Credit Card Quick

Creditors now Targeting Wealthy Consumers, Small Businesses More than Ever

Credit Card Rewards

Just a few years ago creditors were targeting subprime borrowers as an easy way to make money. This profitable niche has since collapsed, leaving many creditors no choice but to rethink their target customer.

With consumer credit card debt soaring and credit card losses hitting an all-time high, creditors must scramble to pinpoint a new consumer, and it looks like the wealthy borrower and the small business owner are the main targets.

Setting their Sights on the Wealthy, Small Businesses

For example, JPMorgan Chase has begun an effort to increase its market share for wealthy consumers and small businesses. This market was always dominated by American Express, particularly during the last few years when most creditors were jumping on the subprime borrower bandwagon.

American Express, long known for catering to wealthy consumers and corporations, is now recognizing that other creditors are trying to inch their way into this stable market. Although American Express also targeted subprime borrowers over the years, its main business was with affluent and corporate customers.

Other creditors looking to get in on this lucrative market include Discover, Citigroup and Bank of America. These are the same creditors, however, that are struggling with outstanding losses from defaulted subprime borrowers.

JPMorgan has recently launched its newest card for their wealthy customers, called the Sapphire card, as well as three new credit cards targeted at small businesses.

Chase has also stepped up its game and aimed its sights at small businesses, and has the promotional mail to prove it. In fact, Chase has sent out more promotional mail targeted at small businesses than any other credit card company, nearly doubling the number of promotional mailings that they would normally send out.

Many of the credit card companies are looking to enter this lucrative market by offering rewards; however, this may prove challenging, as the rewards offered by American Express are highly valued by customers.

In fact, American Express has been consistently ranked first in JD Power’s annual pool about consumer credit card satisfaction.

In the midst of all of these credit card changes, one thing’s for certain: credit card companies are sure to target the most lucrative customer at any given time.

Five Surefire Ways to Negatively Impact your Relationship with Credit Cards

Introduction

Credit cards have gotten a bad rap as of late, mainly as a result of the Credit Card Reform Act recently signed into law by President Obama. It is important to remember, however, as these new credit card changes begin to take place, that you also have a degree of responsibility when it comes to your credit cards and your credit score.

Many consumers, however, fail to consider this until they find themselves in an unhealthy relationship with their creditors and in over their heads in credit card debt.

What did they do wrong?

1. They didn’t shop around for the best card. Keep in mind, even with the current state of the credit card industry that it is quite competitive and that, although it may take some searching, there is likely a card out there for you. From low interest rates to excellent rewards programs, there are a slew of attractive offers from creditors.
2. They never paid more than the minimum. The minimum payment amount set forth by creditors is not written in stone. In other words, your check each month to your creditor should not reflect just the minimum payment. The more you pay on your card each month, however trivial you think that amount may be, will get you out of debt all that much quicker.
3. They never searched for more money in their budget. If you don’t think you can afford more than the minimum payment on your credit card each month then you’re doing yourself a huge injustice. Some of the smallest changes in your budget can make the biggest difference in your credit card balance. Sit down, write out a comprehensive budget, and find ways to save so that you can put that extra money on your credit card each month.
4. They used cash advances and convenience checks way too often. Cash advances and convenience checks are often a problem in disguise. However convenient they may seem, they often come with many fees and charges, all of which can do nothing but plunge you further into debt.
5. They lived beyond their means. Simply recognizing the difference between your wants and needs can do wonders for your budget and your credit card balance. Instead of purchasing things that are simply out of reach for you financially, take a moment to visualize your overall goal of financial independence and say “no thanks” to living beyond your means.

Consumers Across the Nation Continue to Pay Down Credit Card Debt

News

It looks as if the trend of responsible credit card use is still going strong, if recent statistics are any indication.

The Federal Reserve recently released figures which show that consumers across the nation continue to pay down their credit card debt. In fact, August marked the 11^th, consecutive month that borrowers reduced their credit card debt.

According to the Federal Reserve, revolving credit card debt among the nation’s consumers dropped by an annual rate of 13.1 percent in August. Non-revolving credit card debt (i.e. student and auto loans) also dropped by annual rate of 1.6 percent as of August.

