During the holiday shopping season, one of the most convenient ways to shop for American consumers was to go online and order their purchases through an online merchant. However, according to a new survey from Rasmussen Reports, American consumers are still too worried about identity theft to move all of their shopping online.

Rasmussen Reports recently ran a national telephone survey among American consumers aimed at finding out how comfortable American consumers are with making online purchases. According to the results of the report, of those surveyed, 49% felt somewhat comfortable with using their credit cards for making online purchases, a drop by 11 percentage points from the figures taken last year. Almost as many respondents, specifically 47%, said they were uncomfortable with making online purchases with their credit cards.

Consumers who were comfortable with making online purchases with their credit cards were 24% of the respondents.

Usually, respondents who used the Internet daily or almost daily were more comfortable with online credit card spending. However, there were still a few respondents who spend time online for several times a week who said they were wary with making purchases online with their credit cards.

Regarding prevalence of information theft, 12% of the respondents said they have experienced online theft of their credit card information; 80%, on the other hand, reported not having that problem. Figures remained the same as they were from the study conducted one year ago.

Unchanged as well is the percentage of American consumers who were a bit concerned regarding identity theft, 84%. This figure includes 46% of consumers who reported high concern over identity theft.

In terms of identity theft, 16% of respondents said they have been victims of it and 78% said they have not experienced it.

Among those surveyed, consumers belonging to the younger generation and those with higher income levels were more comfortable with making online credit card purchases compared to those belonging to the older generation who have lower income levels.

For online shopping, 49% reported this year that they did part of their holiday shopping online. However, only 2% reported doing all of their shopping online.

Of those surveyed, 51% reported paying off their credit cards fully every month, avoiding incurring interest fees. However, those who said they carried balances on their cards sometimes number almost as much at 45% and 83% of those surveyed also admitted that people are tempted to spend on items that they cannot afford because they carry credit cards.

With retailers upping their marketing of their own store branded credit cards, consumers need to be aware of what they are taking on should they get tempted and apply for one.

The big draw of store branded credit cards is that retailers offer them along with highly favorable discounts or a limited period of interest free card usage. What consumers do not know is that, in many cases, store branded cards can mean more financial risks for them. Not only can that, but store branded credit cards also cause considerable damage in a consumer’s credit score.

Store branded cards are easy to get. In fact, consumers can get one approved right at the cashier. Retailers only need to make a simple credit score check for an applicant before they approve a store branded card. The ease of application is compensated by the relatively higher interest rates that store branded cards have, a risk which completely cancels out the discounts and other benefits that these cards offer.

The higher interest rate poses a greater risk for card holders should they be unable to keep up with their payments. Making a mistake in paying down debt with store branded cards is ultimately much more costly for card holders than if they had stuck with regular cards. Such a mistake also brings damage to the card holder’s credit score.

In fact, consumers may already be damaging their score simply by opening a new store branded credit card line. As credit scores are calculated, every new account accounts for ten percent of the overall score. The more accounts a consumer opens up, the bigger the impact it will have on their score.

A newly opened store credit card also reduces the average age of the card holder’s cards in his or her credit history. This, in turn will result in a reduction of his or her score. Credit agencies prefer to see older credit histories among consumers. A consumer’s financial history age makes up for fifteen percent of his or her score. A consumer who opens up new cards in a short period of time is considered by agencies to be riskier.

This low credit limit of store branded cards also has a negative effect on the card holder’s score. With a lower limit, whenever a card holder uses his or her card, its credit utilization rate – the ratio between available credit and debt carried by the card – goes up. A higher utilization rate results in a lower score. Thirty percent of scores depend on this credit utilization rate.

Credit card companies are now busily looking for ways to change the way they run their business to cope with the slow economy and the new credit card legislation. Of the two, the new credit card legislation poses a bigger threat to credit card companies as it will overhaul several popular practices in the credit industry which will cost credit card companies their profits.

Because of the ongoing credit card term overhaul credit card companies are doing, consumers are finding new surprises with their credit cards almost every week. High interest rates, low credit limits and whatnot have become commonplace among credit cards. Now, a new fee is being introduced which aims to keep credit card holder card usage up courtesy of Fifth Third Bank.

A lot of consumers keep inactive credit cards for a variety of reasons. Some may be keeping their inactive credit cards open because they are wary of using credit but don’t want to impact their credit score. Others may be doing so because their card is connected to the overdraft protection plan of their checking account. With this latest attempt of credit card company Fifth Third Bank to up credit card usage among card holders, card holders who keep inactive credit card accounts may need to review their strategy.

Now, card holders who carry credit cards from Fifth Third Bank with the MasterCard or Visa logo may be eligible for the new maintenance fee that the bank is issuing if their Fifth Third Bank credit cards are dormant. The fee will cost card holders with dormant credit cards as high as $19 every statement cycle. With this new fee, Fifth Third Bank card holders with dormant credit cards will need to reconsider whether holding on to their credit cards is really worth it.

Most financial analysts advice that card holders should try to keep their active accounts open as this will increase their overall available credit. With a higher available credit limit, card holders have a higher credit score owing to the more advantageous ratio between available credit and credit debt. However, with First Bank’s new rules, credit card holders need to figure out if keeping the card is really worth it.

Canceling a credit card is not that simple for First Bank card holders eligible for the new dormancy fees. First, some card holders have their dormant credit cards connected to their checking account’s overdraft protection. In such cases, they can check if they can use another, more active card instead. Secondly, closing a dormant credit card with a large credit limit can seriously impact the card holder’s credit score.

During the holiday season, American consumers hit retailers hard for their holiday shopping. During their shopping period, many consumers may have noticed the increased marketing of retailers of their store branded credit cards. This usually happens when the shoppers hit the cash register and most offers often entice them with discounts for signing up.

Retailers love to offer their store branded credit cards – known in the industry as private label credit cards – to consumers because, not only are they highly profitable but they also encourage consumers to spend more at their stores. It is well known in the retail industry that, when consumers spend with credit cards, they spend more. With a store branded credit card, retailers are also encouraging store loyalty among consumers.

