The past week's datapoint-of-consequence for investors had to be the December 2010 consumer credit report, which indicated that credit card debt increased for the first time in more than two years.

Revolving debt, which includes credit cards, increased by $2.3 billion in December, or at a 3.5% annualized rate, the U.S Federal Reserve said. It was the first monthly increase in credit card use since August 2008.

Are credit card rates too high? The answer is a resounding YES! The Federal Reserve just gave the banks $600 billion in cash in the form of a second round of quantitative easing. What are they doing with it? Raising the rates on credit cards, of course, so they can turn that $600 billion into $1.2 trillion in four years.

You are probably wondering how they are doing this. It's very simple. If you use the rule of 72s, at 18%, money doubles itself every four years (you divide 72 by the rate of interest).

American Express (AXP) was not on Wall Street's list of best buys today. The market is a few minutes away from closing as I write this, and I see that the shares are off by over 2% to $44.82. Volume is quite high.

Should investors be considering this credit-and-charge-card entity for their portfolios? Well, the stock is closer to the 52-week high of $49.19 than it is to the 52-week low of $36.60, but the twelve-month chart shows that the shares have been bouncing around in that somewhat narrow range rather vigorously.

Financial giant Capital One (COF) is trading slightly lower in after hours trading despite crushing analyst estimates for its fourth quarter after today's market close.

As we noted in our earnings preview, analysts had been expecting to see Capital One post earnings of $1.27 per share, but the company easily surpassed analyst forecasts by reporting earnings of $1.52 per share for the quarter.

MasterCard (MA) was higher this afternoon as market participants evaluated the credit-card company's most recent quarterly release. Shares were up 2.5% to a quote of $245.02.

The 52-week high for the stock is $269.88, so one could look at the situation as having room to grow (thankfully, the current share price is comfortably above the 52-week low of $191). The one-year chart, however, might offer some cause for concern. The stock does seem to want to make a comeback, but the image nevertheless is a bit tough to examine.

Let the good times roll. Those 0% APR credit cards are back. For more than a year credit card companies have been slashing credit lines and raising rates to astronomical levels. Much of the delinquencies have been wrung out of the system. Delinquency rates are down 26% from a year ago.

With that pressure lifted, card companies are sending out 0% promotion letters to customers with credit scores 720 or higher, as reported in Smart Money and the Wall Street Journal. The number of promotions is up 71% from 53%. Promotions are for a longer period, 21 months instead of the 12 months last year.

Discover Financial Services (DFS) is trading higher this afternoon after the credit-card entity reported numbers for the fiscal third quarter. At the time of this writing, the stock was up 2.4% to $15.95. Volume was very strong.

The shares have traded in a narrow range over the last twelve months. The 52-week low is $12.11 while the 52-week high is $17.36. The chart shows a nice trading vehicle for those who like to buy and sell on a short-term basis.

How much do you owe on your credit card? If you owe $4,951 your debit balance is average. This is down from 13% from $5,719, according to Trans Union and The Associated Press.

The credit reporting agency said that this was the first time since 2002 that balances fell below $5,000. Late payments fell to less than 1%, down from 1.17% last year.

Given the size and complexity of the U.S. economy, forecasts regarding U.S. GDP growth must be viewed with caution: they contain a margin of error, and are subject to substantial revisions. Even so, with consumer credit card-based purchases continuing to decline, one conclusion investors can draw is that U.S. GDP growth probably will be lower during this expansion than it was during previous post-Cold War era expansions.

One major reason? Historically, consumer spending has account for 65% to 70% of U.S. GDP. If consumer spending remains modest, it's highly unlikely that the economy will be able to grow as fast as it typically does when consumption is high.

News that credit card debt has fallen to an eight-year low may not be the news that Visa (V) and Mastercard (MA) want to hear, but it is good news overall given the employment and economic situation. It's a sign of fiscal discipline during rough times.

Some analysts were a bit worried about credit card debt after the housing crisis; if you are unemployed, it can be easy to run up large debts on credit cards and then default on them.

I am sure there are some out there who think that consumers need to go out and spend more money to stimulate the economy, but that logic is not always good depending on the purchases.

I found a rather interesting article on Bloomberg, one discussing the potential of smartphones to replace credit cards. Supposedly, both AT&T (T), Verizon (VZ), and perhaps T-Mobile, may work with Discover Financial Services (DFS) and Barclays (BCS) in Atlanta and three other cities to test a system allowing consumers to pay with the "wave of a smartphone." This move would be the largest effort to attempt mobile payments in America and could serve to cut into credit card use.

Crone Consulting, a credit card consultant, noted that such a move could be a "game-changer" as far as credit cards are concerned. Think of how much such a move could cut into the market share for credit cards. According to the article, Visa (V) and MasterCard (MA) handled 82% of U.S. consumer spending a year ago (that is $2.45 trillion). Now imagine that smartphone users have the ability to simply pass their phone over a reader in order to pay for their purchases.

(DFS), whose related companies include American Express (AXP), MasterCard (MA), and Visa (V), closed higher yesterday after releasing Q2 data. Of course, I should put the phrase "closed higher" into perspective. The stock ended the day at $14.08, which meant it rose 0.5%. Not exactly a spectacular end to the session, but it actually was doing better at other points during the intraday period.

According to this item, an improved profit picture in the latest report drove the buying. Card-sales volume went up while charge-offs went down. A great combination for the business.

The markets tried to stage some stability after the weekly jobless claims fell more than expected. Unfortunately durable goods, concerns over retail sales, and that nagging notion of a double-dip recession keep the market down. The DJIA was down triple digits in the final minutes and here are the unofficial closing bell levels today:

Dow 10,152.80 -145.64 (-1.41%)
S&P 500 1,073.69 -18.35 (-1.68%)
Nasdaq 2,217.42 -36.81 (-1.63%)

Visa, Inc. (V) saw a nice pop today during the afternoon session. With a little less than two hours to go before the end of market activities, the shares were higher by well over 7%. They hit a price of $83, and the volume level was healthy.

It was great to witness the buying activity. While I don't own Visa, I do recognize its great potential over the long term. The company makes money on transactions at points of sale: just a small percentage on each one, of course, but considering how society has become dependent on both credit and debit cards, you've got to respect the model. Remember that Visa doesn't expose itself to too much risk: it's the banks who make the actual credit loans.

How many days can we have where the plus or minus signs on the DJIA and the S&P 500 are not fully clear until the final minutes of the trading day? Lots it appears. US markets followed global markets higher this morning after China announced its partially more flexible Yuan-Dollar peg promise. A strengthening Euro and concerns in energy and retail sectors took out the strength of the day, as sellers started coming into the market right before the last hour of trading. Here were today's unofficial closing bell levels:

Dow 10,442.41 -8.23 (-0.08%)
S&P 500 1,113.20 -4.31 (-0.39%)
Nasdaq 2,289.09 -20.71 (-0.90%)

Top Analyst Calls