The Furor Surrounding the Impending Credit Card Legislation

It seems as if the backlash from the new credit card legislation has deeply affected consumers. In particular, many creditors have begun changing their terms in anticipation of the new credit card legislation set to go into effect next February, and many consumers are simply fed up with these changes.

Some of the changes that have many consumers cutting up their credit cards in favor of cash include interest rate hikes and credit limit cut backs.

In addition, many consumers, it seems, have just begun an era of responsible spending due to the recession and lack of new jobs. As consumers watch the fallout from the credit and housing crisis, they realize that smart spending can’t come quick enough.

A new Way of Living

As a result, many consumers are paying down their debt and concentrating on responsible spending.

A clear sign of this new way of consumer thinking is the personal savings rate, which saw levels jump to 4.2 percent; a far cry from the near-zero amount just a few years back.

Saving more and spending less seem to be the trend as of late, and for good reason. As more and more creditors change the rules when it comes to consumers’ credit cards, the more likely consumers will be to abandon their credit cards in favor of wise spending and more saving.

Now the ball is the in the creditors’ courts, so to speak. The only way to lure consumers back to using credit card is to, once again, offer them competitive interest rates and fair terms and conditions.

How to Begin Repairing your Credit Following a Foreclosure or Short Sale

Credit Repair

There are many of us in financial peril due to the housing crisis and the subsequent meltdown of real estate market values. Many homeowners have been forced into foreclosure or short sale, leaving many homeowners wondering where they go from here.

Although it may be quite overwhelming and frustrating to go through the loss of your home, you do need to understand that it is possible to repair your credit and move forward. In fact, if you begin repairing your credit now you may be able to purchase another home in as little as two years.

Make no doubt about it: your credit score will greatly affect your lifestyle for the next one to two years, but it is quite possible to take that time and rebuild your credit score so that you can move forward and rebuild your life and your credit rating.

It is important to realize that we live in a society that is dominated by credit, so repairing your credit now will make your life easier in the years to come.

What you can do now to repair your credit:

1. Order a copy of your credit report from all, three national credit reporting agencies. Although it may be hard to face, there is no time like the present to take a good, hard look at your credit report. What we don’t know CAN hurt us, and our credit report is no exception. Take the plunge, order a copy of your credit report and review it carefully so that you can take care of unpaid bills and correct any errors or discrepancies. Most importantly, immediately contact the credit reporting agency if find any incorrect information on your credit report.
2. Don’t fall victim to credit counseling/repair scams. There is one business that has done quite well during the recession: credit scammers. Be very wary of any company offering to repair your credit for a fee, as many times these are just scams in disguise. Unless you are dealing with an accredited credit counseling service, be very cautious about dealing with any type of credit repair company.
3. Pay your bills on time. Simply put, there is no easier way to begin repairing your credit today than to pay your bills on time and in full, every month, with no exceptions.

A Practical Guide to Shopping for a New Credit Card

Choosing Credit Card

We all remember the days of free-flowing credit. Our mailboxes were jammed with credit card offers, many of which were willing to offer us outrageously high credit limits and easy terms and conditions.

We all knew this fairy tale couldn’t last, and it sure didn’t.

Things are different now when it comes to credit cards, and that’s an understatement.

If you are interested in securing a new credit card, the road may be a bit more difficult than it was just a year or two ago. For starters, your mailbox is most certainly not full of credit card offers, let alone good credit card offers.

To put the credit crisis into perspective: consumers are expected to witness 60 percent fewer credit card offers this year, following a huge decline of 71 percent in 2008.

Now, that’s not to say that you can’t get a great credit card with a competitive interest rate, it just may be a bit more difficult. There are a few things you can do to ensure that you are approved for the best credit card with the most competitive terms and conditions:

1. Order a copy of your credit report – In order to qualify for the best credit card with the best rate and features, you will need to have a pristine credit report. It is therefore a good idea to check out your credit report to make sure that it is free of any errors or discrepancies. Don’t forget that you are entitled to a free copy of your credit report from all three credit reporting agencies every year.
2. Consider your current level of debt – Creditors, now more than ever, are considering an individual’s income-to-debt ratio when it comes to credit approval, interest rate and credit limit, so if you have a considerable amount of debt, now is the time to pay it down, not take out another credit card. In addition, don’t take on additional credit card debt if you plan on making a large purchase in the near future, such as a car or a home.
3. Consider your wants and needs – You should consider all of your wants and needs before applying for a credit card. Do you need a card with a low interest rate? Are rewards important to you? Is a large credit limit what you need? Take all of these factors into consideration before applying for a credit card that might not be right for you.

