• Starting in February, card statements will include the amount of interest and fees paid for the year to date.
• The statement will include the size of monthly payments needed to become debt free in 36 month.
• Card companies will give cardholders 45 days before changing the interest rate.

Why are these such minor changes? First, according to Kapner writing for Financial Times, the average American household has $10,000 in credit card debt. At a rate of 18%, it would take 48 years to become debt free by just paying the minimum each month.

Continue reading Some Minor Changes Are Made in Reporting Credit Card Costs

Some Minor Changes Are Made in Reporting Credit Card Costs originally appeared on BloggingStocks on Mon, 01 Feb 2010 15:50:00 EST. Please see our terms for use of feeds.

Continue reading Consumers Find Credit Trouble in November

Consumers Find Credit Trouble in November originally appeared on BloggingStocks on Wed, 30 Dec 2009 09:20:00 EST. Please see our terms for use of feeds.

Consumer debt levels fell again in August for the seventh month in a row. Facing continued instability in the job market, people are paying down their debt, as a way to protect themselves. Savings are up, and borrowing is down - which could weaken the recovery. Consumer spending accounts for 70% of economic activity in the United States.

Total consumer debt outstanding dropped by $12 billion in August, according to the Federal Reserve, reflecting an annualized rate of 5.8%. Reality outpaced Wall Street's expectations, which were around $10 billion. In July, consumer debt outstanding fell $19 billion (9.1%), which was the largest in hard-dollar terms since 1943 and on a percentage basis since June 1975's 16.3%.

While consumer fear is playing a significant role, as a touchy housing market and dicey job situation leave little to lean on, the banks are also responsible for the change in direction. They aren't lending as easily, with stricter standards limiting the amount of credit available to consumers. You can't spend what you can't borrow.

Continue reading Consumer debt declines for seventh month in a row

Consumer debt declines for seventh month in a row originally appeared on BloggingStocks on Thu, 08 Oct 2009 09:00:00 EST. Please see our terms for use of feeds.

Visa (NYSE: V) is changing presidents and reorganizing the management team.

The biggest credit card network in the world is consolidating the oversight of its sales, client service, marketing, product development, and "innovation" (is that the group that thought it would be smart to securitize high-risk subprime consumer debt?) functions. John "Hans" Morris will step down as president but stay with the company through the end of the year in another role (wow, lots of euphemism in there).

Continue reading Visa president out, forecasts are fine

Visa president out, forecasts are fine originally appeared on BloggingStocks on Tue, 28 Jul 2009 12:20:00 EST. Please see our terms for use of feeds.

It's beginning to look like people who borrow money on their credit cards are in a strong negotiating position with the credit card issuers. I find this really surprising; however, people have borrowed so much -- $2.4 trillion in installment debt -- that they have the credit card companies in a strong position when it comes to repaying -- or not.

And those credit card companies expect to get stiffed by 44% more over the next five years than they did in the past five. For example, between 2003 and 2008, credit card companies wrote off $275 billion in credit card receivables but in the next five years, they expect not to collect $395 billion.

And just as we see with the government forking over $8 trillion of taxpayer money to financial institutions, the ones that took on too much risk are the ones getting the special deal. This means that if you are delinquent for 90 days or longer; your income is in the right range; you have a broad network of banking relationships; and your credit record suggests missing a payment is an exception rather than the rule then you can get a deal.

Continue reading Will your credit card company forgive 70% of what you owe?

Will your credit card company forgive 70% of what you owe? originally appeared on BloggingStocks on Sat, 03 Jan 2009 17:02:00 EST. Please see our terms for use of feeds.

Oil prices are significantly down from the summer high of $147 per barrel. Wednesday October 1, New York's main contract, light sweet crude for November delivery, lost $2.11 to close at 98.53 dollars a barrel.

Now Merrill Lynch (NYSE: MER) is slashing its outlook for oil prices. Not only do their analysts believe that oil will drop below $90 a barrel next year, but they add that there is a possibility it may drop below $50. Demand is shrinking and it's hard to call a bottom.

Given all the turmoil in the financial markets this year and with a looming "consumer credit bubble" being discussed in most business publications, it would be very advisable to use any savings from lower oil prices to pay down credit card debt.

Continue reading Credit bubble warning & Merrill forcasts oil price drop

Credit bubble warning & Merrill forcasts oil price drop originally appeared on BloggingStocks on Thu, 02 Oct 2008 13:18:00 EST. Please see our terms for use of feeds.

