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July 17, 2009

Card Holders Seeing Sudden Credit Card Cancellations

The credit card industry is in a state of upheaval right now due to several factors. First is the general economic downturn which affected gravely the credit industry, sending several major credit companies to the brink of bankruptcy.

Card Holders Seeing Sudden Credit Card Cancellations The rise in delinquencies and write offs were primarily one of the major causes of the credit industry crisis and the situation is still continuing today, albeit there have been some improvements and the industry is getting back some of its confidence. Finally, the credit card industry is also currently in a state of overhaul to adapt itself to prepare for the upcoming activation of the credit card bill on the first quarter of next year.

As a result of all of these, credit card companies are now introducing several changes to their business model, many of which are hurting credit card holders. Currently, credit card holders are seeing their interest rates and their fees go sky high. New fees and charges are also being introduced. Credit card companies are also actively cutting down available credit for their credit card holders. However, the worst thing that can happen to any credit card holder is getting their credit card suddenly canceled.

If you have a credit card, this is probably something you ought to be aware of. Credit card cancellations are usually done by a credit card company for a number of reasons. The most common is when they consider a credit card holder as too high a risk for them to continue maintaining as a customer. However, they can also cite any other reason as well.

Credit card companies can cancel your credit card at anytime with but one condition: that they inform you ahead of time, usually thirty days, before they cut you off. The problem is that most notices are sent through snail mail, so you can just imagine your chances of getting their notice on time. Plus, you might have moved too and forgot to update your mailing address or you might be traveling when the notice arrived.

Getting your credit card canceled can be quit alarming. Many people have had the nasty surprise of paying with their card only to have the purchase rejected because the card has been canceled. What’s even more worrying is that, right now, some credit card companies are cutting off the credit lines of people who are relatively low risk borrowers. So even if you are up to date with your payments, you might still get your credit cut.

So far, the practice is still not that widespread but there are indications that it may soon be. If you become a victim of this kind of practice, you should try calling up your credit company, though there is little hope that you’ll get your credit line back.

June 24, 2009

Credit Industry Fees Over Credit Card Bill May Be Unfounded

The credit card industry has been quite loud in expressing their fears over the negative effects that the passage of the credit card bill will bring. While consumers are hailing the credit card bill as their long awaited relief from oppressive credit industry practices, the credit industry insists that the bill stifle credit availability for consumers instead.

Credit Industry Fees Over Credit Card Bill May Be Unfounded Last week, President Barack Obama presented his plans for establishing a separate agency to monitor and safeguard the rights of consumers. The agency will be called the Consumer Financial Protection Agency and, among other things, it will be in charge of implementing the rules and guidelines of the credit card bill. This has increased concern among the credit industry even more.

The credit card bill basically aims to limit the ability of credit card companies to issue fees, such as those issued to credit cardholders who go over their credit limits, and interest rate increases, such as those experienced by credit cardholders who miss a payment. Cardholders are naturally all for the credit card bill. However, credit industry advocates have been strongly campaigning that the credit card bill will actually bring more ill than help for consumers. According to them, the credit card bill will instead dry up available credit, especially for risky borrowers. They are also saying that, by cutting off the income generated from the fees issued to delinquent borrowers, the credit card bill will essentially force credit card companies to stop offering rewards programs, greatly limit available credit and credit limits and issue annual fees for all their customers.

While the warnings of credit industry advocates seem worrying, some experts are disagreeing. A few are citing the situation of credit unions as a perfect example of how legislation like those in the credit card bill can actually help both the consumers and the creditors. While major credit industry players are worried over the credit card bill, most credit union operations are already similar to what the credit card bill insists on.

According to a recent study, credit unions are not as likely to charge high fees and interest rates as major credit companies. They also have a lower annual fee and grace periods that last longer than what other creditors offer. However, these credit unions are still able to make a profit. Some may argue that credit unions are different from other credit companies but, on the whole, these companies actually share many similarities. For one thing, they are competing in the same market.

The example being given by credit unions show that the credit card bill can work. There might be some sacrifices but, on the whole, the bill will make the credit industry much more balanced between creditors and credit cardholders.

June 4, 2009

Does The Credit Card Bill Address The Sickness Instead Of The Symptoms?