In exchange for applying for their credit cards, retailers offer consumers enticing discount offers or no interest fee periods, depending on the retailer. For instance, Best Buy offers new store branded applicants 18 months of freedom from interest charges for all card purchases that are higher than $249 on their credit cards.

Naturally, many consumers would be tempted with the offer. A 20% discount or 18 months of interest free charges can be quite advantageous. That is, of course until they check the details. A 20% discount is quite advantageous as long as the card holder keeps up with his or her payments. If a payment is missed or the card holder pays only the minimum monthly due, then the 20% discount becomes completely irrelevant and the retailer actually sees more profits instead. What’s more, the card holder’s credit score gets a hit as well.

Another perceived advantage that store branded credit cards bring is that they are easier to apply for than regular credit cards. Usually, retailers only need to do a quick check of a consumer’s credit score before they can get instant approval for their new store branded credit card right at the point of purchase.

The limited verification requirements of credit cards make them very attractive for consumers who have low credit scores and cannot easily get regular credit cards. However, what this means is that store branded credit cards can compensate for the inherent risks in their more lenient approval process. Thus, store branded credit cards are offered with higher interest rates compared to regular credit cards, usually going as high as 20%. In comparison, regular credit cards carry an average variable interest rate of 12%.

A lot of store branded credit cards also carry additional delinquency rates. Card holders who miss out on a payment may just see their interest rates climb as high as 27%.

It may sound like a joke but it isn’t. A 79.9 percent interest rate credit card is now available for consumers crazy or desperate enough to get one.

The 79.9 percent APR (Annual Percentage Rate) credit card comes courtesy of First Premier Bank, a credit card company focused on subprime borrowers. The overly high APR rate is First Premier Bank’s strategy to find a way around the upcoming new credit card regulations which will prevent abusive credit card company practices which brought many a card holder to the brink of financial destruction when the economic crisis hit. The strategy, should it become successful, may soon become a common one among the subprime credit card companies in the country.

A typical First Premier Bank credit card is quite expensive. For a card with an available credit line of $250, card holders have to fork over a minimum of $256 in the form of fees for the first year. However, once the new credit card legislation comes into play which is on February of next year, the First Premier Bank will no longer be able to charge such high fees. The new law will cap such fees to 25 percent of the credit card’s credit line. In fact, in recent preapproved card mailings, First Premier Bank has already lowered its fees right at the limit, equivalent to $75 of fees for the first year for a card with a $300 credit line.

However, the new credit regulation only puts a cap on fees, not on interest rates which is why the 79.9 percent rate of First Premier Bank is quite valid and legal. Notably, the previous rate for First Premier Bank’s cards was at 9.9 percent.

Anuj Sahani who is an analyst at credit card mail tracking firm, Synovate says First Premier Bank’s APR is the highest on the market today. “It’s the highest we’ve ever seen”, he says.

Although the terms of First Premier Bank’s credit cards is astonishingly high, the bank does target consumers who have bad credit scores. This particular group is not likely to be able to find credit cards from regular credit card issuers. Thus, it is quite plausible that these 79.9 percent APR cards will likely find a considerable amount of applicants. Moreover, consumers who belong in the bad credit score group are also more likely to incur financing charges which means that First Premier Bank’s 79.9 percent interest rate gamble may payoff impressively.

Consumer Reports recently did a study which showed that, over the previous 12 month period, 70 percent of consumers took advantage of mail in rebates. However, of these consumers, 21 percent were not able to to actually succeed in getting their rebates. Consumers who were not able to get rebates received nothing or were turned down for rebates due to a technicality, the survey showed.

As stated in a press release from the Better Business Bureau (BBB) from December 21, an increasing number of retailers and manufacturers are choosing to give rebates to their customers through pre-loaded cards instead of the traditional checks. The reason behind this is that, with pre-loaded cards, consumers are forced to spend their rebate, unlike checks which can be deposited into the bank instead. Usually, these pre-loaded cards can be used where credit cards are accepted. Generally, these cards are usable at any merchants similar to debit cards. However, some retailers give out pre-loaded rebate cards that can only be used at their establishments. These rebate cards can also carry expiration dates and may have additional fees which lowers their stated value.

For consumers who are planning to use mail-in rebates, the BBB says they should act as fast as they can on their rebates so that they get the full benefits from it. The BBB also gave a number of helpful tips for consumers when they are mailing in their rebates.

Among the most important tips that the BBB gave is for consumers to be quick on mailing in their rebates. A number of rebates carry a time window in which rebates are applicable. Applying for a rebate for a little while longer could also increase the chances of consumers losing their required receipts or packages.

It is also important for consumers to follow the proper instructions in applying for rebates. Guidelines for rebate redemption can be quite long and a missed step could delay the process or cancel it entirely. Consumers should also read the details in the fine print so that there are no surprises for them to find.

Consumers should also keep their packaging as rebates will most times require the UPC bar codes or other parts of the packaging for processing the paperworks of the rebate. Regarding paperworks, consumers should also make a copy of everything that they send out. This will be their record of their transactions should there be any problems later on.

If the rebate does not arrive, consumers should contact the business. There are cases where businesses use a third party fulfillment firm to process rebates and the business itself may not be to blame for the rebate’s delay.

In extreme cases such as when the rebate never arrives or is severely late, consumers also have the option of filing a complaint at the BBB, at the Federal Trade Commission or with their state Attorney General.

During the holidays, American consumers stepped up their spending as they bought presents and other holiday items to celebrate the holidays. As consumer spending stepped up, so did credit card use among a few consumers, though not as many as before.

Just a few years ago, a majority of those who shopped would’ve used their credit cards for shopping. Now, shoppers are opting for cash and debit in an attempt to keep their credit usage in check. Consumers are now much more aware of the dangers of overextending their credit. The slow economy and the growing unemployment rate is certainly keeping people very much aware of the risk of letting their personal finances go haywire.

However, even though a majority of American consumers are focusing on responsible spending, there are still a considerable number of consumers who got themselves caught up in the season and overused their credit cards. As most consumers are aware of, this is particular easy to do, especially if the credit card is right there in their pockets.

