atlanta Journal-Constituion, the former owner of a Cherokee County newspaper, Connie Buce, 42, of Woodstock, was arrested for using the credit card information of her newspaper customers to commit identity fraud. In another article in the Sacramento Bee, a father and his son were sentenced for defrauding more than a thousand customers out of approximately $125,000. This insestious and felanous team initiated false $25 debits each month against 400 to 500 of his 1,200 credit card merchants, rotating the merchants to avoid arousing suspicion.

15 Year Mortgage Looks Juicy

2008-01-22T21:54:00.000-05:00

If you have a 30 year fixed mortgage that is a few years old and had a reasonable interest rate, 5.5% - 7.5%, there may be an opportunity to refinance and really save on interest payments. While the 30 year fixed mortgages have stubbornly refused to really drop dramatically, though Bank Rate is showing them at 5.42% which is historically low, just not as low as everything else has dropped.

A curious thing shows up on the rate curve, Bank Rate is showing the 15 year mortgage at 4.98%. Another interesting thing that my brother, a mortgage broker at Mortgage Foundation (if you call, ask for Eric, tell them I sent you), said that while Fannie Mae has instituted a lot of penalties and extra fees on the 30 year mortgage that don't show up on the published rate, but hit you with the actual mortgage, they aren't doing so on the 15 year mortgage.

If your house can appraise sufficient for you to have some decent equity in your home, you might qualify for a really low rate on a 15 year mortgage.

As an idea, if you owe $250,000 at 7.5%, than your monthly payment is $1748.04, $1562.50 of which is interest (that's on a fresh loan, not necessarily the case if you are 4-5 years into it). On a 15 year mortgage at 5%, your payment would go up approximate $225 to $1976.98, but only $1041.67 would be interest.

In other words, if you could find an extra $225/month to pay at the lower rate but shorter your, instead of paying down your mortgage by less than $150/month, you'd be paying over $900/month right off the bat.

If you have money on a second mortgage that you could consolidate down to a single payment, or any credit card debt, the savings could be huge. You might be able to combine your car loan into the mortgage, knock $300-$400/month in car payments off, and find yourself with more money each month and paying your loan off sooner.

I'm getting the paperwork together, go see if it's right for you.

Fed Cuts Rates 75 Basis Points

2008-01-22T21:49:00.000-05:00

In a huge attempt to keep financial markets from collapsing, the Fed cut their overnight rate by 75 basis points, or three quarters of a percent. Given that a large rate cut has been 50 basis points since the Greenspan era of measured cuts, and this came between meetings, this can only be seen as drastic action on the part of the Fed.

While we're happy to see the Fed take action to keep the economy afloat, and we all love watching our HELOC and credit card rates drop (those that are tied to the Prime Rate), I am concerned that the Fed is cutting rates drastically when inflation is showing an uptick. The expectation of inflation can cause more inflation, so I'm concerned that if inflation gets out of control, we'll see dramatic increases in the rates later.

Use these lower rates to pay off your debts faster, not spend more money. The Fed's goal may be to get people to spend more, but if rates go up, you'll be in for a world of hurt if you took on a lot more debt during the low rate period.

HAPPY NEW YEAR!

2008-01-03T13:31:00.001-05:00

We are back from an extended break, and hope all of you have had a wonderful time! Now let's all get to work and pay down our credit car balances!

Congressional hearings on excessive card fees resumed in Washington

2007-12-23T11:11:00.000-05:00

Scrutiny of credit card companies by legislators could spur credit card rate relief for credit card consumers according to an article in today's San Jose Mercury News. Chase Bank, one of the top five credit card issuers, announced that it will no longer increase a cardholder's interest rate when his/her credit score declines, starting March 1, 2008. This is imortant because your credit score could decline if you have too many credit-check inquiries, or if you close an old account, or if you increase your debt, or simply pay a bill late. Citigroup, another major credit card issuer, made changes after Congressional hearings last summer. Citi stopped the practice of "universal default" rate increases. Similar to Chase, this means Citi will no longer raise cardholders' rates over a late payment on another company's credit card. Citi will also stop adjusting cardholder's original interest rates during the intial credit card agreement term, typically two years.

