The latest report from the Federal Reserve shows that consumers used their credit cards quite extensively to fund their holiday shopping.

Revolving credit, which is made up primarily of credit card debt, increased at an annual rate of 4.1 percent in December. It rose nearly $3 billion to $801.0 billion.

This follows a jump of $5.5 billion in November which was an annual rate increase of 8.4 percent.

December was the fourth straight month of increases in revolving credit.

This could be a positive sign that consumers are more confident in the economy. But on the other hand, it could mean that people are struggling and have to rely on using their credit card to make ends meet.
Consumers are going into 2012 with higher credit card debt, but the same wages. If consumers have a hard time paying this down, then we might see delinquencies and defaults start to increase by spring.

The latest G19 report:

http://www.federalreserve.gov/releases/g19/Current/

In the past few weeks, consumers have received their credit card bills, revealing the financial damage from the Christmas season. Financial relief may be hard to find since Valentine’s Day is just around the corner.

The National Retail Foundation predicts that U.S. shoppers will spend an average of $126 on gifts and treats for loved ones on Valentine’s Day, an 8.5 percent increase from the $17.6 billion spent in 2011. While this spending may be good for retailers and romance, it can add add more debt to a budget that is already under stress.

Money management and spending are landmines that can destroy a relationship. Making financial decisions together can be extremely difficult since many couples can’t even agree on what movie they want to see. However, couples that create a workable and efficient financial plan significantly lower their anxiety levels and have more time and money for long-term romance.

Talking about money may be initially awkward, but don’t avoid it. Building a solid financial foundation is much easier than bitterly trying to re-build after a financial collapse.

Here are 10 tips for couples to help reduce financial stress:

1. Full Disclosure of All Debt and Financial Obligations
Get everything out in the open. Make a list of all student loans, car loans, credit card debt, even loans to friends and parents. Get copies of individual credit reports to share the financial past and any accounts that you may have forgotten.

2. Raise Your Credit Score
Make it a goal for both partners to have a credit score over 720. This will this help you qualify for the best terms and interest rates on loans and save thousands of dollars over your lifetime. In addition, insurers, landlords and employers use credit reports to make decisions about your application. Raise your credit score by paying your bills on time, paying down your debt and limiting your credit applications.

3. Plan for Spending
Both spouses spend money on things they think are necessary, but this is often subjective. Conflict occurs when spending leads to judgment or anger from the other spouse. Together, work out a plan for daily spending and how to save for some of the bigger purchases–and even an occasional splurge. This can help remove the temptation to hide purchases and keep secrets from your spouse about spending.

4. Keep a Credit Card in Your Own Name
Keeping a credit card in your name helps build your individual credit history. If you are worried about your partner’s spending habits, then he or she should not carry a credit card. Add your partner as an authorized user to your account and monitor the monthly statements for any unrecognizable charges.

5. Pay Off Debt
Decreasing debt reduces financial stress. The faster you pay off your loan balance, the sooner you can start saving and building a strong financial foundation. When you receive gift money, a bonus, a second job or a tax refund, use this to pay off debt. Making micropayments can help pay down your debt faster. Eat a meal at home or use coupons, and immediately apply the money you saved to your credit card balance. If you have multiple credit cards with a balance, pay off the balance with the highest interest rate and then move to the next-highest rate.

6. Emergency Fund
All couples should have an emergency fund of six to eight months’ worth of living expenses held in a safe place such as a money-market fund. Simply knowing it’s there can reduce stress, since you know you’re not walking a fine line between comfort and catastrophe. Make savings consistent and untouchable by setting up an automated deposit from your paycheck into your savings account.

7. Monitor Your Accounts
Even if you divide up bill paying and investing duties, both parties should be able to easily access accounts to know what is going on with your money. Websites like Mint.com can keep track of all accounts–investment, checking, college funds and loans. This keeps information clear and in the open for both spouses.

8. Get Help
If arguments prevent you from getting started or making a financial plan, it may be good to seek professional counseling from a financial counselor or credit counselor. The National Foundation for Credit Counseling can help you find a certified credit counselor in your area. They can help you create a debt management plan. The set up fee is typically $50 and the monthly fee is about $25.

9. Talk It Out
Regularly make time to talk about your finances. It is important that both partners actively participate in these discussions. Keep it comfortable and conversational–do not make this a business meeting. It is not a time for blame and accusations. Let it be an open forum where either spouse can bring up problems and issues and even ask for suggestions and help. Let your actions show that you are in this together.

10. Add Extra Income
Selling unwanted items at a garage sale or on eBay is a start, but you may have skills that can make extra income. You can make picnic tables and chairs and sell them on Craigslist, or make bows and girls’ accessories to sell at children’s clothing consignment sales. You can board animals while their owners are on vacation. If you are a former athlete, you can give private lessons to kids learning how to play your sport.

Credit cards are like relationships. It’s sometimes hard to break up and the split may hurt you more than the other party. While it may feel good to cut up that credit card, losing the available credit could hurt your credit score and raise the costs of future loans.

Closing a credit card account that you have paid off or don’t use seems like a logical thing to do. However, the “credit utilization ratio” is one of the major factors in calculating your credit score, accounting for approximately 30 percent of your score. Closing an account can have a dramatic effect on that ratio.

When it comes to your credit cards, the credit utilization is the ratio of all your credit card balances to the credit limits available on your cards. Having a low ratio–not having much debt but a lot of available credit–is beneficial to your credit score. A high ratio may indicate that you may be a risk for default. A healthy credit utilization ratio is anything below 30 percent.

Closing an old or unused card erases some of your available credit and increases your credit utilization ratio. For example, say you have two credit cards–one with a $3,000 balance and one with no balance, and each card has a $5,000 credit limit. Your credit utilization ratio is currently 30 percent ($3,000 divided by $10,000), a very attractive ratio for lenders to see. But if you close the account with no balance, you decrease your available credit by $5,000 so your credit utilization ratio increases to 60% ($3,000 divided by $5,000).

Another major factor in calculating your credit score is the length of time you’ve had credit. If you have to close a credit card account and you are choosing between two equal cards, close the one with the shorter history. It is usually better to keep your credit card accounts open for a long period of time.