For those who have found themselves with considerable credit card debt after the holidays, the best thing to do is to pay off the credit card balances immediately. Ideally, consumers should try to move away from their concept of credit as delayed cash payments and instead consider it as near as they can to cash payments – meaning, pay it off as soon as payment is due.

Of course, paying credit card debts off completely is not applicable for everyone. For those who just can’t pay off their debts in due time, the best thing to do is to pay as much as they can every month. It is not a good idea to stick to the minimum amount due only. When card holders pay only the minimum amount due, a large part of their payment actually goes only to paying off their incurred fees. Only a small amount goes to paying off the debt which means that their debt will last longer and they will be paying more for it in the end.

While still paying off their credit card debt, it is best that consumers avoid adding to it. If they have to use their credit cards, then they should stick to necessities only. If they add up to their debt even as they are paying it off, this will make it harder for them to completely close down that debt and will only add up to the fees that they are already paying for.

During the holiday season, gift cards are one of the most common gifts to change hands. Among consumers, gift cards have become more and more popular as a gift choice. However, gift cards may not be as “Christmas-y” as people think. Gift cards are still a business and gift card issuers will always be looking out for their profits first which is why, the rise in popularity of gift cards is accompanied with the rise of gift card inactivity fees.

Gift cards penalize card holders who do not redeem the value of their gift card within a specific time period. Oftentimes, it turns out that the recipient of the gift card is only able to use a fraction of the stated value of the gift card due to a number of hidden fees. The upcoming consumer friendly Credit CARD Act, does address the issue of gift cards. However, many feel that the measures that the new credit law takes is far too little. The new credit legislation will only limit charging inactivity fees on gift cards if it has been used in the last twelve months. If the gift card has not seen activity twelve months, then the card issuer gets to issue inactivity fees.

Due to the apparent weakness of the Credit CARD Act’s measures against gift card inactivity fees, nonprofit outfit, Consumer Union and a number of other consumer support outfits have written letters to the Federal reserve asking to expand the gift card rules of the Credit CARD Act of 2009 so as to provide full protection to consumers from unfair fees. They also asked the Fed to provide more consumer protection by putting a limit on the inactivity amount that is charged by gift card issuers. The limit would be that the inactivity fee would have to be equal to the actual cost that the card issuer incurs to maintain the card.

At the moment, a large number of consumers lose the actual value of their gift cards because they delay their redemption. Consumer Reports recently did a poll which showed that one fourth of those who received gift cards last holidays still have one card, at least, still unused. 11 percent of those who were surveyed carry multiple gift cards still unredeemed. In 2006, the total amount of gift cards unredeemed was around $8 billion, estimated.

Consumers Union has already told the Fed that it ought to follow what a few states are doing. In Washington, California and Oklahoma, gift card issuers are limited from charging inactivity fees when the balance on the gift card is $5 dollars or below. The aforementioned states also limits gift card issuers to only a $1 per month in fees.

Since the signing of the Credit CARD Act, credit card holders have been the recipients of a barrage of credit card term changes, most of which are highly unfair and financially oppressive. With the economy quite weak and an unemployment rate still going up, American consumers really cannot take any more additional financial burden.

For a few months now, members of Congress have been hearing from their constituents about the credit card rate hikes that credit card companies have been busy introducing. Credit card companies, in preparation for the new credit legislation, have been rushing credit card rate hikes before their capability to do so is severely hampered by the new credit law.

In response to the outcry over interest rate hikes, a few members of Congress are considering introducing a cap on credit card interest rates. The proposal is to limit the maximum credit card rate at 16% and the maximum late fees to $15. While this may sound like a big win for card holders, it probably is not.

Interest rates are adjusted by credit card companies according to the risk that credit card holders carry. Riskier borrowers generally get higher interest rates while not so risky borrowers qualify for better terms. If a rate cap is introduced, credit card companies are no longer able to effectively use interest rates to manage risky borrowers. The most likely scenario is that credit card companies will no longer be extending credit to people with poor credit ratings. Even those with average credit ratings may find themselves unable to get credit. Ultimately, millions of American consumers will lose access to credit.

It will not only be credit card holders with poor to average credit ratings who will get hit, however. Even those with good credit ratings will have a hard time as well. Since credit card companies will no longer be able to profit from consumers with low and average credit ratings, they will most likely be making up their losses through card holders with good to excellent credit ratings. These card holders can then expect higher interest rates. Even those with excellent credit ratings will be likely to see their interest rates hike up.

The loss in terms of profits that credit card companies will face from losing consumers with low and average credit ratings will also mean that they will be scrambling to make up those profits from other sources as well. Most likely, those who are still able to keep their credit cards will have to deal with higher fees and a larger number of fees as well.

Credit card holders need to keep an eye on credit card notices arriving in their mail box nowadays. As the activation of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 gets nearer and nearer, credit card companies are beginning to ship out these notices in preparation for the act.

For those who do not know, the Credit Card Accountability, Responsibility and Disclosure Act of 2009 is a new set of rules aimed at making credit card terms fairer between credit card companies and credit card holders. It is going to introduce several things in credit card practices. For instance, over-the-limit fees are going to receive some new and much needed restrictions. Credit card marketing to those under 21 years old are also going to be much more restrictive. The biggest change, however will be on how credit card companies can impose credit card rate hikes. With the new credit law, credit rate hikes will no longer be as arbitrary as they are at the moment.

When the new credit term notices arrive, there are a few key items to take note of. First is the APR. Credit card companies are sure to be introducing new APRs or Annual Percentage Rate since, when the new law becomes active, they will no longer be able to raise interest rates unless the card holder falls sixty days behind with his payments. At the moment, credit card companies can still hike up APRs virtually according to their discretion.

Another change that the new laws will bring is with monthly minimum payments. Once the law is in place, credit card companies will have to place amounts above the minimum monthly payment towards paying off the balance with the highest APR. Right now, credit card companies place them towards the balance with the lowest APR, keeping the balance with the higher APRs revolving.

