The LowCards.com Weekly Credit Card Rate Report 11-20-08

The LowCards.com Weekly Credit Card Rate Report 11-20-08

The LowCards.com Weekly Credit Card Rate report is based on
our Complete Credit Card Index which tracks the rates of
1260 credit cards in the United States.

Our index showed that Annual Percentage Rates for credit
cards moved slightly higher this past week. The average
credit card rate for purchases was 12.01% for the 1260
credit cards that are tracked by LowCards.com compared to
the 11.99% average for the previous week.

Here are the averages from the LowCards.com Complete Credit
Card Index for the previous ten weeks:

Nov. 20 12.01%
Nov. 13 11.99
Nov. 6 11.95
Oct. 30 12.01
Oct. 23 12.03
Oct. 16 12.06
Oct. 8 11.89
Sept 30 12.13
Sept 23 12.14
Sept 16 12.12
Sept 9 11.99

The average cash advance rate dropped slightly to 20.71%
from 20.72% the week before.

A new batch of concerns has hit the financial markets and
those may be making credit card issuers pause before
lowering rates.

"I think the credit card issuers have some general concerns about the economy and the ability of certain card holders to pay their bills." said Bill Hardekopf, CEO of LowCards.com .
"The credit card issuers are not yet aggressively dropping
rates even though Fed rates have declined. Issuers may be making a little more profit since it now costs the credit card issuers less to borrow money from the Fed, and in this tough economy, they may be reluctant to give up that new increased profit margin. Citigroup even said this week they were raising rates on about 20% of their customers after promising not
to do so."

The credit cards with the lowest interest rates in the
nation this week are:

1. 4.50% Wells Fargo Prime Rate Visa Credit Card
2. 4.50% Nordstrom Platinum Visa
3. 5.00% SimplyCash Business Card from American Express

The LowCards.com credit card rate report is compiled weekly
using data from 1260 credit cards which are tracked on the
LowCards.com website. The Complete Credit Card index is
available here:

http://www.lowcards.com/CreditCardIndex.aspx

Rates may occasionally change due to the number of cards
being tracked.

About LowCards.com: LowCards.com ( http://www.lowcards.com )
simplifies the confusion of shopping for credit cards. It is
a free, independent website that helps consumers easily
compare credit cards in a variety of categories such as
lowest rates, rewards, rebates, balance transfers and lowest
introductory rates. It also gives an unbiased ranking and
review for each card. The company has been analyzing the credit card industry and supplying objective websites on various consumer expenses for eight years.

The LowCards.com Complete Credit Card Index ( http://www.lowcards.com/CreditCardIndex.aspx ) is the most
objective and comprehensive resource on the Internet which
allows consumers to compare rates for all 1260 credit cards
offered in this country.
The founders of LowCards.com have written a book called The
Credit Card Guidebook which helps clarify the confusing
world of credit cards. Consumers can download this book
absolutely free as a PDF or browse it online:
http://www.lowcards.com/the-credit-card-guidebook/index.php

Nearly 10 Million Citi Customers Could See Rates Increase

Just in time for the holiday shopping season, Citigroup has announced that it is raising interest rates for some of its credit card accounts. Nearly 20% of the Citi customers could receive a notice in their November billing statement or a letter from Citigroup saying that their rate has increased 2-3%. Citigroup says this increase is necessary to make up for losses in its global card division.

"Many households are stretching to find extra money for holiday purchases. If you plan on using credit cards for your holiday shopping and you are one of the Citi customers that gets this notice, remove that Citi card from your wallet or purse because that rate increase will just add to the cost of your purchases," says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook.

Citigroup says the rate increase is necessary to help it return to profitability in a difficult environment. Citigroup reported losses of $1.59 billion in the third quarter. The company has already cut 12,900 of its 352,000 jobs worldwide with another 9,100 expected in the next twelve months.

The Wall Street Journal reports that interest rates are being raised by an average of three percentage points and it will apply to customers that have not had a rate increase in the last two years. This is expected to affect approximately 20% of Citigroup's cardholders. Citigroup is one of the nation's largest credit card issuers with 54 million active accounts.

"A number of other issuers are in the same boat as CitiGroup with the same market conditions and large losses. All issuers are looking for ways to increase revenue, minimize their risk and future losses and turn this around. I wouldn't be surprised to see some other issuers making the same rate changes," says Hardekopf. "However, this rate increase strategy can also backfire on issuers if rate increases sends more cardholders into default on their credit card loans.