Among credit cardholders and within the credit card industry, the current buzz is the credit card bill and what it will mean for each and everyone of them.

The credit cardholders are hoping that the legislation in the bill will give them a better arrangement for paying off their debts and keeping their credit. The credit card industry is dreading the cut in profits that the credit card bill will bring.

Does The Credit Card Bill Address The Sickness Instead Of The Symptoms With the credit card bill in place, predatory practices by credit card companies will certainly be curtailed. The leeway that this will give to customers in paying off their debts will be very much welcome. It will certainly help them survive the economic crisis in a much better financial state. While there is going to be a considerable cut in profitability, credit card companies will certainly not be going bankrupt, their current doom-saying not withstanding.

All this is well and good but, does the credit card bill really go deep down to the root cause of the problem in the first place?

A study recently released shows a very dismal picture. The figures were taken in 2008 and it shows that more than 78% percent of households in the U.S. have at the least, one credit card. That translates to 91 million households. Each household, on the average has 5.4 credit cards. Figures from December 2008 show that the total credit debt is at $937 billion, each U.S. household averaging $8,329 in debt. Coupled with the very low savings rate of the U.S. and the picture gets very dismal indeed.

Consumers now know very well how credit card companies created policies which encouraged more debt among credit cardholders. By giving credit to subprime borrowers, credit card companies cashed in on their inability to pay off their debts by collecting only interest and penalty fees off them. As disgusting as this practice may be to the average credit cardholder, they must also acknowledge that no one really ever “held a gun to their head” to use their credit.

The credit card industry is, indeed guilty of encouraging a lifestyle where relying on credit and being lax on paying it off is the norm. For many years, American consumers have been very quick to use their plastic for purchases, some of which they could have done without. While doing so, they have also been very slow in paying off their monthly debts.

The credit card bill, fortunately helps in these matters. The bill, while discouraging the predatory practices of lenders, also penalizes cardholders who do not keep up with their debt payments. Even better are the amendments in the bill which put limits on who lenders can give credit cards to. With these amendments in place, only people who can actually pay off their credit can carry credit cards.

May 30, 2009

Preemptive Measures to watch out for before Credit Card Bill Goes Active

The passage of the credit card bill has given credit cardholders a lot to look forward to when it becomes active after nine months. With the credit card bill in place, credit cardholders can expect to see limitations being put in place for interest rate hikes, credit card agreement transparency, and generally, more protection for them from unfair credit card industry practices.

However, a key fact is being overlooked by many of those who are hailing the approval of the credit card bill – the fact that the bill goes into effect only after nine months has passed. Some industry experts are saying that starting now until the law goes into effect, the credit card industry is going to have an open season on earning as much as they can from their customers. This is to offset their impending losses when the credit card bill comes into play.

Since last year, credit card companies have been increasing their interest rates and cutting off available credit for cardholders. The resulting credit card crunch was actually one of the primary motivations for the credit card bill. Cardholders now need to be aware that what the credit card companies have been doing is not going to stop anytime soon. It is going to continue and may even get worse. It’s going to be nine months of continuous unfair and deceptive credit card practices before credit cardholders will see any positive changes in the way their credit companies do business.

The best that credit cardholders can do in the interim months before the credit card bill becomes active is to be as vigilant as possible with their credit cards.

Interest Rates

Credit card companies can still raise interest rates with relative impunity. They are only required to inform you 15 days of the change in interest rate. Therefore, read the fine print of your credit card bill so that you are aware of any changes in your billing. In some cases, you may have the option of closing the account. You should seriously consider doing so, especially if you can find a credit line with better interest rates.

Watch Your Credit Limit

Balance chasing or cutting down credit limits to just above the credit line’s balance is becoming a widespread practice of credit card companies. Watch your credit limit and avoid overdrafts so that you won’t be charged large overdraft fees.

Rewards and Rebates

Rewards and rebates are probably going to end when the credit card bill goes active. If you have some points stocked or awards pending, take advantage of them now as they may soon end or expire.

May 29, 2009

Credit Card Industry Earnings Likely to Drop

The credit card industry is in an uproar over the legislations in the recently passed credit card bill. The credit card bill is aimed at legislating many credit card industry practices that cardholders see as unfair and deceitful. For the credit card industry, the credit card bill is a disastrous piece of legislation which will destroy their profitability and, according to them, limit the available credit for American consumers.