A major win for credit card holders is the new requirement for credit card companies to stop automatically enrolling credit card holders to overcharge protection plans. Overcharge protection plans allow card holders to go over their credit limits for credit card transactions while charging them high penalty fees for the service. The problem is that, at the moment, credit card holders are often unaware that they are already enrolled in such a service. Oftentimes, card holders are surprised to find that their card company allowed them to go over the limit and is charging them fees for it. With the new law, credit card companies are required to explicitly ask for permission from card holders before enrolling them in such a program.

Charge cards have already gone out the door but the current trend in plastic payment may indicate that they may be making a come back.

During the time when the economy was up, charge cards became obsolete as card companies began handing out credit cards like there was no tomorrow. Credit cards, unlike charge cards, assured card companies of high profits by allowing high credit limits with revolving debts. However, when the economy tanked, the very thing that made credit cards much more attractive to card companies spelled their doom. Overextended credit largely contributed to card companies seeing their delinquencies and charge off rates go up to historical heights.

Now, card companies are wary and are exploring new ways to generate profits without exposing themselves too much to financial risk. This is why charge cards are slowly making a come back among card companies.

Charge cards work similar to credit cards. However, charge cards must be paid off fully every end of the month. Thus, although consumers have to deal with having to pay for their card purchases fully at the end of the month, they no longer have to worry about revolving balances from month to month with fees and interest rates added on every month that the debt remains unpaid. Another plus for charge cards is that they don’t carry overdraft fees, something which even debit cards do not offer.

With charge cards, card companies are aiming for acquiring long term customers by making a tamer product available during this tougher time. San Diego University finance professor, Tony Cherin says that the idea for card companies is to lock a customer in to their company through one of their products. He adds that a card company may get a long term customer just from the inertia of a banking relationship coming from that one product.

At the moment, charge cards are still pretty rare. In the large market of card activity among consumers, charge cards still make up for a small share of the market. However, direct mail offers from card companies for charge cards is continuing to grow and is moving quickly. Just a few years ago, charge card mail offers accounted for around 2 percent of card offers. In 2007, charge cards started becoming more common. At the moment, charge card offers are four times what they used to be. Among all card offers mailed for October of 2009, charge card offers made up 8 percent, says Synovate, a market research firm.

When it comes to spending, retailers know that the ultimate say belong to women. Although the general consensus is that men are the head of the household, it is often the case that women dictate where spending goes to. This is doubly true for the shopping spree that retailers expect to see this holiday season.

This holiday season is not going to be any different that the previous ones in the sense that women are going to dictate just how much of the family budget goes to shopping spending. One glaring difference this holiday is bringing is that women are now opting out of credit cards and moving towards cash and debit cards instead. This is just another indication of the alienation American consumers are feeling with credit cards.

A survey from CheapToday, an online shopping network, shows that the majority of women in the household prefer to use their debit cards instead of their credit cards through their Visa networks. Of the 14 percent polled who preferred to use MasterCard, the preference was once again to use debit cards instead of credit cards. An impressive 31 percent said that they used cash or checks primarily for shopping payments.

CheapToday CEO and president Chris Hill says that women shoppers are now much more inclined to use debit or cash to pay for “pay as you go” purchases for this year’s holiday season. According to Hill, the primary motivation among women shoppers seems to be to avoid getting in debt trouble and having to contend with paying off large credit card balances for 2010. This trend, hill adds, reflects the overall trend among consumers of moving away from credit card reliance for shopping this holiday season.

The trend is quite understandable considering that the economy, although already showing small signs of recovery, is far from stabilizing. Unemployment is also up and analysts expect it to continue to climb for a few more months. The new Credit CARD Act is also making huge waves in the credit industry, causing credit card companies to be more stingy with credit and scrambling to maximize profits and realign their businesses to prepare for the penalties that the new credit law is bringing, all of which is contributing to consumer spending jitters.

As a matter of fact, the shift away from credit card payments is well known. Generally, credit cards are getting overtaken by debit cards when it comes to consumer card-purchases. Analysts also believe that the trend is side effect of the recession the country is going through, emphasizing a growth in financial responsibility among consumers.

The new Credit CARD Act is having a large effect on the credit card industry. One particular area where the effect of the new law is being felt at the moment is at the retail industry.

America’s Research Group consumer polling chairman, Britt Beemer says that sales for retailers for the months of November and December are expected to drop by 1.2 percent, about $436.7 billion compared to the same period during the previous year, 2008. In an interview he did on December 21, Beemer says that a sales gain of around 0.8 percent, about 445.5 billion would have been realized if credit card companies were not severely limiting credit limits for consumers and rejecting a larger number of credit card applications.

Target Corporation, one of the major retailers in the U.S. and a number of other U.S. retailers may see a sum total $9 billion loss in sales this holiday due to the cutbacks credit card companies are implementing. The new credit card legislation is making things worse as well, says Douglas Scovanner, the Chief financial Officer of Target. The new credit card legislation is making credit card companies much more stingy with credit just when consumers are beginning to warm up to making discretionary purchases where they would traditionally use credit cards to pay for. During the recession, items where retailers saw the most of their profitable sales such as jewelry, home goods and clothing saw a sharp decline, hurting retailers.

Scovanner says that the new law is going to “mute the impact” that the spending rebound among consumers would have brought. He adds that the lessened availability of credit ultimately ends up diminishing the amount of spending among consumers. In an interview in Minneapolis on November 17, Scovanner said that the reduced lending spurred by the Credit CARD Act may end up shaving off half a percentage point at the minimum from store sales for at least one year after February of 2010, the month where a majority of the Act becomes active. Already, Minneapolis based Target saw a decline of 1.5 in comparable-store sales in November.

The new credit card legislation is also bringing another change that retailers have to contend with. Already, the Federal Reserve has proposed guidelines that would make it a requirement for retailers to ask for income and other asset information from customers before they are granted store branded credit cards. Store branded credit cards represents another major profit source for most retailers. This new measure may ultimately limit the ability of retailers to issue store branded credit cards or, at least raise borrowing limits.

The promised changes that the Credit CARD Act is bringing is scaring many credit card issuers, not least of whom are retailers with their own store branded credit cards.