Rather than closing an inactive credit card account, it may be beneficial to keep that account open and just make a small transaction on it every month or two. Buy lunch on that card and pay that balance completely at the end of the month. That will keep your account active and enhance your credit score by prolonging your account history and keeping your credit utilization ratio low.

Here are some considerations on whether to cancel a credit card account:

* Look at your total available credit. Add up how much available credit you have and how much credit you are using. Your goal should be to keep your credit utilization ratio below 30%. If you have few credit cards, or a high credit utilization ratio, keep the account open. If you have several credit card accounts with large credit lines and you pay them off each month, you should see a minimal effect from closing a credit card.

* What is your credit score? If your credit score is excellent, losing a few points won’t be a big deal. If you are building or repairing your credit score, leave the account open.

* Does unused credit tempt you to overspend? If these temptations have historically gotten in the way of sound financial judgment, it is better for you to close an account even if it does slightly lower your
credit score. Running up needless debt is one of the worst financial mistakes you can make.

* Will you be applying for a loan in the near future? If you have a good credit score and no plans to apply for a loan, close the account. However, if you are going to buy a house or a car in the near future, keep your credit accounts open until you have been approved for the loan.

If you do choose to cancel your account, follow these steps:

* Pay off the total credit card balance.

* Wait for the next bill or call customer service to make sure the balance is zero.

* Call customer service and cancel the card. They will ask a few questions and may even offer some incentives to change your mind.

* Send a written confirmation and keep a copy for your records.

* Check your credit report to make sure the account is closed. This will take a few weeks. Go to www.annualcreditreport.com and check your report for free. Every year, you get one free credit report from each of the three credit bureaus.

Even though credit card issuers have been providing significant incentives for consumers to use their cards over the past year, consumers are once again turning to cash to pay for small purchases.

According to a new Javelin study released on Tuesday, 79% of consumers used cash to make a purchase over the past seven days compared to 65% who used a credit or debit card.

The increased use of cash may be a side effect of the interchange fee regulations that capped these swipe fees for debit card purchases. While a smaller fee was good news for most retailers, it provided a cruel twist for the smaller merchants. Business owners specializing in lower-priced items like coffee, candy and ice cream now have to pay a higher fee when their customers use debit cards for transactions because many card companies discontinued the discounts that were often given merchants for small transactions. Issuers say the higher swipe fee previously paid by retailers subsidized the discount for smaller transactions.

Many consumers who once used a debit card for small purchases are learning to carry cash to cover these transactions, or pay a fee to cover the store’s cost of processing the debit card. The debit card fee regulations are costing some retailers more money. We are certainly not seeing much lowering of prices that retailers were promising when the swipe fee regulations were being discussed.

While consumers are turning to cash, most credit card issuers continue to provide fairly lucrative incentives for consumers to use their cards. The Chase Freedom card offers a $200 cash back bonus once a new cardholder spends $500 during the first three months. Capital One Cash offers 1% cash back on all purchases plus a 50% cash back bonus, in addition to a $100 bonus for spending $500 on the card during the first 90 days.

Another major dispute on interchange fees could take place, and this one may have new, painful consequences on consumers. This time, the battle centers around the swipe fee that retailers pay on credit card transactions.

According to CNBC, there is an antitrust suit between five million retailers and Visa, MasterCard and 13 large banks, including Citi, Bank of America, Chase, Capital One, U.S. Bancorp and Wells Fargo. Retailers claim that banks and the payment systems have unfairly worked together to increase the amount of the interchange fee retailers pay on credit card transactions.

The amount that each retailer pays as a swipe fee on a credit card varies widely but the industry average is approximately 2 percent. This antitrust suit could cut that figure by three-quarters down to 0.5 percent. That would be one more devastating revenue blow to the banks as well as Visa and MasterCard, leading to billions of dollars in lost income.

Last year, the Durbin amendment went into effect on October 1, cutting the interchange fee on debit card transactions from an average of 44 cents to no more than 21 cents (plus 0.05 percent of the transaction, with the possibility of an additional cent if banks comply with fraud prevention procedures). Banks tried to make up for this lost revenue by implementing a monthly debit card fee which led to consumer outrage. Banks eventually rescinded this monthly fee.

If the retailers win this antitrust suit, it could have have a significant impact on consumers:

* Banks will lose billions of dollars at a time when they have already suffered significant cutbacks in revenue. Whenever banks lose revenue in one area, they try to make up for it in another area and that always comes at the expense of the consumer. An increase in existing fees, the introduction of new fees, and an increase in the credit card interest rates are changes that could be pushed by banks.

* A significant decrease in credit card reward programs. The lucrative cash back and airline mile rewards will likely decline. Most banks eliminated debit card rewards when the Durbin amendment passed. The same could happen with credit card programs if retailers win this suit.

* A likely decrease in attractive balance transfer offers. Currently, credit card issuers are offering 0 percent interest rates for extended periods of time in order to lure customers from their competitors. The Citi Platinum Select card offers 0 percent for 21 months; the Discover More card offers 0 percent for 18 months; and the Slate from Chase card offers 0 percent for 12 months with no balance transfer fee. If retailers win this antitrust suit, look for credit card issuers to scale back these balance transfer offers.

* On the positive side, a possible decrease in prices at store level. Retailers claimed the passage of the Durbin amendment could lead to a decrease in prices since they would no longer have to pay the high swipe fees on debit card transactions. It is difficult to see if this actually took place. However, retailers may face more pressure from consumer groups to cut prices if the interchange fee is also slashed on credit card purchases.

Banks released fourth quarter earnings this week and the reports show that credit cards issuers are in a much healthier position than the last few years.

Consumer use of credit cards is growing, while the default and delinquency rates continue to drop.

Credit card lending is entering a sweet spot where cardholders are charging more purchases to accounts once again while staying current on their payments.

This healthy outlook will probably lead to more aggressive marketing on the part of credit card issuers in 2012. We will likely see some new cards and offers, as well as an increase in the number of credit card solicitations in your mailbox, especially if you have a good or excellent credit score.

According to the Wall Street Journal, American Express credit card loans grew 4.5% from November to $53.7 billion in December. Capital One credit card loans grew 3.3% in December to $56.6 billion. Citi credit card loans were $75.9 billion in the fourth quarter, up almost 3% from the third quarter.