Some credit card safety tips from the Des Moines Register

2007-12-21T09:15:00.000-05:00

We can all use a little help keeping our credit card numbers safe. Not a day goes by, these days, that I don't see a dozen stories on credit card theft and credit card fraud. Today's Des Moines Register printed an article with some really good tips for keeping your credit card information safe this Holiday Season. The article reminds us that credit card criminals don't need your card to charge up a storm. They only need to know the credit card number to make bogus charges, and cash withdrawals from your account. The Register recommends 7 important safeguards:

1. Don't carry credit cards all of the time, just when you are going to use them.
2. Sign your credit cards or put "See ID" on them as soon as you get them.
3. Photocopy your credit cards, front and back, and keep copies in a safe location.
4. Don't let salespeople copy your credit card number when using a check or social security number with your credit card.
5. Do not sign a blank receipt. Draw a line through blank spaces above the total.
6. Only give your credit card number over the telephone if you know the company is real.
7. Notify your credit card providers immediately or in advance of any change in address.

See the full article here.

Expense reduction for credit card processing fees

2007-12-10T12:21:00.000-05:00

Ever wonder how much merchants pay for credit card processing services? Businesses across the Nation spend millions of dollars every year on such credit card processing fees. And what they pay, of course, depends how big the merchant is. For every $100.00 you spend this Christmas, $3-4 on average goes to the merchant processor and the banks and networks they belong to. And, the costs of credit card processing have become so complicated that few merchants know enough to distinguish between good pricing and bad pricing on merchant processing fees. And now there are even businesses devoted to negotiating discounts for merchants that pay themselves on their merchant client's savings. Great idea! Get paid based on what you save the client. One such group that helps credit card merchants save big is EP Consulting in Temecula CA. Click here to learn more.

Trouble gambling with credit cards

2007-12-08T12:57:00.001-05:00

Visa was the first credit card company to block casinos from allowing (and encouraging) gamblers to load up their credit card balances with casino bound cash advances. MasterCard, American Express, and Discover followed quickly. Despite lower and lower "high risk" transaction limits, and the effects of the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006 which made it illegal for banks to take transactions from online casinos (except for horse racing and the lottery), despite these credit card curbs, consumer credit card abuses have become the largest issue for gambling operators. According to a recent article in OG PAPER, 70% of credit card deposits to online casinos fail. This leaves most casinos with only a few e-wallet services and ACH transaction options. Read the story here.

Presidential hopefuls join law makers on credit card reforms

2007-12-03T11:46:00.001-05:00

US lawmakers and Presidential hopefuls urged America's largest financial companies to "clean up" their credit card practices. An ongoing congressional probe of charges and fees imposed on consumers includes shopper interviews in the high part of the Christmas shopping season. The AFP (Associated Free Press) reported that Senate subcommittee chairman, Carl Levin, said few Americans were aware of how the credit card industry's complex credit rating system can harm their financial health. Meanwhile, the American Bankers Association (ABA) warned Congress that new legislation could have "unintended negative consequences," and said it was a myth that Americans were drowning in credit card debts. Holy credit card company myth, Batman! Turns out that US credit card debt has soared in recent years to 877.1 billion dollars in 2006, up over 100 billion dollars from 770.5 billion in 2003, according to the Federal Reserve. Who should we believe? Presidential hopeful, Barack Obama promised to "crack down on predatory credit card companies using deceptive practices to make big profits while driving families deeper into debt." His proposed bill would bar banks from hiking interest rates without giving consumers an opt out option. Check out the whole political story here.

With so many things to fight about...

2007-11-27T13:07:00.000-05:00

Would you believe that anyone would end up in a fist fight over credit cards? Well according to a story in AXcess News it seems that two people were arrested at a Wauwatosa, Wisconsin Kmart on Saturday after a brawl ensued . Store representatives said it was a credit card promotion gone awry! The brawl ensued between two women and spread to more shoppers, and after several men tried to intervene, and a dozen police squad cars were brought in to break up the fighting crowd of Kmart credit card applicants. It appears the store ran out of credit card applications when the fight broke out. The run on credit card applications was the apparent result of a "computer glitch" that issued one customer a $10,000 line of credit instead of the $10 promised in the promotion. Read the whole story here.