The Credit CARD Act sees full activation next year but, this year, drastic credit card industry changes are already being widely seen. As Brad Jolson, Fair Isaac Corp.’s risk management solutions senior director puts it, the new credit card rules are making credit issuers “tighten up” in anticipation of the new changes. FICO is a major player in the credit industry. The Minneapolis based company provides the most widely used credit scoring formula in the credit industry.

A July study from TowerGroup, a financial research and advisory firm from Needham, Massachusetts also shows that available credit for U.S. consumers dropped to $3.6 trillion for the year 2009 after it peaked at $4.7 trillion last year, 2008.

Retailers are very wary of what the new rules will be bringing. CFO of Stage Stores Inc., Edward Record voiced out a common sentiment in the retail industry, saying, “We’re scared to death of what this law is going to do”. Stage Stores Inc operates from Houston and runs 759 stores which includes the Bealls and Peebles chains. Record added that the new law is sure to bring down consumer spending.

One particular area where Stage Stores are getting hit hard are with store branded credit card sales. One third of the sales that Stage Stores sees are from store branded credit cards. Credit cards from other card issuers account for one fourth. Record however expects the credit card law to affect primarily general purpose credit cards in his stores since, he says, they have been quite conservative with their own store branded credit cards.

Supporters of the new credit card law argue that the new law is going to protect consumers from abusive credit issuer practices and will place more cash available at their disposal as well. This will ultimately benefit not only consumers but retailers as well. Carolyn Maloney, a sponsor of the new law and a Democrat Representative from New York says that some card issuers may be hurting sales at retailers by hiking up their interest rates in anticipation of the coming new credit card law.

In a telephone interview, Maloney said that a lot of the damage done is “self-inflicted”. According to her, virtually all of the consumers she has talked to regarding her credit card reforms have said that they liked it.

This holiday season, consumers in the Bay Area and California need to be a lot more discerning when it comes to credit card purchasing. One of the hardest hit areas during the economic downturn, California and the Bay Area have a lot of ground to cover to recover from the effects of the slowdown of the economy. So far, if the figures from TransUnion’s survey is to be believed, Bay Area and California consumers may already be on the right track.

TransUnion, the Chicago based credit reporting agency, recently reported the rate of credit card debt in the Bay Area and California is dropping fast – faster than the rate by which national credit card debts are falling, actually. That is an encouraging sign which may indicate that credit and economic recovery in the area may well be on the way. Delinquencies in the area are also on the decline. Delinquencies are debts that have not been paid for thirty days or more and the decline in delinquencies, TransUnion forecasts, may also continue throughout the next year, 2010. So will credit card debt payments by credit card holders.

As encouraging as the figures from TransUnion are, Bay Area and California credit card holders still have a long way to go. During the month of October, Bay Area credit card holders paid an average monthly bill of approximately $5,700. That’s a lot less than what California credit card holders are paying off but higher than what the rest of the country’s credit card holders are paying. Also, in terms of credit card delinquencies, California remains among the top in the country, fourth in the nation to be exact. California is just behind Nevada, Florida and Arizona.

In San Francisco, credit card holders also have something to celebrate. Visa Inc. of San Francisco is joining the fight against online scammers, a very welcome development for those who use their credit cards for online purchases. Visa is one of the major credit card transaction processorsn worldwide and the company settles a hundred and thirty million credit card transactions on average globally every day. That accounts for 45% of credit card transactions worldwide. This makes Visa perfectly placed to have a major impact in stopping online scammers. So far, 100 unscrupulous online merchants have already been cut off by Visa. These include online companies that offer free trial offers which ultimately turn out to be duping consumers into a vicious cycle of unauthorized charges.

The current mindset among American consumers seems to be to stay away from credit card purchases, no doubt scared away by the high cost of credit card debt which hurt a lot of consumers during the height of the economic downturn.

Now, consumers are doing everything they can to keep their credit cards away from the cashier during the holiday season. For their shopping, consumers are using cash, bank account direct debits, using free financing services and even cashing in frequent flier miles. Basically, they are doing everything they can to avoid using credit cards for their holiday shopping.

The move away from credit cards is primarily fueled by the desire of the majority of consumers to keep under their budget and to avoid expensive interest rates which have been hiked considerably by credit card companies. Aside from consumers keeping away from credit cards, credit card companies have also been limiting the access to credit, even to consumers who are considered to be low risk borrowers.

Bryan Eshelman, consultant AlixPartners’ managing director of retail practice says that consumers are doing their best to discipline themselves in terms of spending, something which they can best do by sticking to cash for purchases. A recent survey of AlixPartners showed that the top concern among shoppers is to eliminate their personal debt.

For merchants, consumers moving away from credit cards means a drop in costs – specifically in credit card transaction costs. However, the drop in credit card usage means that merchants are no longer able to track the purchasing habits of consumers, something best tracked through credit card transactions.

Credit Union National Association chief economist, Bill Hampel, calls the consumer switch away from credit cards as “seminal”. According to him, consumers are trying a number of new spending behavior, changing the way they spend and how they pay as a response to the scary economic situation. He adds that a lot of these new habits, such as using cash for payments, will most likely linger, what with unemployment rates to continue to remain high for a few more years and credit lines getting scarcer.

The shift among consumers away from consumers has also given rise to alternative payment methods such as deferred payments and layaway plans. Services such as those from PayPal and Bill Me Later are also becoming more and more common among consumers. PayPal is an online payment service and Bill Me Later offers free 90 day financing for consumers.

Recently, the Center for Responsible Lending (CRL) released the results of a study they made involving the credit card industry, specifically the effects that the upcoming Credit CARD Act will have on it.

Kenneth J. Clayton, the senior vice president and general counsel for card policy of the American Bankers Association (ABA), has seen fit to respond to a few details in CRL’s study.

According to Clayton, the study made by CRL is correct in stating that the Credit CARD Act, signed into law last May of this year, is indeed a landmark piece of legislation. Because of the Credit CARD Act, credit card companies have had to completely change their business models to respond to the recognized expectations of government policymakers of a new paradigm in credit card lending. Aside from the new credit legislation, credit card companies are also being seriously challenged by the downturn that the economy is currently experiencing.