While these figures are positive for the issuers, so, too, are the default and delinquency rates. Charge-offs and late payments peaked in the summer of 2010 and have dropped rather steadily since then.

All six of the major credit card issuers showed declines in the delinquency rates in December, while four of the six issuers also showed drops in the charge-off rates.

* The Capital One charge-off rate dropped to 3.98% in December from 4.29% in November. The delinquency rate dropped to 3.66% in December from 3.73% the previous month.

* The American Express charge-off rate dropped to 2.3% from 2.4%. The delinquency rate dropped to 1.4% from 1.5%.

* The Citigroup charge-off rate dropped to 5.11% from 6.36%. The
delinquency rate dropped to 3.11% from 3.28%.

* The JP Morgan Chase charge-off rate dropped to 4.11% from 4.18% in November. The delinquency rate dropped to 2.48% from 2.54%.

* The Bank of America’s charge-off rate rose to 6.05% from 5.67% in November. The delinquency rate dropped to 3.82% from 3.96%.

* The Discover charge-off rate rose to 3.15% from 3.04%. The delinquency rate dropped to 2.32% from 2.43%.

Lower default rates are good for banks because they set aside less money for losses and this money can boost the bottom line.

Credit cardholders and issuers have both made changes that brought an excessive system of credit card borrowing and lending back under control. Many of the borrowers who could not pay off their debt have already defaulted, while others have diligently paid down their balances and used other forms of payment to avoid the high interest rate penalties. Credit card issuers have closed risky accounts, cut credit limits on millions of accounts, and tightened lending standards to cut their risk of defaults and late payments.

We’ve all been tempted by the immediate benefit–save 10% or maybe even 15% on your current purchase when you apply for the store’s credit card.

But this is not a wise financial move for most consumers.

Most retail stores offer credit cards with interest rates between 23% and 30%, much higher than bank-branded credit cards. According to the LowCards.com Weekly Credit Card Rate Report, the average advertised APR last week among the nation’s 1000+ credit cards was 14.04%.

Some cards, such as the Napa Auto Auto Care Easy Pay and the Lane Home Furnishings Credit Card, are charging a jaw-dropping 30% interest on credit card purchases. Both Goodyear and Zales have 28.99% APR on their cards; Office Depot Personal Credit Card charges 27.99%; Sears charges 25.24%; and Macy’s credit card has a 24.50% APR.

Retail cards, also known as private label credit cards, carry higher interest rates than bank-branded cards because they tend to be held by riskier borrowers with fewer credit options. Issuers suffered significant losses on these private label cards during the financial crash of 2008. In fact, General Electric and Citigroup, two of the largest issuers of private label cards, indicated that they wanted to sell off their private label business but both failed to find a buyer.

But in the past year, default rates have dropped significantly and private label cards with high rates are more appealing for banks and issuers that need the revenue. According to the Wall Street Journal, Wells Fargo is considering getting into the private label business. Packaged Facts forecasts receivables for private label card programs to reach $152 billion by 2015 (down from the pre-recession of $156 billion in 2007).

There are plenty of reasons to avoid these retail credit cards:

* Extraordinarily high interest rates applies to every applicant, no matter your credit score. If you use the card to pay for a purchase and know you can’t pay it off, you should add in the cost of your interest penalties to the price of your purchase. If your interest rate is 29.99% on a card with a $500 balance and you just make the $20 minimum monthly payment, it will take three years to pay off your balance and you will pay $295 in interest payments. Instead of paying $500 for the purchase, you are paying almost $800.

* Retail cards can pull down your credit score. Retail cards usually have low credit limits since merchants want to minimize their financial risk. If you carry a balance, this will increase your credit utilization ratio which is an important factor in your credit score.

* If you apply for multiple retail cards, this can can also pull down your credit score for two reasons. Opening these store accounts will lower the average age of the cards in your credit history, and the length of credit history accounts for 15% of your credit score. Secondly, every time you apply for a card, the issuer may pull your credit score which is a “credit inquiry”. Too many credit inquiries can lower your credit score.

Americans are borrowing and charging much more, according to the latest Federal Reserve G19 report released yesterday.

Consumers increased their overall borrowing by $20.4 billion in November which represents the largest increase in ten years. Many analysts believe this is a sign that Americans are feeling better about the economy.

However, there could also be some red flags in this latest report.

Revolving credit, the majority of which is credit card debt, increased at an annual rate of 8 1/2 percent and grew for the third straight month. The $5.6 billion jump represents the largest gain since March 2008.

This is a big jump in credit card debt, and these are November figures. With the strong holiday sales, we will likely see another increase in December during the peak of the shopping season. While this increase may be good news for retailers, it also means that consumers will soon be getting credit card bills with much higher balances. Consumers can’t get lured into running up more credit card debt if they can’t afford to quickly pay it off. Increasing credit card debt is not a trend to be carried over into the new year.

Here are six tips for paying down the debt on your credit card:

1. Get an honest assessment of how much you owe for all credit cards debts. It may have been easier to pay the minimums without looking at the total amount that you owe, but misleading yourself only makes it worse. Write down a debt summary that includes the creditor, monthly payment, interest, balance due, credit limit and due date for each loan.

2. Pay more than your minimum payment. Your minimum payment is usually only 2-5% of your balance. At this rate, it will take years to pay off your debt. Try to pay at least twice the amount of your minimum payment every month.

3. Pay off the card with the highest APR first. Continue to pay at least the minimum on your other cards until you pay off the card with the highest rate. Then focus your effort on the card next in line. After you pay off the card, keep it open, especially your oldest cards. Losing this available credit can lower your debt utilization ratio which could lower your credit score.

4. Consider transferring your balance to a card with a lower rate. If your rate is above 15%, look for a card that offers 0% for at least 12 months. You will need to determine if the interest payments you save outweigh the fee you will pay on the amount you transfer (usually 3-4%). To take full advantage of this 0% introductory offer, don’t charge anything more on this card and try to pay off the entire balance during that introductory time period. When comparing cards for a balance transfer, also look at the ongoing interest rates. If you are unable to pay off the balance before the introductory period ends, you will then pay the ongoing interest rate. Another consideration is that the credit card issuer may only accept a portion of the amount you want to transfer because, depending on your credit limit, the issuer will want to leave room for new charges. The best offers will typically be given to applicants with a credit score in the mid-700s. If you have a score less than this, you may receive a shorter introductory period, or your application may be declined.