Discover Card penetrates Global Payments

2007-11-26T10:07:00.001-05:00

Global Payments Inc., a leading provider of electronic transaction processing services for consumers, merchants, Independent Sales Organizations (ISOs), financial institutions, government agencies and multi-national corporations located throughout the United States, Canada, Latin America, Europe and the Asia-Pacific region has expanded acceptance of Discover Cards. When the rollout of its new program is finalized, Global's entire merchant portfolio will have the capability of processing Discover Network card transactions with full customer support services. In a PR NewsWire press release today in CNN Money, the company announced that it anticipates full implementation by the third quarter of 2008.

Hillary Clinton gets in on the Credit Card action

2007-11-24T10:49:00.001-05:00

Senator Hillary Clinton issued a statement regarding growing credit and bankruptcy concerns among Iowans. She said the economy is not working for middle class Americans and that President Bush created a trapdoor economy into which too many Iowans are falling and landing in debt. She said that as President, she will act quickly to ensure that families saddled with high debt do not lose their most important asset to foreclosure, and that she has called on the President to immediately convene a ‘crisis conference’. She also said that she will put an end to abusive practices by credit card companies that impose enormous fees and astronomical interest rates on unsuspecting borrowers, and promised to restore fairness to the economy and restore the basic bargain that "if you work hard you will get ahead". In other states, a top secret White House search by trace of credit card receipts in local Florida pubs turned up no shows for comments from Credit Card Al and Thanksgiving drinking pal, WhiskeyOrWhat who were last seen heading away from their respective Mama's kitchens reportedly in search of "something real to drink". Seems they may have been paying cash in those bars.

The crunch behind the credit crunch

2007-11-19T07:46:00.001-05:00

While securities backed by subprime mortgages have caused losses and layoffs from Wall Street banks to Main Street mortgage lenders, securities backed by other types of consumer loans, such as credit card receivables, haven’t been impacted by the credit crunch, yet. All of that could soon change according to a report today in the corporate finance industry trade publication Financial Week, if the broader economy weakens further and housing prices continue to fall, the credit card sector could go south as soon as the beginning of 2008! According to the report, at Sept. 30, there was over $920 billion in consumer credit card debt and with delinquencies still low compared with historical standards, but rising steadily over the past year, the scales may tip post Christmas.

Good advice from the Wall Street Journal

2007-11-16T10:57:00.001-05:00

Owe a lot of money to credit card companies? Can't (or won't) cut your budget for the Holidays? The Wall Street Journal says to line up your credit cards on a table, and turn them over and call the phone number on the back. Ask the customer service rep for the credit card interest rate you're currently paying, as it may have changed since last you looked at your credit card statement. Tell the rep you're trying to decide which card to use this holiday season, and ask if they will please lower your rate. If they won't, then ask to speak with someone who can give you a better deal. This does work, not always... but a lot. I have done it myself, so I am sure. As for the Wall Street Journal article, there is a lot more to it, so if this sparks your interest, read it all, here.

Build your credit without building your debt

2007-11-15T11:34:00.001-05:00

Syndicated columnist Liz Pulliam Weston in her Column Money Talk in the Los Angeles Times talks about building credit without increasing your debt. Liz sais that it's a myth that you have to carry a balance on your credit account to build your credit history. She writes "What's important is having and using credit -- carrying balances typically is just money down the drain." She recommends looking at your credit report to make sure your accounts are being reported properly. If they don't show up, they're not helping you build your credit history. Find our what Liz recommends to avoid finance charges and build your credit here.

How to sort and pick credit cards on www.CardPick.com

2007-11-09T05:17:00.001-05:00

Cardpick.com is organized into logical categories for choosing a credit card. On Cardpick.com you can view the available credit cards by major brand (American Express, Discover, Mastercard, and Visa); You can choose your credit card by credit card issuing bank; You can sort credit cards by your credit rating (excellent credit, good credit, fair credit, bad credit); And you can sort credit cards by credit card feature catagories (balance transfers, mileage rewards, instant approval, etc.).