A more important challenge for credit card companies is to meet their current challenges in such a way that the needs and expectations of American consumers are well served, Clayton says. Credit card companies, at the moment, are busy experimenting and finding new credit card business approaches that will not only comply with the requirements of the Credit CARD Act but will also keep the cost of credit cards beneficial to both American consumers and businesses who rely heavily on credit cards daily, Clayton adds.

The senior v.p. of ABA however disagrees with the suggestion of CFL that the new credit card rules being adopted by the Federal Reserve and the Credit CARD Act itself does not address a number of pricing issues that the report raises. These issues were actually addressed and discussed by policy makers throughout the legislative and regulatory process, says Clayton

Clayton stresses that there is one fact that must not be lost. That is, consumers are actually in charge when it comes to what card product they want to use. Consumers are free to open credit card accounts that they feel will work for them and close card accounts that do not. Consumers also have the option of opting out of any credit card term changes that they do not want. As of August 20, 2009, credit card companies are also required to give card holders 45 days of advance notice for any interest rate changes. Not only that but they must also provide the option to decline to card holders as well.

Holiday shopping trends are showing an impressive amount of restraint among American consumers. In particular, consumers are moving away from spending on credit and prefer using cash or debit cards instead – that is, if they spend for the holidays at all.

According to a new National Retail Federation survey, less than a third of holiday shoppers included in the survey see their credit cards as their preferred method of payment for their holiday shopping. Out of ten shoppers surveyed, almost four or 39.3 percent say that they use their debit cards or check cards most instead of credit cards. This year, the number of people who prefer to use their credit cards for shopping payment has dropped to 30.9 percent. Last year, 2008, it was 33.8 percent. Consumers who used cash for holiday shopping numbered more than a quarter of the surveyed shoppers. Only 3.8 percent of those surveyed used checks.

Phil Rist, the executive vice president of Strategic Initiatives, BIGresearch says that the survey  shows the expected restraint among American consumers who are focusing on using money that they have for shopping and not money that they hope to have. BIGresearch is the company that did the survey for the National Retail Federation. Rist says that, by relying less on credit for their holiday purchases, consumers will feel more secure with their personal finances soon. This will then lead to an increase in spending from them in the future.

Aside from moving away from credit cards, the survey also showed that, by the second week of December, 46.7 percent of the surveyed shoppers had finished their holiday shopping. During the same time last year, 47.1 percent of those surveyed had finished their shopping. This year’s percentage is the lowest that the survey as seen since 2004. During that year, only 46.3 percent had completed their holiday shopping for the same period of time.

As the holidays get nearer to ending, retailers are going to be more aggressive at catching shoppers. Tracy Mullin, president and CEO of National Retail Federation says that retailers are aware of how much hangs on the final lap of the shopping season. Most of them plan on emphasizing their product promotions and their discount offers as the shopping season comes nearer to closing so that they can bring in more last-minute shoppers.

The forecasts from NRF predicts that sales during this year’s holiday season is going to drop by 1 percent compared to last year’s sales figures. Details from the retail industry regarding November sales already showed a drop of 0.8 percent in year over year sales.

The credit card industry is seeing a drastic change owing to the economic crisis and the upcoming new credit card legislation. Credit card company practices are changing drastically, reflecting a change in how credit card companies view credit cards and those who carry them.

One particular change which illustrates very well the shift in thinking among credit card companies with regards to credit card holders is the increase in the marketing of reward card offers.

The increase of rewards credit card offers comes as no surprise. Rewards cards have always been popular among credit card holders and reward cards are also generally reserved for credit card holders whose credit ratings range from good to excellent. However, rewards card offers do come with a price – annual fees.

According to market research done by the firm, Synovate, 28% of the rewards cards offered during the third quarter of the year carried annual fees. That’s a sizable increase considering that, during the same period last year, rewards cards offers amounted to 21%. The Synovate firm tracks per household credit card mailings.

The market research also showed that, during the first month of the fourth quarter of the year, 36% of rewards card offers already carried annual fees. Anuj Shahani, the director of competitive tracking services in Synovate, expects this spike which was seen on October, to continue on as the fourth quarter comes to a close. Shahani says that the shift in the credit industry is not surprising at all. At the moment, banks are turning their focus towards the more credit worthy customers so that they limit their risks in the economic downturn.

Generally, there are certain rewards card types that are more susceptible to carrying annual fees. These include rewards credit cards that are cobranded with a particular airline or a hotel. Exclusive cards which offer higher membership rewards are also apt to carry annual fees. For instance, American Express’ high end Preferred Rewards Gold credit card carries a fee of $125 a year.

Although annual fees are not really common for a basic rewards credit card, analysts predict that they become commonplace soon enough. This is expected considering the implementation of new federal regulations which will put severe limits on the ability of credit card companies to raise their interest rates.

Synovate’s data also shows indications that credit card issuers are offering more tiered offerings to consumers. This means that the better the reward, the higher the cost is for the card holder. The Hilton Surpass card introduced by American Express last February makes a perfect example. Card holders can get nine rewards points for every dollar that they spend in participant Hilton hotels if they pay an annual fee of $75. For card holders who do not pay a fee, they only earn six rewards points for every dollar spent.

Credit card holders may be getting more high tech soon with the new service being introduced by internet entrepreneur Philip Kaplan.

Philip Kaplan is most notably known for creating a web site that followed the crash of several dot com companies during the years 2000 and 2001. He also made a success of himself by creating an advertising tool that allows advertisers to place their ads on websites in a self-service manner. The success of his tool led to the creation of AdBrite in 2002. AdBrite has been doing well since then and, at the moment it is responsible for ad placements to more than a hundred thousand affiliated websites. The company’s revenue for 2008 was at $31.6 million.

Recently, Philip Kaplan announced his new online venture: Blippy. Blippy is Kaplan’s take on a social nature centered on credit card usage. Basically, a user of the service is able to share the details of his or her credit card transactions with friends or even strangers.

At the moment, the service is still in beta testing and availability for the service is still invitation only. A public introduction of the service may come next year, 2010.