5. If you have a credit card balance, stop using it for anything other than necessities. Use cash instead. If you carry a balance, you are paying interest for every purchase, including clothing, entertainment or dinner. Factor that in to each purchase. Paying with cash will not only save money on interest, but it will also reduce the amount you spend.

6. Pay your bills on time, every time. Not only do you have to pay a late fee, but late payments can also appear on credit reports. Negative information like this can result in lower credit scores and higher interest payments.

It didn’t work for the Kardashians. Perhaps it will for Suze Orman.

Orman is the latest celebrity to jump into the prepaid card market. As a well-known financial adviser with a strong following, she just may have the clout to capture a significant portion of the market.

Prepaid cards have historically targeted consumers with poor credit who could not qualify for a standard credit card. These cards were easy to get, but were loaded with exorbitant fees. That began to change last year when American Express introduced its own prepaid card with fewer fees.

There are some nice advantages to Orman’s Approved Card. It has fewer fees than most prepaid cards: there are no loading fees, no fee to transfer money to another card, and no fee to make electronic bill payments. The card comes with free identity theft protection and also gives the cardholder unlimited credit reports and scores from TransUnion, one of the three credit reporting agencies.

As with any card, consumers need to read the fine print to be aware of the fees that will be charged.

The Approved Card costs $3 to purchase and then has a monthly fee after the first month of $3. ATM withdrawals are free each month as long as they are made from the Allpoint network and you make a direct deposit of at least $20 each month. Otherwise, the ATM withdrawals will cost $2 per transaction.

If you get cash back when making a purchase at a retail store, that will cost you $2.

Your first call each month to a customer service representative will be free, but subsequent calls will be $2.

The opportunity to receive unlimited credit reports and scores from TransUnion can be beneficial for consumers, especially those trying to build their credit. However, the score that will be available will be the TransUnion score, not the FICO score that most banks use when deciding a consumer’s credit worthiness. Orman says TransUnion plans to collect Approved Card user data to determine if it should include prepaid card data on its credit reports in the future.

A debit card linked to your checking account is much better than a prepaid card for most consumers. A debit card will not have the monthly or usage fees that are common with prepaid cards, even this new one from Suze Orman. But for people who don’t have a bank account, or may have some credit problems, her card may be a good alternative.

Citi is giving its customers a chance to share or combine ThankYou Rewards through a Facebook application. ThankYou members can combine points to make a charitable donations or choose from rewards. Citi says this gives members a chance to help their friends get a bigger reward or support a common cause.

To kick this off, Citi is giving away 10 million ThankYou points to qualifying ThankYou members on Facebook. The first 4,000 ThankYou members to like the ThankYou Point Sharing App to their personal Facebook page will receive 2,500 ThankYou points from Citi. Individuals must be a Citi ThankYou Rewards member.

The Citi ThankYou Point Sharing App allows you to start a pool of points for an individual, group, or cause and set a goal and track the donations. Facebook friends who are ThankYou members can join the pool. This includes people with a Citi credit card with ThankYou Rewards or a Citibank checking account with ThankYou Rewards.

If you don’t have a plan for your points, or don’t accumulate enough to cash in, this can be a good way to use the points to help a charity or do something nice to someone you care about. Keep in mind that this is also a smart move by Citi to build loyalty and give you another reason to use your Citi card. If you carry a balance on your Citi card, your biggest concern should be paying off your balance instead of earning more ThankYou points.

The start of a new year is typically when consumers take a close look at their finances and make resolutions on saving money and cutting expenses. Changing credit cards can save substantial money on interest payments, or earn some extra cash with attractive rewards.

But credit cards are not one-size-fits-all, and shopping for the best credit card to fit your specific needs is a must. The credit card offer you receive today is determined by your credit score and how you have handled finances in the past.

Getting Started
When shopping for a card, you must first determine what kind of credit card consumer you are. Are you a disciplined person that only charges what you can afford and pays off the balance in full on time every month? If so, a rewards card is the best credit card for you. However, if you do carry a balance from month to month, you should not be concerned with the rewards of a card but in paying off this balance as quickly as possible. For you, getting a card with the lowest interest rate is the most important consideration.

Know that credit card companies can make every card seem like the best product on the market. Television ads, emails and direct mail pieces tout the low rates and benefits of every card. But consumers should look closely at the terms and conditions of the offer before applying for any credit card. The lowest interest rate is only given to applicants with good to excellent credit scores, not to everyone who applies. If you don’t have a good credit score, you could receive an offer with a higher rate, or a declined application.

Before you apply for a credit card, check your credit score so you know what offer you can expect. A FICO score in the mid-700s is considered a good score and you can expect to receive the lowest interest rates. A FICO score less than 640 is too low for normal credit cards and you will have to look at other options like a secured card.

Low Interest Rates
If you feel you are likely to carry a balance on your credit card from one month to the next, it is vitally important to get a credit card with a low interest rate. According to the LowCards.com Complete Credit Card Index which tracks over 1,000 credit cards, the average advertised APR last week was 14.00%. Look in the terms and conditions for the range of interest rates because most cards have three rate tiers. The higher your credit score, the lower your APR will be. If your FICO score is in the mid-600s, you will probably get the highest rate.

When shopping for a low interest credit card, consider your credit union and local bank. In addition, these are the most attractive low interest credit cards:

Simmons First Visa Platinum
An APR of 7.25% but you have to have outstanding credit to be approved. No transaction fee for balance transfers

Iberia Bank Visa Classic
If you have an excellent credit score, you can get a 7.50% APR. They also offer a 1.99% APR for six months on balance transfers.

Capital One Platinum Prestige
The lowest rate is 10.90%. The card offers 0% through March 2013 on balance transfers with a 3% balance transfer fee. There is no fee for international transactions.

Balance Transfers
Consumers can transfer their credit card debt onto another card that is offering an attractive interest rate and sometimes save significant money on interest charges. Currently, many issuers are offering 0% interest rates on balance transfers for a substantial time period. The two important considerations for consumers are to make sure they can pay off this transferred balance during that 0% introductory period, and that the interest penalties you save are more than the fee you’ll pay to transfer the balance from one issuer to another.