Credit Card Industry Earnings Likely to Drop During the past few years, the credit card industry has enjoyed high profitability. Many see that this is coming to an end. Although many see the credit card bill as the main reason for this, it may only be one of many factors.

Although the credit card industry is currently preoccupied with the threat of the credit card bill legislations, it is important to remember that the profitability of the industry was already going down even before talks of the credit card bill surfaced.

With the economic crisis, credit cardholders were unable to keep up with their monthly payments. Whereas many of those who struggled with credit card debt were able to at least keep up with the minimum monthly payments, they were ultimately defaulting when the economic crash came. The increase in credit card debt defaults greatly hurt the credit industry. Aside from that, it also proved wrong one common boast in the credit card industry: their capability to analyze a borrower’s risk and balance with the right interest rate.

Credit cardholder dissatisfaction over high interest rates and large financial fees is also another factor to consider. Considered the root cause of the credit card bill and its popularity, the dissatisfaction of credit cardholders over many of the practices of the credit card industry has been going on for some time. It was only a matter of time before the issue blew up on the credit card industry.

Now, with the credit card bill in place, credit cardholders are going to get the changes that they have been clamoring for. Unfortunately, many of these changes are going to hurt the credit card companies. The legislations on full disclosure of agreements and restrictions on interest hikes and financial fees will hurt the credit card industry the most.

In the past, the credit card industry has profited greatly from credit cardholders who were unable to pay off their monthly bills but did not default, only paying off penalty fees. The impact is hard to calculate, given the credit card industry’s reluctance to release any figures. Many, however, consider the amount to be quite high.

The credit card controversies, coupled with the economic crisis, have also given American consumers a crash course on financial responsibility. Many of them are going to be more careful with their credit card purchases, limiting credit card industry’s previously large profits from subprime borrowers.

May 27, 2009

Will Credit Card Bill Burdens Responsible Credit Cardholders?

The passage of the credit card bill has gone remarkably fast. The House version passed during the last days of April and the Senate version just got passed last week. A few days later and President Barack Obama signed the bill into law.

Will Credit Card Bill Burdens Responsible Credit Cardholders Credit cardholders are excited to finally see some sensible regulation for credit cards. Long feeling oppressed and frustrated by arbitrary interest rate increases and unreasonable fees, credit cardholders have been pressing for the passage of the credit card bill since it first came out in congress.

On the other hand, the credit card industry has been against the credit card bill from the start. Their stance is quite understandable, considering that, with the passage of the credit card bill, they have been essentially stripped of their most lucrative customers the past few years, subprime borrowers.

Partially to limit support for the credit card bill, the credit card industry has been issuing dire warnings of what is to come should the credit card bill become law. One of the most ominous is that responsible cardholders, those who keep their payments up to date and maintain good credit scores, will get hit hard and will basically end up supporting bad borrowers.

The credit card industry says that this will happen because, in order to make up for their losses and decrease their exposure to financial risks, they will have to make credit much less available to credit cardholders, regardless of credit standing. Annual fees will be making a comeback. Initial interest rates will also soar to balance out the inability of borrowers to increase interest rates on existing debts. Reward point programs will also be put a stop or, at least severely curtailed.

These dire warnings, though worrying, may not actually come true. What will assuredly happen when the credit card law becomes active is that credit cardholders will again have some confidence and trust on their credit cards. They won’t be worrying about high interest rates and fees and other unfair credit card industry practices.

The credit card bill won’t save all credit cardholders, however. Those with large credit card debts will have a ways to go to get out of debt. At the very least, however, they won’t have as hard a time paying down their debts.

With credit cardholders much more confident, cardholders will most likely be returning to their plastic for their purchases. They will also most likely be more choosy and intelligent in their choice of credit cards, what with the new credit card bill transparency measures. This will mean high competition among credit card companies. With competition taking place, the credit card company able to offer the best features and incentives package wins which makes the probability of the industry’s dire warnings coming true very low indeed.