According to Kaplan, the idea behind the Blippy service is that, for American consumers who carry multiple credit cards, they can sign up one of their cards to the Blippy service – as a sort of social card. Once the credit card is connected to the website, whatever transactions that the credit card is used on will be instantly messaged to the website, applicable to the friends and whoever else the credit card holder wants to notify.

The service is similar to the status updates on Facebook or the twitter messages on Twitter. Similar to these services, Blippy subscribers can also make their accounts private or public. Public accounts are, of course available to anyone while private accounts are accessible only to the people who the credit card holder has given authority to do so. The service can also be set to show only selected credit card transactions.

Kaplan expects the Blippy service to expand consumer interaction based on what consumers are currently buying. Consumer preferences such as their favorite food or a new band that they’ve discovered will be available to their friends and acquaintances through Blippy. The Blippy service can also be a great way for consumers to find bargains and reliable retailers.

Considering that the Blippy service is tied to the consumer’s credit card, it is going to be a very interesting tool for online marketers. Blippy almost lends itself entirely to targeted marketing. Kaplan insists, however that marketing is not his focus. He says he is more interested in making Blippy “a fun and interesting place ”  for their customers.

For most credit card holders, reading mail from their credit card companies is not much of a priority. Credit card company mail, even credit card bill mail, rarely get a thorough reading from credit card holders. No wonder, considering how difficult to understand credit card mail are.

As a matter of fact, credit card companies enjoy making credit card mail as obscure as possible for credit card holders. The logic there is that they want the card holders to keep their focus on the simply worded, large print information and keep out of the fine print. Unfortunately, the things that can get a credit card holder hit with large fees and interest rates are usually found in the fine print.

Credit card holders who don’t take the time to try and understand their credit card statements may find themselves in a lot of trouble, especially now that the new Credit CARD Act’s activation is fast approaching.

As credit card companies prepare for the changes that the Credit CARD Act is bringing, credit card holders can expect to find some very important information coming out of their credit card mail. They may also have to make important choices which will determine if the consumer protection that the new credit legislation brings will extend to them or not. Consumers who fail to keep an eye on their credit card mail may end up paying more for their credit cards, being unpleasantly surprised on their trip to the ATM or even having their credit card rejected.

The upcoming credit card bill will introduce many changes to the credit card industry, some of which will require the “opt in” of credit card holders for them to become eligible for protection.

For instance, credit card holders who take the time to peruse their credit mail may find that their credit card company is raising their interest rate. In the past few months since the Credit CARD Act got signed into law, credit card interest rate hikes have become quite common, with some credit card companies raising their interest rates up to 29.99%. However, new rules from the Credit CARD Act now allow credit card holders to opt out of interest rate hikes. However, opting out usually means that the credit card gets canceled. The compensation is that the credit card holder gets to pay off his or her credit card balances using the old interest rate of the credit card.

There is no doubt about it; credit scores definitely play a major role in the financial status of any person these days. This is precisely why more and more ideas of improving credit scores are popping from just about anywhere and everywhere. One such idea is known as “credit renting”, which is also popularly known as “piggybacking”.

So, how does credit renting work exactly? It works pretty much like you transplant the “credit DNA” of people who have great credit histories into the credit histories of the users who are not doing so well in the industry. Companies that do this arrange for the improvement of their clients’ scores by adding these clients as authorized users of the cards of people who have excellent credit standing and history. Of course, these people who have great standing are paid to add these less fortunate people as authorized users of their cards. Basically, this works similarly with renting and leasing.

Statistical figures show that the FICO credit scores of these authorized users actually rise by at least 50 points, and even as high as 250 points. This is great news for credit users who have not been lucky enough to have high credit scores to begin with. Now, you do have to look for a credit user who has a FICO score of at least 700. This way, you are sure to have a fruitful 2-way relationship. This is because the positive details that are contained in the credit report of the owner of the account would then be plotted into your own credit report.

How effective is this, you may ask. There have been a lot of success stories when it comes to credit renting. One such case is a credit user based in Florida who paid close to $2,000 for 3 credit card spots. This means the Florida user paid 3 credit cardholders of exemplary status so that he would become an authorized user of the cards. In less than 2 months, his FICO score made quite leap from just 550 to 715. What’s even better about this is that because of this leap, he was then able to close out his own mortgage with an APR of just 7.5% – and with no down payment.

Credit renting is certainly a feasible option that credit users should consider, given that there is no limit to the amount of authorized users you can have. Also, the authorized users do not have to be related to you in any way. Thus, it would really bring forth a symbiotic relationship for both the owner of the credit card account and the person renting to become the authorized user in the deal.

Because of the global economic meltdown affecting the credit industry very hard, credit users are bearing the brunt of the credit crunch, leading to credit card debts reaching their all-time high. In turn, credit card companies are also tightening up everything that they can, including their lending standards.

Fair Isaac Corporation, the enterprise behind the FICO score, gives the estimate of more than 30 million Americans reducing their credit limit – and this is just for the 2nd half of 2008. Statistics show that for the 1st quarter of this year, big companies, such as JPMorgan, Citigroup Inc., and Bank of America Corp. reduced a total of $320 billion from the credit lines of their users. A more recent survey conducted in the first week of May 2009 shows that 65% of today’s banks show lowered credit limits – both with the new and the existing customers. This is quite a high figure, compared to just 45% in the January 2009 survey.

The purpose of the FICO score is actually to evaluate the relationship between your total credit balance and your available credit. If you compartmentalize your FICO score, 30% of this would be dependent on your credit balances. The credit utilization rate, on the other hand, would be the percentage of the revolving credit amount that you have already used. For instance, you have a credit card that has a credit limit of $10,000, and you’ve already used up a balance of $4,000 that has a utilization rate of 40%. If your lender decides to drop your credit limit to just $7,000, your utilization rate would jump to more than 57%. From this point of view, the higher your debt, the lower your score would drop.

Many politicians have already noticed this trend and a lot are saying that banks are reducing credit lines without much regard for the credit users’ risk profiles. The FICO scoring system is also taking quite a hit due to these reductions of credit lines.