"Pay attention to your mail and look for your notice from Citi. They often come in nondescript white envelopes that are easy to miss and toss before reading. However, if you don't respond, you are stuck with the rate increase," says Hardekopf.

If your receive notice that your account is subject to an increase, you have until January to decline the rate increase. If you decline, you can pay down the balance on the old pricing terms until the card expires. You will then have to reapply for a card or find a different issuer.

"If you decline the offer, send a letter to your issuer by certified mail. Keep a copy of the letter for your records," advises Hardekopf.

New Fed Survey Confirms Tightening Credit Card Practices

A new Federal Reserve Survey shows that it is becoming more difficult for consumers to get credit cards, and that banks are lowering credit limits on existing card customers.

The Federal Reserve October 2008 Senior Loan Officer Opinion Survey on Bank Lending Practices says that a majority of domestic banks reported that they are tightening standards on both credit cards and consumer loans.

Here are the survey's key findings about credit card and consumer loans:

* About 50% reported that they increased the minimum required credit scores on credit card accounts over the past three months. 60% reported that they raised minimum scores on other consumer loans over the same period (this is about the same as the July survey).

* A majority of respondents, about 60%, reported that they reduced the extent to which credit card accounts were granted to customers who did not meet their bank's credit-scoring thresholds. A similar percentage of respondents reported a reduction in granting other kinds of consumer loans for that reason.

* About 20% of domestic banks reported having reduced credit limits on existing credit card accounts to prime borrowers. But roughly 60% of banks had lowered limits on existing credit card accounts of nonprime borrowers; no banks reported raising limits to those borrowers. Reasons for lowering credit limits include: an uncertain economic outlook, a more conservative position on risk, a decline in customer credit scores, and missed payments by customers on credit card loans and other loans at their bank.

* Almost 60% of respondents indicated that they had stiffened lending standards on consumer loans over the past three months.

"This proves that banks are paying more attention than ever to credit scores. The reductions in credit limits and loan offers aren't just rumors, they are now becoming bank policies," says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. "It is extremely important that consumers do all they can to maintain their credit score and not appear to be a greater risk. If that happens in
this financial environment, you are almost sure to see your APR increase and/or your credit limit decreased.

"To help maintain your credit score, a consumer should pay all your bills on time, not just your credit card bills. Pay well over the minimum amount. Keep your debt utilization ratio under 30%."

This survey is based on responses from 55 domestic banks and 21 U.S.branches and agencies of foreign banks. Here is the full report: http://www.federalreserve.gov/boarddocs/SnLoanSurvey/200811/fullreport.pdf

Use Gift Cards Immediately to Avoid Problems

Use Gift Cards Immediately to Avoid Problems

Gift card sales have boomed as they have become the easy, no-hassle
holiday gift. The National Retailers Federation estimates that consumers
spent $26.3 billion on gift cards last Christmas season.

However, there is little consumer protection with gift cards, which can make
them a costly gift if you don't use them quickly.

Earlier this year, Sharper Image declared bankruptcy, turning Sharper Image
gift cards into worthless pieces of plastic. The bankruptcy affected almost
$20 million in gift cards.

There is no guarantee that consumers will be able to redeem the full value
of the gift card if the retailer files bankruptcy. Retailers filing for
bankruptcy must have court approval to operate gift card programs.
Bankruptcy courts consider unused gift card funds as debt and decide whether
or not the retailer must pay it. The retailer can choose to petition the
court to allow it to continue to honor gift cards. If the retailer doesn't
make the request, or the court doesn't allow it, then the consumer can lose
the value of the gift card. After that, the only remaining option is to file
a claim as an unsecured creditor to the bankruptcy proceeding.

Consumer groups, including Consumers Union, recently filed a petition to the
FTC to ask regulators to do more to keep consumers from losing money on gift
cards from bankrupt retailers. The recommendations include retailers
setting up trust accounts for funds generated from gift card sales that
would be used in the event of a bankruptcy; forcing the bankrupt
company to accept its own card at full value as long as it remains
in business; and requiring bankrupt companies to stop selling gift
cards no later than the date of filing for bankruptcy.

"The best way to use a gift card is to spend it as soon as you receive it
because you don't know what is going to happen in the future," says
Bill Hardekopf, CEO of LowCards.com and author of The Credit
Card Guidebook. "Bankruptcy isn't the only way that your card will
lose its value. After 6-12 months, some retailers charge a monthly fee
that is as high as $2.50, which will quickly reduce the value of your gift
card."

