LowCards.com Weekly Credit Card Update November 30
How Four Families Conquered Their Credit Problems
A Federal Reserve Board report issued in June revealed that only about 39 percent of card holders carried a balance in 2010, down from 46 percent in 2007. Those balances average $2,600, compared to $3,100 three years earlier. One of the reasons for this drop is the result of consumers understanding that paying off debt is one of the only sure ways to increase disposable income. That’s very true when it comes to credit card debt, since it often carries extremely high or variable interest rates. The recession’s silver lining is that many people have changed their ways. Meet four reformed families. Story by Christine Larson for U.S. News & World Report.
Sandy Recovery is in the Credit Cards for Issuers
Gov. Chris Christie opened a new market for credit card companies after Hurricane Sandy. He gave an executive order that allows regulated insurance companies to issue claim payments via prepaid debit card for the first time. The change comes with a few conditions–insurers must let customers choose which form of payment they want, insurers can’t charge fees and customers must be allowed to convert the payments into cash. Credit card companies have been trying to get the federal government and states, including New Jersey, to embrace plastic. New Jersey and the federal government already issue some social program payments via prepaid debit cards, but until now, the Department of Banking and Insurance hasn’t let regulated insurers use the cards for payments. Credit card companies hope this change will help convince the state to also issue income tax rebates on prepaid debit. Story by Jared Kaltwasser for NJBiz.com.
Federal Student Lending Swells
U.S. student loan debt rose by $42 billion, or 4.6 percent, to $956 billion in the third quarter while overall household borrowing fell, the Federal Reserve Bank of New York said. The late payment rate now exceeds the rate for credit cards–payments on 11 percent of student loan balances were 90 or more days behind at the end of September, up from 8.9 percent at the end of June. Nearly all student loans—93 percent of them last year–are made directly by the government. Student debt is extremely difficult to discharge in bankruptcy. Trying to reduce defaults, the Education Department has tightened standards for loans to parents and grad students, prohibited federal lending to schools if more than a certain percentage of its graduates default over several years, and allowed borrowers to postpone payments during periods of “hardship.” Story by Josh Mitchell for Wall Street Journal.
10 Shopping Tips to Minimize Holiday Debt
The holiday shopping rush is on. Paying with a credit card makes it is easy to be in the spirit of buying and giving without paying attention to how much money is being spent. But January credit card bills bring the cold reality of debt and interest payments. You could be paying for Christmas 2012 long after the gifts are forgotten. Here are ten tips to make this an affordable holiday season. Story by Bill Hardekopf for LowCards.com.
Fed Says Household Debt Declined 0.7 Percent in Third Quarter
Household debt in the United States fell 0.7 percent during the third quarter according to a Federal Reserve Bank of New York survey. Consumer indebtedness shrank by $74 billion to $11.31 trillion. Mortgage debt declined by $120 billion to $8.03 trillion. Borrowing outside of home financings climbed by 2.3 percent in the third quarter to $2.7 trillion–auto debt increased by $18 billion, student loans rose by $42 billion and credit card balances grew by $2 billion, the survey showed. Story by Caroline Salas Gage for Bloomberg.
Merchants Appeal $7.2 Billion Card-Fee Settlement
A group of retailers appealed a court order preliminarily approving a $7.2 billion settlement between Visa, MasterCard and merchants over credit card fees, saying it violated their rights by preventing them from opting out of the pact. Ten of the 19 stores and trade groups that brought the proposed class action have come out in opposition to the pact and filed notice Tuesday that they would appeal the Judge John Gleeson’s order to the 2nd U.S. Circuit Court of Appeals. In their appeal, the 10 objecting merchant plaintiffs are challenging a portion of the order that would release Visa and MasterCard from new legal claims over related interchange issues. Story by Jessica Rye for Reuters.
LowCards.com Weekly Credit Card Rate Report
Based on the 1000+ cards in the LowCards.com Complete Credit Card Index, the average advertised APR for credit cards is 14.31 percent, slightly above last week’s average of 14.30 percent. Six months ago, the average was 14.36 percent. One year ago, the average was 14.16 percent.