When comparing cards for a balance transfer, also look at the ongoing interest rates. If you can’t pay off the balance before the introductory period ends, you will then pay the ongoing interest rate. Another consideration is that the credit card issuer may only accept a portion of the amount you want to transfer because, depending on your credit limit, the issuer will want to leave room for new charges.

The best offers will typically be given to applicants with a credit score in the mid-700s. If you have a score less than this, you may receive a shorter introductory period, or your application may be declined.

Citi Platinum Select
This card gives you a 0% interest rate for 21 months on both the balance transfer and new purchases. That gives you almost two years without paying interest on your transferred balance. The balance transfer fee is 3%. The ongoing APR is 11.99-21.99%.

Discover More
There is currently a Discover More card that offers 0% interest on balance transfers for 18 months. Consumers also receive 0% on purchases for six months. The balance transfer fee is 3% and the ongoing APR is 11.99-20.99%.

Capital One Platinum Prestige
Consumers receive 0% interest until March 2013 on both purchases and balance transfers. The balance transfer fee is 3%. The APR is 10.90-18.90%.

Read the rest of this entry »

This past year was a very eventful one in the debit and credit card industry. Here is a review of the top ten stories of 2011:

1. Debit Card Interchange Fee
The government regulation of the debit card interchange fee was the most controversial issue of the year. The Durbin Amendment to the Dodd-Frank financial overhaul bill went into effect on October 1. Before the legislation, the interchange fee averaged 44 cents per transaction. Now, the reduced fee is 21 cents plus an additional amount to cover losses from fraud. This cost the banks billions of dollars in lost revenue. The interchange fee was intended to resolve a bitter issue for merchants but it also ignited unintended consequences for consumers, such as banks dropping rewards for debit card purchases in the spring and proposing to add fees for debit card usage in the fall.

2. Banks Add, Then Rescind, Debit Card Fees
A number of banks introduced a debit card fee of $3 to $5 each month that the debit card was used for a purchase in order to make up for the revenue lost from the reduced interchange fee. But the public rebelled when Bank of America added the $5 fee in September. This fee received condemnations from consumers, Congress, and President Obama. Some consumers even declared a ‘Bank Transfer Day’ on November 5. Banks quickly backed down and dropped the fee at the end of October.

3. Greater Rewards for Credit Card Consumers
After the credit crash in 2008, credit card issuers cut back on the rewards offered to new cardholders. But in 2011, nearly every issuer ramped up the rewards, trying to attract new customers with good or excellent credit scores. Rewards are used to compete for new cardholders, as well as to encourage credit card spending and regular usage.

Some cards now offer very attractive bonuses based on usage. The Chase Freedom card began offering a $200 cash back bonus once a new cardholder spent $500 during the first three months. Capital One Cash was introduced during the year and offers a 50% cash back bonus on all you earn each year, plus an additional $100 bonus for spending $500 on the card during the first 90 days.

Earlier in the year, there were extremely attractive airline rewards. In March, Capital One created a buzz with the heavily promoted “Match My Miles Challenge” where consumers could earn up to 100,000 miles by switching and spending on the Venture Card. Chase followed with a promotion on the British Airways card where cardholders could receive an extra 100,000 miles by becoming a customer and reaching a certain spending level.

4. More Attractive Balance Transfer Offers
Balance transfer offers were also strong throughout the year. Issuers used very attractive offers to lure credit card customers to transfer their existing balance from a competitive card. Nearly every major issuer currently has a card where consumers can receive 0% APR for an extended period of time–Slate from Chase for 12 months; Capital One Platinum Prestige for 15 months; Discover More for 18 months; and Citi Platinum Select for 21 months.

5. Mobile Payments
Google Wallet debuted in September and mobile payments became a payment option for some smartphone users. Mobile payments allow consumers to make purchases or transfer money with a quick application downloaded to a mobile phone. Even though mobile payment systems are now available, plastic cards and cash won’t vanish tomorrow. Consumers and retailers will need convincing and incentives to make the switch. Consumers won’t save money by paying with a mobile phone. The same fees and interest rates for consumers and interchange fees for retailers will apply to mobile payments. Retailers are also reluctant to spend the money to buy the equipment necessary to link your cell phone to their cash registers.

6. Defaults and Delinquency Rates Decline
It is a much healthier environment for credit card issuers in 2011. Credit card defaults and delinquencies declined during most months this year. Credit cardholders and issuers both made changes over the past couple years that brought an excessive system of credit card borrowing and lending back under control. Many of the borrowers who could not pay off their debt had already defaulted, while others have diligently paid down their balances and used other forms of payment to avoid the high interest rate penalties. Credit card issuers closed risky accounts, cut credit limits on millions of accounts, and tightened lending standards to cut their risk of defaults and late payments.

7. Credit Card Issuers Drop Some Fees
Some banks tried to polish their tarnished image by dropping some credit card fees. Chase is now offering a Slate card that for a limited time does not charge a 3% fee for balances transferred during the first 30 days that the card is open. Other issuers have eliminated the foreign transaction fee on certain cards. Discover dropped its 2% foreign transaction fee; Chase eliminated its 3% foreign transaction fee on the Sapphire Preferred card; and Citi dropped its 3% fee from the ThankYou Premier and ThankYou Prestige cards. Avoiding the foreign transaction fee is a significant savings for travelers, but also for consumers who makes a purchase from another country or even a purchase that is routed through a foreign bank.

8. Additional Protections for Cardholders
The Federal Reserve Board approved a rule designed to provide additional protections for credit card consumers. The Board’s rule amended Regulation Z (Truth in Lending) to clarify prior rules implementing the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act).

The CARD Act required issuers to consider a consumer’s ability to make payments before opening a new credit card account or increasing the credit limit on an existing account. Issuers must consider the consumer’s individual income or salary. The application can no longer request “household income” because that term is too vague. As a result, stay-at-home parents now find it much more difficult to be approved for a credit card.

It also clarified that promotional programs, like introductory rates that waive interest charges for a specified period of time, must follow the same rules as promotional programs that apply a reduced rate for a specified period. Offers that waive interest charges during an intro period cannot revoke the waiver and charge interest during the intro period, unless the account becomes more than 60 days delinquent.