Consumer Satisfaction Plummets as Creditors Raise Interest Rates, Cut Credit Limits

News

As if 2009 didn’t bring enough bad news: recent polls released by J.D. Power and Associates reveal that consumer satisfaction with credit cards fell sharply in 2009.

It’s no surprise, really, that consumers are frustrated with their credit cards, as many have been socked with outrageous fees and equally outrageous interest rates as creditors scramble to recoup some of their losses.

Highlights of the J.D. Power and Associates Poll (which was conducted in May and June by 9,000 credit card customers):

• Twenty percent of credit card holders saw an increase in their interest rates between 2008 and 2009.
• Eighteen percent of credit card holders were dissatisfied with fees on their credit cards, which was a 10 percent jump from just a year earlier.
• The customer satisfaction index fell to 703 (on a 1,000-point scale), which is the lowest since J.D. Power and McGraw-Hill began the customer index satisfaction survey in 2007.
• Credit card customer satisfaction comes in dead last among all financial services industries, including banking, insurance and investment services.
• One out of five customers experienced a rise in their interest rate over the past year.

It is clear from this recent survey that most consumers are simply fed up with the over-the-top rates and fees being charged by many credit card companies as of late. As the government put the squeeze on credit card companies, and as the recession took its hold, credit card companies started responding by slashing rewards for customers and raising rates.

And this doesn’t sit very well with customers, as to be expected.

American Express, which is the largest credit card company based on sales, was ranked first in the poll for customer satisfaction, followed by Discover Financial Services and JPMorgan Chase. Those ranked below the industry’s average included Citigroup, Bank of America and Capital One.

It is important to note that American Express, Bank of America, JPMorgan, Citigroup, Capital One and Discover make up about 80 percent of the industry in the United States.

The J.D. Power and Associates poll reviewed customer satisfaction based on many factors, including rewards, benefits, services, problem resolution, interaction, fees, rates, billing and payment processing.

What you need to Know about Forgiven Debt

Credit Card Debt

You may have heard of it before: a credit card customer, bogged down in credit card debt, cuts a deal with their creditor to have some of their debt forgiven, in exchange for paying off the remainder of the debt and closing the account. Sounds good, right?

Is all Really Forgiven?

Well, not so fast. Forgiven debt is not really forgiven, in the eyes of the creditor or the IRS. In other words, when a creditor forgives some of your debt, that debt is then reported to the IRS as taxable income.

Although credit card companies are facing hard times for several reasons, including the tough economic conditions and the pending credit card laws, they recognize that tough times call for tough measures. In other words, something is better than nothing, even when it comes to collecting credit card debt.

If a credit card customer has limited resources, and the credit card company chooses not to cut a deal with the customer to resolve a credit card balance, then chances are they will not receive anything.  Faced with that fact, many creditors are now forgiving debt so that they can collect at least part of the customer’s debt.

As it stands now, credit card companies have written off nearly $275 in unpaid credit cards over the past five years.

Is Debt Forgiveness for you?

Although accepting a “forgiveness loan” from your creditor may seem like your best option, be aware that any portion of your balance that is written off will be reported to the IRS and declared as income. Credit card companies are legally bound to report any forgiven debt to the IRS, which could make things difficult for you at tax time.

For example, if you have a $10,000 credit card balance and the creditor has agreed to forgive $5,000 of that balance, you will then need to pay taxes on that $5,000 come tax time.

There are a couple exceptions to this rule: the income does not need to be reported to the IRS if the amount of forgiven debt is less than $600; or your debt has been written off by the credit card company as “unpayable,” meaning that the debt has been forwarded over to a collection agency for payment.

The Top Three Reasons why Secured Credit Card may be Right for you

Choosing Credit Card

A secured credit, once upon a time, was the kiss of death for consumers. It was also quite unnecessary in most cases, as consumer credit was flowing like water.

However, given the state of the economy and the state of many consumers’ credit scores, secured credit cards are making a comeback, and for plenty of good reasons.

If you are new to the credit card game, or if you’re looking for an easy way to begin rebuilding your bruised credit history then you may want to consider a secured credit card.