Mark Greene, the CEO of FICO, issued a statement in defense of the scoring model. Greene states that FICO scores have consistently held up very well when it comes to predictive accuracy. The actions of banks today just indicate that the credit environment has become riskier and that the reduction of the credit limit of a particular account would likewise indicate that the credit user is considered a risk as well.

If your credit limit has been reduced and you need to improve your credit score, then it would be wise to transfer your remaining balance to another credit card that offers a higher limit. This way, your credit utilization ratio would significantly improve.

Is it possible to live a life free of credit card debt these days? With the global economic crisis affecting everyone, this seems quite unlikely nowadays. However, this does not mean that it is not achievable – for it really is, as long as you remain determined to achieve that goal of living a debt-free life.

This does not mean that it would be safe to say that people can live their lives without having to make monthly mortgage payments. Although this would be an ultimate dream come true for people, generally, this just would not be the case today.

Focusing on credit card debt, the best way to avoid this is by going with the old and simple adage: If you cannot pay for it, then do not buy it. Yes, it is as simple as that, and our parents and grandparents have passed these wise words unto us as advice we should live by. Another great piece of advice to take heed is to pay more than the required minimum monthly payments. That is, if you already find yourself in a hefty situation as it is.

Still, there are a lot of people who fall short of these minimum monthly payments, in spite of the huge efforts they make. The sad thing about this is that when you fall short, that amount that you should have made will carry interest that you will be charged with the next month. And if you are still unable to make that next minimum payment, you can expect the interest rate to just go higher and higher.

So, is it really possible? Yes, it still is, and it all boils down to two things: determination and discipline. If you have become used to living the easy life of just swiping your plastic for your purchases, then you better start getting rid of that habit – and fast! Do not wait for your finances to come tumbling down because if you do not do something about this fast, then you will inevitably face bankruptcy.

Do your best to make that minimum payment. Be disciplined with your purchases and try paying for everything with cash. Use your credit card just for emergencies, and only if you do not have the cash to cover them as well. More importantly, pay for the debts that come with the higher interest rates. This way, you will be able to rid yourself of the larger debts and making the smaller ones would be much easier for you already.

Living a life free of credit card debt is not easy but as long as you maintain the right mix of determination and discipline, you will make it. Others have made it so there’s no reason why you shouldn’t as well.

Business credit cards have long been one of the most reliable and most used financial fall back position of many businesses. The flexibility and convenience that business credit cards offer have enticed many a credit card holder which is why, now that credit card companies are slowly making business credit cards much less customer friendly, many business owners are in a quandary as to where they can turn to.

One particularly damaging practice, a recent one from Capital One, is when a credit card company reports the credit card business accounts to the personal credit report of the card owner. When a business owner has his business debts listed right alongside his personal debts, this gives the impression that he is overextending his credit. This is potentially troublesome when the card holder wants to take out a personal loan. Loan companies are wary of allowing loans to people with overextended credit and any loan that they get would most likely carry unfavorable terms.

Steve Schoof, spokesman for Capital One said that reporting a business card holder’s accounts to the commercial and consumer credit bureaus is standard practice in the industry. That has not been the case traditionally, however.

Major credit card companies American Express and JPMorgan Chase said that, while they check the credit report of a consumer when he applies for a business credit card, they only report the accounts to the consumer credit bureaus only if the card holder becomes delinquent in his card payments. Otherwise, they only report the accounts to the commercial credit bureaus such as the Small Business Services of Experian and D&B. For small business owners, this is a very nice gesture from these credit card giants. Such a practice allows business owners to use their business cards without having to worry that they may seem heavily in debt on a personal level.

Capital One is the first major credit card company to start reporting the business credit card accounts of business owners to consumer credit reporting bureaus even though the card owners are still in good standing. Unfortunately for small business owners, although the practice is quite unfair, it is still legal. Credit card companies are allowed to report business credit card usage to consumer credit reports as long as the credit card holder have authorized them to check their personal credit. So says Gene Truono, consumer regulatory compliance banking practice managing director of BDO Consulting. Usually, business card holders give their credit card companies that authorization when they apply for their business credit cards.

Indicating that the credit card industry has yet to recover, major credit card companies JPMorgan Chase & Co, Capital Financial Corp and Discover Financial Services reported a rise in credit card charge off rates for the month of November. The announcement underlined the financial stress that consumers are still dealing with and sent shares downwards throughout the industry.

JPMorgan Chase & Co, the largest Visa branded credit card issuer in the U.S., recently said that their charge off rates -  loans that the company writes of as unpayable – rose to 8.81% for the month of November from 8.02% for October. The announcement came when the company recently made a regulatory filing. JPMorgan’s charge off increase is the biggest among the credit card issuers in the U.S. It is far from the only one, however.

Discover Financial Services also announced a rise to 8.98% of their charge off rates from a previous rate of 8.54%. Capital One Financial Corp’s charge off rates went up to 9.60% from a previous rate of 9.04%.

Argent Capital Management senior portfolio manager, Ken Crawford said that it is a sign that American consumers are still financially hurting, especially with the holiday season fast approaching.

On the other hand, the largest bank in the U.S., Bank of America posted a drop in its charge off rate for the third straight month. Last October, the company’s charge off rates was at 13.22%. In November, that dropped to 13.00%. Despite this positive announcement, Bank of America still remains as the credit card company with the highest rates of defaults and delinquencies.

Usually, credit card delinquencies and charge offs follow the unemployment trend. In November, national unemployment trends dropped to 10.0% from a previous high of 10.2% in October, the highest it has been for twenty six and a half years. Although the unemployment rate did drop, 11,000 people still lost their jobs last month which is probably a major contributing factor to the increase in credit card delinquencies and charge offs. Analysts also expect the unemployment rate to continue to remain high throughout next year, 2010.

To stem their losses which has crept up to record highs in the past few months, credit card companies have closed down several millions of accounts, cut down credit limits and slowed down or discontinued rewards programs. They have also hiked up credit card interest rates and fees, well ahead of the upcoming, consumer friendly credit card law.