9. Consumer Financial Protection Bureau Opens
Credit cardholders now have a place to file a complaint against their credit card issuer. The new Consumer Financial Protection Bureau (CFPB) was created by Congress through the Dodd-Frank Act. While it still does not have a director, it opened in July. It offers consumers webpage just for credit card complaints. During its first three months of operation (July 21 through October 21), the agency received 5,074 complaints. The most common complaints involved billing disputes (13.4%), interest rates (11.0%), and identity theft or fraud (10.8%). Most of the complaints (84%) were sent to credit card issuers for review and response. Issuers reported either full or partial resolution of 74% of the forwarded complaints, and 71 percent of these consumers did not dispute the responses provided.

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The holiday presents have been unwrapped and most of us received at least one gift card. Now is the time to shop with these cards while they are still fresh in our hands.

The National Retail Federation predicts that 80% of people have purchased gift cards this holiday season and shoppers will spend an average of $43.23 per card. Total holiday spending on gift cards in 2011 will reach $27.8 billion. That number grows each year because gift cards are the easiest present to give, saving time and shopping stress for the giver.

Surprisingly, it is also a present that goes unused. Last year, 113 million Americans received gift cards during the holidays, but at the start of the 2011 holiday shopping season, a quarter of recipients still had an unused gift card from last year (Consumer Reports).

Gift cards aren’t spent as quickly as a cash gift. We slide them into a wallet or drop them in a drawer, lose them, or forget about them. We let that money waste away. The best time to use a gift card is soon after you receive it. Use them before you lose them.”

What happens to unused gift cards? The Securities and Exchange Commission allows companies to count unused gift-card money as income once they can reasonably say the card won’t be redeemed. However, some states require unused gift cards to go to an unclaimed-funds accounts. Those states can then use the unclaimed funds for general purposes until someone claims it.

Here are some consumer tips for using a gift card:

* Use them before they expire. Merchant and bank-issued gift cards must now be good for five years, thanks to the CARD Act provisions. Reloadable cards can expire five years after the money was last added.

* Research the fees. Some cards, like bank-issued cards, also charge fees, such as a monthly fee after 12 months of inactivity.

* If you will not use the card, or would prefer to have the cash, you can resell the card. There are several sites, such as PlasticJungle.com and CardPool.com, that are a marketplace to buy, sell, or exchange gift cards. You may receive as much as 80%-90% back for your gift card. Some cards are worth more than others and the price can vary between sites.

* Turn your gift card into cash for investing or saving. GoalMine.com trades unused gift cards for cash to fund your GoalMine account. Receive 150% of the initial $50 of card value on your first card if you’re opening a new account, and market value for the rest.

* Donate your gift card to charity and get a tax deduction. Many national charities and foundations, like the Kidney and Urology foundation, accept gift card donations.

Millions of credit cardholders are receiving an unexpected holiday surprise: an $18 check.

The check is a refund from the Currency Conversion Fee Antitrust Settlement, a class-action lawsuit that was filed against credit card companies, accusing them of improperly disclosing fees for credit and debit transactions made abroad.

The suit was filed several years ago and more than 10 million Visa, MasterCard, and Diners Club cardholders who used their cards abroad filed claims forms. The Court granted final approval of the settlement in a Memorandum and Order dated October 22, 2009, and all of the appeals have now concluded. On October 5, 2011 the Court entered an Order authorizing the Settlement Administrator to disburse the available settlement funds.

Most checks are for $18.04, but if you traveled extensively, your check may be larger.

If you have questions, or if you have moved since you filed the claim and want to verify the address, you can visit the settlement website at https://ccfsettlement.com/contact/, or write them at:

Foreign Currency Antitrust Litigation
Settlement Administrator
P.O. Box 290
Philadelphia, PA 19105-0290.

The Better Business Bureau cautions against copycat scams and advises consumers to verify any check that may look unusual or suspicious.

A separate settlement involving American Express is pending.

The financial crash of 2008 forced both borrowers and lenders to slam on the breaks, putting a freeze on most loans. Revolving credit, which is made up mostly of credit card debt, dropped in 32 of the 36 months during a three-year period as cardholders cut back spending while issuers lowered credit limits, tightened approval guidelines and cancelled risky accounts.

But this financial restraint is showing some signs of easing for both sides in 2012.

The latest Federal Reserve numbers from the monthly G19 report show that consumer borrowing increased by $7.65 billion to $2.46 trillion in October. This is the biggest increase in two years. Revolving credit climbed by $366.2 million in October, while non-revolving credit, including educational loans as well as loans for autos and mobile homes, increased by $7.28 billion.

Credit card issuers are once again aggressively marketing their cards, especially to consumers with good or excellent credit scores. Many people are probably seeing more credit card solicitations in their mailboxes with attractive rewards and balance transfer offers. Consumers need to guard against running up large account balances and getting themselves in a financial pinch once again.

Here are ten tips for reducing credit card debt in 2012:

1. Understand that paying off debt won’t be easy. It took time to accumulate this credit card debt, and it will probably take even more time to pay it off. Do not get discouraged or give up. Eliminating debt and building a secure financial foundation for yourself or your family is worth the sacrifice.

2. Get an honest assessment of how much you owe for all credit cards debts. It may have been easier to pay the minimums without looking at the total amount that you owe, but misleading yourself only makes it worse. Write down a debt summary that includes the creditor, monthly payment, interest, balance due, credit limit and due date for each loan.

3. Contact your creditors to negotiate lower rates. The less money you pay in interest, the more money you use to pay off your bills. Unfortunately, negotiating lower rates for credit cards is now more difficult than several years ago but it doesn’t hurt to try. If your lender does not offer a lower rate, shop around for another credit card.

4. Pay off the card with the highest APR first. Continue to pay the minimum on your other cards until you pay off the card with the highest rate. Then focus your effort on the card next in line. After you pay off the card, keep it open, especially your oldest cards. Losing this available credit can lower your debt utilization ratio which could lower your credit score.

5. Pay more than your minimum payment. Your minimum payment is usually only 2-5% of your balance. At this rate, it will take you many years to pay off your debt. Start with the card with the highest interest rate and try to double your minimum payment.

6. Balance transfer offers are currently very attractive so consider transferring your balance to a card with a lower rate. If your rate is above 12%, look for a card that offers 0% for at least 12 months. To take full advantage of this 0% interest, pay as much as you can above the minimum payment each month.