According to the National Retail Federation, another reason to spend a gift
card quickly is that the government may take it away. Many states have laws
which will treat unused gift cards as "abandoned property." If personal
property goes unclaimed for a certain period of time, the state has the
right to take it into the state treasury. This includes bank accounts and
personal property like gift cards. These abandoned property laws can go into
effect in as little as two or three years. Retailers must turn over unused
gift card dollars to state governments under the appearance of returning the
"abandoned" money to the gift card purchaser. States can collect millions
of dollars a year from these clauses.

"It is a good idea to spend your card within the first year. If you wait
much longer, you may forget about it and later find yourself with an expired
card," says Hardekopf. "If your card has expired, take it to the retailer
and ask them to issue you a new card--some retailers may do this. If
the card has been treated as abandoned property, you can try to initiate
an unclaimed property claim through your state's treasurer."

How To Plan A Debt Free Christmas

How To Plan A Debt Free Christmas

Most people have barely had a chance to put the Halloween decorations back in storage, but some radio stations are already playing non-stop Christmas music. This is a good reminder that it is time to start saving for the holidays.

A recent survey by the National Retail Federation indicates that many people have already started their holiday shopping. The survey found that 40.2% of consumers started their shopping before Halloween. Consumers plan to spend an average of $832.26 on holiday-related shopping, up just 1.9% over last year's $816.69.

"Every year, we remind consumers that unless you pay off your balance every month, you should limit using credit cards for holiday purchases. Limiting credit loans for holiday shopping avoids inflating your debt in the new year. The credit crisis of 2008 has made this even more critical because creditors are closely watching spending and credit limits for every account," says Bill Hardekopf, CEO of LowCards.com. "Lenders who were once so aggressive with extending credit are now very
sensitive to an increase in the amount that you borrow. An increase in your balance sends a warning to issuers that you are a higher credit risk. This can result in a lower credit score, a higher APR and a lower credit limit on your credit card account.

"Before you make your first holiday purchase, this is also the time to verify the credit limit on every credit card that you use. Issuers are protecting themselves by lowering credit limits. If you are unaware that yours has been lowered, you can unknowingly exceed your credit limit. This can cause problems such as a lower credit score and a significantly higher APR. If you exceed that limit twice in a rolling 12-month period, some issuers have the ability to take your APR up to the default rate
which can be anywhere from 28% to 32%."

Here are some tips to prepare for holiday spending:

* Start saving now. Look at what you spent last year and try to save that amount in the next two months. If you spent $500, you can save $62.50 per week for the next eight weeks and afford everything you purchase, or apply that payment to your January credit card balance so you don't have to pay interest on your holiday spending. "Instead of eating out, take your lunch to work or eat more meals at home from now through December; save that money for Christmas purchases," says Hardekopf.

* Change your shopping habits now before you get into the spirit of the season. If you can't afford to pay off your credit card in November, then you can't afford to add a lot more to it. "It's Christmas" is not a good reason to put yourself deeper into debt. "If you are still paying for purchases from last Christmas, then you can't afford a lot of shopping this Christmas," says Hardekopf.

* If you must use a credit card loan to pay for Christmas, make sure you can pay it off by Easter.

* Pay attention to your credit limit. "If you are close to your limit in November, you could have problems by December. The punishment for going over your credit limit is no longer a simple fee. You will have to pay the $39 over-the-limit fee, and your APR is almost sure to increase," says Hardekopf. "If you add to your balance and your credit utilization goes much higher than 50%, you could hurt your credit score."

* If you are looking for a new credit card, this may be a good time to apply. If the card has a 0% intro rate for purchases for six or twelvemonths, you can use your card as a free loan for holiday spending. This is recommended only if you pay it off before the interest charges begin.

* If you really want to stick to your budget and avoid impulse spending, pay in cash. According to Dun and Bradstreet, people spend 12-18% more when using credit cards than when using cash.

"Many households are struggling financially with credit card debt and mortgage payments. This is the year to give yourself permission to have the Christmas that you can actually afford. Don't add to your financial stress by adding more debt for gifts that will be forgotten before the first credit card bill comes in January.

"It is critical to look at the effect of additional spending on your credit card if you have been carrying a balance. Say you charge another $1,000 for holiday purchases on your credit card with an interest rate of 15%, and you pay just $30 each month. It will will take 43 months to pay off Christmas 2008, and you will pay an additional $302 in interest," says Hardekopf.

Link to survey from National Retail Federation:
http://www.nrf.com/modules.php?name=News&op=viewlive&sp_id=590