LowCards Weekly Credit Card Update June 29
Should You Ditch Your Credit Cards?
Consumers’ reliance on credit cards appears to be at a turning point. Some reports suggest that more people are steadily paying down their debts or are even deciding to forgo credit cards altogether. Despite the existence new consumer protections for credit card users, distrust of card issuers and their gimmicks also remains high. Then there’s the other reason–after a confidence-shaking recession, many people are wary of taking on debt. It’s hard to argue with someone who decides to put aside their credit cards. But if you opt to ditch your card, you should also be aware of the benefits you could be giving up and be prepared to deal with the limitations and risks of using other forms of payment. Story by Ray Martin for CBS News.
Debit Card Dangers During Travel
Plenty of people are packing their debit cards instead of credit cards as the plastic of choice this summer because they want to avoid digging themselves deeper into debt. Consumers need to watch for fast curves in the road, though, when it comes to using debit cards on vacation. There can be onerous holds placed on your cash, unwanted ATM fees and even debit-card-related fraud. Some hotels will hold 115% or 120% of the room charge plus tax on a debit card at check-in. The trouble is, you don’t have access to that amount of money in your checking account when a hold is in place. And that might trigger overdraft charges. Depending on the balance in your bank account, blocking could lead to a string of $35 overdraft charges or bounced check fees for insufficient funds while the block remains in place. Story by Susan Tompor for the Detroit Free Press.
Many Borrowers Fall Behind Again After Mortgage Modifications
More than half of delinquent borrowers who received mortgage modifications were behind on payments again 18 months later, according to a new analysis from the credit reporting company TransUnion. Yet the study also found that borrowers who receive modifications are more likely to continue paying other debt, like auto loans or credit cards, that they obtained after falling behind on their mortgages. The data also showed that people who fell behind on their mortgage alone remain much better credit risks than those who fell behind on their mortgage and other types of debt. Story by Ann Carrns for the New York Times.
Arrests Made in Massive Online Sting Operation
Federal authorities have arrested 24 people in the U.S. and a dozen other countries in what they say is the largest-ever undercover operation targeting the global online trade of stolen credit card numbers. The Federal Bureau of Investigation set up a fake online forum two years ago to attract online thieves who steal personal identification and account information for credit, debit and bank cards that are used to make illicit purchases or to sell to others. The fake website, carderprofit.cc, was described in the complaints as a “marketplace for illegal activities.” It attracted thousands of people who obtained stolen-identity information from about 400,000 unsuspecting victims. Federal officials said 47 financial institutions, government entities and educational institutions avoided more than $200 million in losses as a result of the sting operation. Story by Reed Albergotti at the Wall Street Journal.
Credit Downgrade of 15 Global Banks Could Be Costly for Consumers
Last Thursday, Moody’s Investors Service cut the credit rating of fifteen banks due to their significant exposure to the volatility and risk to the global financial markets. Earlier this month, Standard & Poor’s also warned that the United States could face another downgrade in credit rating if the government does not get a serious plan about paying down the national debt. While the Federal Reserve has vowed to keep interest rates at record lows through 2014 in an effort to stimulate the economy, these credit downgrades for banks and the government can result in higher interest rates for consumers. Story by Lynn Oldshue for LowCards.com.
Confront Your Debt
Young adults are racking up record amounts of debt. Students are taking out bigger-than-ever loans to pay for college, and then freely using credit cards to cover the extras they can’t afford to buy outright. For many, this leads to a spiral of debt that will follow them for years. But there are ways to reduce your debt load–and even catch a break for being a young person. First, ask yourself if it’s even feasible to pay off your debt. If your payments are big but manageable with your income and other expenses, you’ll want to focus on cutting back and consistently paying down as much as possible. Story by Rachel Louise Ensign for the Wall Street Journal.
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 14.30 percent, identical to last week. Six months ago, the average was 14.00 percent. One year ago, the average was 13.95 percent.