7. If you have a credit card balance, stop using it for anything other than necessities. Use cash instead. If you carry a balance, you are paying interest for every purchase, including clothing, entertainment or dinner. Factor that in to each purchase. For example If your APR is 15%, ask yourself if the purchase is worth paying an additional 15% in interest per year. Paying with cash will not only save money on interest, but it will also reduce the amount you spend.

8. Pay your bills on time, every time. Not only do you have to pay a late fee, but late payments can also appear on credit reports. Negative information like this can result in lower credit scores and higher interest payments.

9. If you are surprised by your current rates, check your credit report. It may contain an error that lowered your credit score, causing creditors to increase your rates. If you find an error on your credit report, contact the credit bureau to report it. They must respond to your claim in thirty days or remove the information that is incorrect or unverifiable. You can dispute by mail, telephone, or online. If the corrected error results in a higher credit score, alert your creditors to this and ask for a lower interest rate.

10. If you are in danger of missing a payment, or defaulting on your credit card loan, contact your credit card issuer as soon as possible. Your issuer may work out a payment plan with a lower rate or monthly payment if it will help keep your account out of default. If the first person you speak with can’t help lower your rate or make adjustments to your account, ask to speak with a supervisor or someone who can. Persistence may be necessary to find the person who will help you. Explain that you are in debt, the steps you are taking to repay it, and what you can pay today. Document all conversations, including whom you spoke with, and the date, time, and the results.

Overdraft fees are again taking a larger bite out of our pocketbooks.

In July 2010, new regulations from the Federal Reserve required consumer consent for overdraft protection for ATM and debit card transactions. These overdraft regulations cost the banks billions of dollars in revenue, but the overdraft fees are increasing once again.

Overdraft revenue fell for six quarters, but have now risen by $700 million in the second quarter of 2011, according to Moebs Services. In addition, the average number of overdrafts per household increased during the same period. Moebs found that 26 percent of consumer checking account holders intentionally overdraw their checking account.

New research by the Pew Charitable Trust found that overdraft fee will cost Americans an estimated $38 billion in 2011.

The Pew Charitable Trust found that banks can still maximize the number of times an account goes negative by processing deposits and withdrawals in an order that reduces the account balance as quickly as possible. They suggested the posting should be neutral.

Overdraft protection is not a necessity and opting out is an easy way for consumers to avoid an expensive fee. If you don’t have enough money in your account and you don’t have overdraft protection, then the transaction will be declined. That would seem to be a much better alternative than these costly overdraft fees.

Credit reporting is a booming business. Agencies now sell data about how much you make, how much you owe, even predicting if you will take your medication. Taking care of what your credit report says about you should be a financial resolution for 2012.

Credit agencies are finding new ways to collect and assemble data on individual consumers. Credit reports can now reveal evictions, applications for payday loans, even if you are behind on homeowner’s association dues. Agencies analyze and sell this data to lenders, employers, insurers and renters who use these reports to make judgments about you.

Credit agency CoreLogic will soon provide credit files that dig deeper than the three traditional credit bureaus–Experian, TransUnion, and Equifax. According to the New York Times, this will include property tax liens, if more is owed on a house that it is worth, or if someone is behind on homeowner’s association dues. It may also include payment history for utility and cell phone bills. This data will be available in March for mortgage and home equity lenders, but it could eventually be developed for other types of credit. CoreLogic combines property and mortgage information; legal, parcel and geospatial data; motor vehicle records; criminal background records; national coverage eviction information; payday lending records; credit information; and tax records.

In February 2011, Experian purchased RentBureau, a credit bureau that allows apartment owners and managers to share rental payment history. These rental payment histories are now factored into Experian’s consumer credit reports.

“As agencies add more information to credit reports, there is a greater chance for negative entries and black marks to show up on on your credit report,” says Bill Hardekopf, CEO of LowCards.com. “Extended reporting could be bad news for households that are already living on the edge and struggling to pay the bills each month. A missed payment here and a late payment there can add up. Unfortunately, there is no loan officer to look at the whole story. Financial histories and futures could now be judged by algorithms.”

Having a good credit report means access to loans with lower interest rates; lower interest rates translate into smaller monthly payments and keeping more money in your pocket. A good credit report can also help you qualify for a job, insurance or an apartment. A bad credit report can lead to higher interest rates, housing rejections and a more difficult job search.

Here are some tips for building a better credit report:

* Review your credit report and make sure all of the debts are accurate. Each year you can get a free credit report from the three credit bureaus (Experian, TransUnion, Equifax) through www.AnnualCreditReport.com

* Know your rights. Under the Fair Credit Report Act, both the credit reporting company and the information provider are responsible for correcting inaccurate or incomplete information in your report. Tell the credit reporting company, in writing, what information you think is inaccurate. Include copies (you keep originals) of documents that support your position. Credit reporting companies must investigate the items in question unless they consider your dispute frivolous. When the investigation is complete, the credit reporting company must give you the written results and a free copy of your report if the dispute results in a change. If the negative information in your report is accurate, you must wait out the time for its removal. A credit reporting company can report most negative information for seven years and bankruptcy information for 10 years.

* Pay all your bills on time. Late payments, the most common piece of negative information appearing on credit reports, are often responsible for significant drops in credit scores. Make at least the minimum payments on your credit cards and loans on time each and every month. If you have a good payment history but slip up with a random late payment, ask your lender to erase the late payment from your credit history.

* If you have a good credit card, keep it. Maintaining a card and building a good payment history looks good on your credit report and helps build your credit score. Creditors want you to have a long, dependable credit history.

* If you are just getting started, don’t open several new accounts all at once because that will lower your average account age. Opening too many accounts during a short period could indicate you are desperate for money and are a credit risk.

* Pay off your debt. High balances and high debt ratios can drag down your credit score. If you are having trouble paying your bills, contact your creditors to work out a payment plan or see a legitimate credit counselor. This will help you manage your credit and improve your score over time. A good place to start is the National Foundation for Credit Counseling.

* Get a checking and a savings account.

A merger or bankruptcy in the airline industry can sometimes result in changes in the frequent flier programs.

American Airlines has declared bankruptcy this week in an attempt to regain financial stability, but the company says the 69 million worldwide members of its AAdvantage Travel Awards program will not be affected by the bankruptcy. American Airlines’ petition for bankruptcy repeatedly claims that the airline must maintain its reward programs and fulfill its obligations so it can retain current customers and attract new customers.