A secured credit card account requires that the account user open a savings account, of sorts, where the creditor will hold the funds that will act as collateral on the card. This money is the creditor’s insurance policy, although if you loyally pay your bills on time the money will remain there, unused.

Why Secured Credits are Useful in Today’s Economy:

• They provide you with a credit card – Credit cards are convenient and practical, and are often the desired payment method for things such as airline travel and online purchases. A secured credit card acts in the same fashion as a traditional credit card, thereby enabling consumers to charge their purchases – not to exceed their credit limit, of course – and repay them each month.
• They provide you with a payment history – One of the best ways to begin building or rebuilding your credit is to simply begin establishing a payment history. In that sense, a secured credit card works just like a traditional credit card, thereby enabling consumers to begin boosting their credit score.
• They provide you with an interest-bearing savings account – Once you have developed a proven track record of timely payments, many secured credit card companies can begin paying you interest on your secured funds. For many consumers on a budget, this is a great way to build their credit and keep money tucked away in a savings account at the same time.

Fighting Credit Card Fraud: What you need to Know

Identity Theft

A sobering fact in today’s technology-driven society is that fraud – particularly credit card fraud – is an increasingly serious problem that many of us will fall victim to at one point or another.

From stealing your credit numbers to your identity, credit card thieves are craftier than ever, which can cost you big.

The following are the most frequent types of credit card fraud, and what you can do to prevent it:

Skimming –

• What is it – Skimming is a fairly new type of credit card fraud that happens when you hand your credit card over to make a purchase. The thief takes your credit card and, in a matter of seconds, steals your credit card numbers using a small, handheld device called a “skimmer.”
• What you can do – Pay close attention to anyone that takes your card for a purchase, particularly those individuals that must walk away in order to complete your transaction.

Phishing –

• What it is – Phishing is credit card fraud that happens via email. Phishing are usually bulk emails that are sent to consumers. These emails, which usually disguise themselves as the individual’s bank or credit card company, ask consumers to provide their personal information. They may appear to be legitimate, even possessing the company’s logo or replicating the company’s web site.
• What you can do – Never, ever respond to an unsolicited email requesting your personal information. Banks and credit card companies will never ask for your personal information via an email message. If in doubt, contact your credit card company or bank directly to inquire about the validity of the email. In addition, make sure you type your bank’s address so that you aren’t re-routed to a fake website who can gain access to your credit card number or other personal information.

It is important to understand that, although credit card thieves are finding new ways to steal consumers’ identities every day, you can protect yourself by never responding to emails, by never providing your personal credit card information to anyone over the phone unless you have initiated the call, and by always paying close attention whenever you pass off your credit card to anyone.

Your Options when you Simply Can’t Afford your Credit Card Payments

Credit Card Debt

During these difficult financial times many individuals across the country are struggling to pay their credit card bills. With rising interest rates and tighter credit restrictions, many of us have found ourselves caught in a serious situation where our income simply can’t be stretched any farther.

Combine that with job losses and layoffs, and it becomes quite clear why so many Americans are struggling to make their credit card payments.

If you simply can’t afford your credit card payments, know that you do have options:

• Contact your lenders and explain your situation. If you recently lost your job or were laid off you can always request that your lender waive your fees, lower your monthly payment or set up some kind of payment plan that will allow you to better manage your debt. Persistence is key when it comes to negotiating new terms with your credit card company. Ask questions and demand to talk to a manager or supervisor if you are having no luck working out alternate arrangements.
• Consider debt forgiveness. If you have no means of paying your entire debt, you can often negotiate debt forgiveness. Debt forgiveness involves paying off your credit card for less than you owe. For example, if your credit card debt is $10,000, your credit card company may forgive half of your debt, thereby allowing you to pay off just $5,000 of that debt. However, it is important to understand that the debt forgiven will be reported to the IRS as taxable income. In other words, that $5,000 worth of forgiven debt will be taxed come tax time.
• Consider debt consolidation. If your credit is still strong, and you recognize impending trouble, you may be able to consolidate your credit card debt into one, easily manageable monthly payment.  You may be able to consolidate onto another credit card, or take out a personal loan to accomplish this. Reconsider using your home’s equity to consolidate this debt, though, as your inability to repay your loan could cost you your home.