Continue reading Dumb Money Move No. 9: Declare bankruptcy so you can start fresh with a clean slate

Dumb Money Move No. 9: Declare bankruptcy so you can start fresh with a clean slate originally appeared on BloggingStocks on Fri, 08 Aug 2008 16:34:00 EST. Please see our terms for use of feeds.

Bloomberg News reports that consumer borrowing -- as measured by credit card receivables -- grew much faster than expected in March. Specifically, the 9% growth to $2.56 trillion was twice the rate of increase that economists had expected (the actual increase was $15.3 billion vs. 34 economists who expected $6 billion). The March figures brought U.S. consumer borrowing in the first quarter to $34 billion, the most since the first three months of 2001, when the economy entered its last official recession.

And as consumers are increasing their indebtedness, they are also having more trouble paying it back. Overdue payments at the six largest U.S. credit-card lenders reached the highest level since November 2004, according to data compiled by Bloomberg. It found an average of 4.11% of loans were at least 30 days late in February and March.

Bloomberg quotes Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York who says it all: "incomes are not keeping up with inflation and this is leading them to rely increasingly on credit to see them through the worst housing downturn since the Great Depression. The days of extracting cash from one's home to spend on goods and services are long gone."

With consumer spending accounting for 70% of GDP growth, that's why I suggested selling into the sucker's rally that peaked last week.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

From houses to plastic: Spike in credit card borrowing signals trouble originally appeared on BloggingStocks on Thu, 08 May 2008 09:39:00 EST. Please see our terms for use of feeds.

Continue reading Growing credit debt may not be good for credit card company Capital One

Growing credit debt may not be good for credit card company Capital One originally appeared on BloggingStocks on Thu, 10 Apr 2008 15:43:00 EST. Please see our terms for use of feeds.

While there are plenty of fast-talking late-night gurus out there who want to give you the information you need to get rich (all for the three easy payments of $29.95, but wait there's more...), the New York Times's Damon Darlin has some of the best personal finance advice that graduates don't want to hear:

• Save 10% of your income right off the top.
• Buy stuff used.
• Enroll in a 401(k).
• Don't borrow money to buy depreciating assets.
• Make your own coffee.

He offers two compelling reasons to start saving early. First, there's the most obvious one. Starting the cycle of compound interest early means your money will grow more. But then there's another one that I hadn't really thought about. Living below your means conditions you to be comfortable with a less expensive standard of living, which will also save you money in your retirement years.

There's another important thing to remember, and it's probably the best reason of all for being wise in your money management. I first realized this paradox when I was talking to my friend "Jim," who, after years of poor spending habits, has run up a huge amount of credit card debt, and lies awake at night worrying about money. He used to make fun of me for my Scrooge-like spending habits and obsession with saving as much money as possible. The other day, we sat down to discuss his problem.

Continue reading Damon Darlin's great advice for recent grads

Damon Darlin's great advice for recent grads originally appeared on BloggingStocks on Sun, 03 Jun 2007 18:10:00 EST. Please see our terms for use of feeds.

American Express is changing its ad campaign. The new catchphrase: "Are you a cardmember?" American Express will be spending four to five hundred million dollars on the campaign, which gives you some idea of how much money these guys are making. My favorite quote from the New York Times article about the change: Mr. Hayes said that the "My life" campaign "has done a great job redefining the notion of membership" as well as reminding consumers that "American Express is a company, not just about transactions, but about relationships."

Ohh ... So credit card companies are about relationships! Well, according to Indianapolis Mental Health counselor Dawn Kozarian, financial problems cause more divorces than adultery. And in his book Maxed Out, James Scurlock tells the story of a young man who killed his entire family as a result of stress over credit card problems. So I guess that credit cards really might involve relationships in that sense. But I somehow doubt that's what Mr. Hayes was talking about. Perhaps he was referring to the relationship between the credit card company (and its bill collectors) and the consumer, in which case Scurlock could also tell you a story about a young lady who committed suicide after receiving months of harassing and threatening phone calls from a collection agency. But I don't think that's what Mr. Hayes means either.

Continue reading How about a warning label for credit cards?

How about a warning label for credit cards? originally appeared on BloggingStocks on Sat, 07 Apr 2007 11:40:00 EST. Please see our terms for use of feeds.