Started thirty years ago, the AAdvantage Travel Awards Program now has 69 million worldwide members. The airline’s bankruptcy petition says that approximately 7,100 new members have enrolled in the AAdvantage Travel Awards Program, on a daily basis, over the last eight months.

American Airlines is the last major airlines to go through a bankruptcy or a merger. Delta and Northwest airlines both filed bankruptcy in 2005 and exited in 2007. US Airways filed for bankruptcy in 2002 and 2004.

United filed for bankruptcy in 2002 and exited in 2006. After bankruptcy, these airlines cut billions of dollars in costs, renegotiated labor contracts and some merged with other airlines.

Continental Airlines’ OnePass program ends Dec. 31, 2011. In 2010, Continental Airlines merged with United Airlines. On December 31, 2011, the Continental Airlines’ OnePass loyalty program will merge
into the United Airlines’ Mileage Plus program. Continental Airlines’ OnePass loyalty program will end and those frequent flyers will automatically be enrolled in the Mileage Plus program. United will
deposit award miles equal to OnePass award miles balance. Chase OnePass credit cards will still earn miles and benefits in the Mileage Plus program. Mileage Plus will recognize the OnePass members’ 2011
elite qualifying activity. OnePass members’ 2011 OnePass elite qualifying activity will be fully recognized in the Mileage Plus 2012 elite status and can even be combined with 2011 activity for Mileage Plus.

There will be changes for OnePass members. Continental OnePass miles did not have an expiration date, but beginning next year, miles will expire if there is no account activity for 18 months. The OnePass fine
print also says that “Many OnePass Upgrade Reward and Star Alliance Upgrade Award amounts will increase,” and “Some United and Star Alliance Award amounts will go up; however many popular reward routes, including North America to Mexico and the Caribbean, will remain the same.”

The Consumer Financial Protection Bureau (CFPB) released its first report about credit card complaints yesterday.

In its first three months of operation (July 21 through October 21), the agency received 5,074 complaints. The most common complaints involved billing disputes (13.4%), interest rates (11.0%), and identity theft or
fraud (10.8%).

Most of the complaints (84%) were sent to credit card issuers for review and response. Issuers reported either full or partial resolution of 74% of the forwarded complaints, and 71 percent of these consumers did not dispute the responses provided.

The CFPB complaint system includes a toll-free number and a form on its website. The bureau’s toll-free phone number provides services in 191 languages.

The CFPB was established by Congress through the Dodd-Frank Act. The bureau’s complaint system began with credit cards, but it is expanding to include mortgages and other home-secured loans by the end of 2011.
The CFPB plans to handle the majority of consumer financial product complaints and inquires by the end of next year.

The outrage toward large banks continues.

Fresh off the heels of consumer protests over monthly debit card fees and “Bank Transfer Day” is a new movement that speaks out against high credit card rates.

December 11 has been deemed “Balance Transfer Day” where consumers are encouraged to switch from high interest credit cards to lower or zero rate cards.

The Balance Transfer Day’s Manifesto statement on FaceBook encourages consumers to “demand the same 0% interest rate that banks receive from the federal government” and “create our own bail outs by using a balance transfer as a means to bail ourselves out of credit card debt.”

Criticizing high interest rates is a fair point, and encouraging cardholders to transfer balances to a card with a lower rate can help save them money in interest payments. This is a good reminder to shop around at other banks and credit unions to see if you can get a better deal, especially as you start the new year with resolutions to improve your finances. However, getting a lower credit card rate may not be as easy as transferring your account to another bank. The rates you receive are based on your credit score. If your score is low, then your interest rates are going to be higher and you are going to have fewer options. The only real way to pay 0 percent interest on a credit card is to pay off the entire balance each month.”

Tips When Transferring a Credit Card Balance

* Balance transfers are usually not free. Most come with a balance transfer fee, typically 3% or 4% of the total amount you transfer. However, Chase is currently offering a special balance transfer offer on the Slate card where there is no transfer fee. Before you apply for any balance transfer card, do the math to see if the amount of interest payments you save with the introductory offer is more than the balance transfer fee that has to be paid immediately.

* If you feel you will be unable to pay off the entire balance during the introductory period, pay attention to the interest rate that you will pay after the introductory rate expires. In this case, a low APR for the long-term could be more important than the length of the introductory period.

* If you currently have a low credit score, you may not receive the introductory offer that is advertised. The ongoing APR you receive may be higher or your introductory period may be shorter. Or you may not be able to transfer your total balance.

* If you do transfer your balance, you must pay your credit card bill on time every month. If you have a late payment, your introductory period will likely end and you will be assessed the ongoing APR on the transferred balance.

* The introductory rate may only be applicable for the amount you transferred. Unless the introductory offer specifically includes new purchases, any purchase made with the new card will be at the ongoing interest rate.

* If the offer you receive does not meet your needs, decline the card. Limit the number of applications because multiple credit applications are a red flag on your credit report and can lower your credit score.

* The new issuer pays the amount of the balance directly to the old issuer and the amount you owe them will be reduced by the amount you transferred. The available credit on your new account will be reduced, as if you had made a purchase.

* It takes about four weeks for the balance to be transferred. Continue to make all required payments until you confirm that the balance transfers were made. Transferring a balance does not automatically close your old account. If you want to close that old account, contact the issuer directly.

Attractive Balance Transfer Credit Cards

Slate from Chase–Limited Time No Balance Transfer Fee No balance transfer fee for the first thirty days of account opening, a 0% introductory APR for up to 12 months on transfers and purchases, and no annual fee. The ongoing APR is 11.99-21.99%.

Citi Platinum Select
This card offers 0% interest rate for 21 months on both the balance transfer and new purchases. The balance transfer fee is 3%. The ongoing APR is 11.99-20.99%.

Discover More
This special Discover More offer is for 0% interest on balance transfers for 18 months. Consumers also receive 0% on purchases for six months. The balance transfer fee is 3% and the ongoing APR is 11.99-20.99%.

Capital One Platinum Prestige
Consumers receive 0% interest until February 2013 on both purchases and balance transfers. The balance transfer fee is 3%. The APR is 10.90-18.90%.