May 26, 2009

Rapid Rise On Credit Card Fraud Seen

Credit card fraud has long been one of the most controversial problems of the credit card industry. The nature of the crime is doubly troubling as credit card fraud, more often than not, involve the theft of information of a personal nature which can be hard to secure again once it has been compromised.

Rapid Rise On Credit Card Fraud Seen Some types of credit card fraud can also be difficult to detect and, since consumers only see the summary of their purchases when their bill comes, finding out that they’ve been a victim always comes after the fact. This makes credit card fraud much more difficult to track and the perpetrator much more difficult to apprehend.

CQR Consulting is a firm specializing in information security. Their security specialist, Steve Darrall, recently released a statement saying that the total cost of fraud in 2008 has risen by at least 51% compared to the figures from 2007. These figures were taken primarily from credit card fraud involving counterfeiting cards and card skimming.

The information security firm has also noted that CPN or card-not-present credit card fraud along with card counterfeiting and skimming is the most common type of credit card fraud that is threatening cardholders today. Card-not-present credit card fraud is when the illegal transaction occurs without the cardholder or the card itself present during the transaction is done. This is most common in credit card transactions involving telephone or mail orders. Internet or online transactions are also commonly used for card-not-present credit card fraud.

Financial institutions are not standing still and, currently there is a strong push in the financial industry to increase their information security and reduce their risks for fraudulent credit card transactions. Financial institutions are also encouraging their respective merchants offering card payment services to improve their defenses against credit card fraud. This usually involves making necessary information storage equipment more secure and minimizing as much as possible the amount of personal data about the credit cardholder that the merchant will have access to.

According to Darral, there are two initiative that the financial industry is pursuing in order to improve the security of both cardholder and card transaction information. One is the PCI-DSS or Payment Card Industry Data Security Standard. This is developed primarily by the major credit card companies and it will be applied to all organizations that process, store or transmit data pertaining to cardholder payments regardless of the size or the transaction numbers. The other is the Payment Application Data Security Standard. This will be applied to software applications which are made to store, process or transmit data pertaining to card payment.

May 20, 2009

Teaching Teeners Better Credit Control with Prepaid Credit Cards

The credit card industry seems to be getting smarter and more creative in their credit card marketing approach. Although some of the marketing styles of credit companies have been a bit questionable as of late, this one is actually a step in the right direction.

Teaching Teeners Better Credit Control with Prepaid Credit Cards Discover Bank is now issuing prepaid credit cards for the teenage set, with the proper parental control locked in. This practical approach of Discover is being received warmly by parents who understand the convenience of credit cards for teenagers but who also are wary of the financial responsibilities that it carries. With prepaid credit cards, parents get the best of both worlds.

The credit card is essentially an extension of the parent’s current credit card. A special account of the current credit card can be deposited with an amount up to $200 to make the prepaid credit card usable. The account also allows parents some control over the spending habits of their teenagers. These include putting limits on spending, tracking their kids’ transactions, and even creating automatic text alerts that they receive whenever their kids use their prepaid credit cards.

The prepaid credit card also encourages teenagers to spend wisely, as parents will have control on where the card can be used. Parents will therefore have the option of encouraging their kids to spend only in retail shops that they approve of. The prepaid credit card also comes with an automatic block that blocks purchases from bars, liquor stores, and tobacco shops.

Any parent knows the fear of their children misplacing their credit cards and having them used by someone else fraudulently. The prepaid credit card also comes fully protected against fraud in preparation for these situations.

Prepaid credit cards can also earn reward points for their owners. Online discounts and store coupons can be earned by kids whenever they use their prepaid credit card in selected venues and online sites.

Teenagers who have a job also have the option of automatically having their checks deposited to their credit cards every payday.

The prepaid credit card can be very helpful for parents who recognize the convenience of using credit cards for purchases. Furthermore, carrying these prepaid credit cards can be much safer for their kids than carrying cash.

Discover has been marketing these prepaid credit cards as great tools for teaching children smart spending habits. Parents are seeing the other benefits as well such as keeping track of their kids’ spending. The card’s appeal is quite apparent and Discover may have hit on a winning idea with their prepaid credit card idea. Imagine what a generation of prepaid credit card users can do to Discover’s market when they grow out of the credit card “training wheel” phase of their financial life.

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