Credit Card News: Latest Credit Card News From LowCards.com

LowCards.com Weekly Update

A summary of this week’s top credit card stories.

 DISCOVER CEO: NEW RULES DON’T HELP THOSE WITH BEST CREDIT

Discover CEO David Nelms says the CARD Act will benefit some credit cardholders and hurt others. Those with good credit will lose the “ultra-low rates of the past 10 years.” Credit card companies will shift away from “risk-based” pricing with a wide range of rates to a single-rate system.

Bill Hardekopf, CEO of LowCards.com, says that Nelms’ prediction doesn’t come as a surprise; issuers even told Congress and consumers that this would be one of the consequences of the CARD Act.

 ”There already are fewer cards with lower rates,” Hardekopf says. “Since credit card companies are more restricted in what they can do, they appear to be trying to make more money off their good customers. We’re seeing not only higher interest rates, but a cutback in rewards, more annual fees and the introduction of new fees.”

Story by Lesley Mitchell in the Salt Lake Tribune

http://www.sltrib.com/business/ci_14320083

MORE PEOPLE PAY CREDIT CARDS AHEAD OF MORTGAGES

In a new study by TransUnion, more consumers seem to think it is better to have a credit card than to own a home. The percentage of people current on their credit cards but delinquent on their mortgages rose to 6.6% in the third quarter, up from 6.3% in the second, according to Reuters.

One conclusion that might be drawn from the data is that people close to foreclosing on their homes are willing to lose their homes rather than face a loss of access to credit. Homeowners can leave their homes and rent but if they lose their credit, they lose access to consumer spending.

Story by Douglas A. McIntyre for 247Wallst.com

http://247wallst.com/2010/02/03/more-people-pay-credit-cards-ahead-of-mortgages/

MAJOR CHANGES AHEAD FOR STUDENT CREDIT CARDS

The Credit CARD Act will take effect in two weeks and one of the major provisions is the restriction on marketing credit cards to young adults under 21.

Beginning February 22, issuers are not able to offer free merchandise to lure students to sign up for a credit card on college campuses, at college sponsored events (like sporting events) or within 1,000 feet of the campus.

In addition, the CARD Act bans credit cards to people under 21 unless there is an adult co-signer or the young adult can show proof they have the income to pay the debt.

“Right now, it is easier for a college student to get a credit card than to get up for class. College students use credit cards to pay for everything, just like their parents. Once this new law takes effect, many college students will have difficulty getting a credit card,” says Bill Hardekopf.

http://www.lowcards.com/2010/02/major-changes-ahead-for-student-credit.html

VISA QUARTERLY NET INCOME JUMPS 75%

Visa Inc. quarterly net income jumped 75%. Visa operates the world’s largest payments system. Net operating revenue in the latest quarter was $2 billion, up 13% from the previous-year period. Visa raised its estimate for operating

profitability in 2010 Visa and MasterCard do not lend to consumers and are shielded from from credit problems arising from increasing delinquencies. Instead, they make money from the fees they charge banks, and have been hurt by lower consumer spending. Visa also has the largest market share of debit cards and is benefitting from the consumer shift from cash to cards and electronic payments.

Visa said that the number of Visa-branded cards grew 5% worldwide to 1.8 billion as of Sept. 30. The number of transactions processed on its network increased 12% for quarter ended Dec. 31.

Story by Dakin Campbell for Bloomberg

http://www.businessweek.com/news/2010-02-04/visa-posts-higher-profit-as-consumers-embrace-cards-shun-cash.html

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 this week was 13.41%, down slightly from 13.43% last week. Six months ago, the average was 12.10%.

One year ago, the average was 11.51%.

http://www.lowcards.com/ratereport/credit-card-rate-report.asp

FIVE MYTHS ABOUT CREDIT CARD DEBT

Myth: The credit card industry is so competitive that regulation is unnecessary.

Fact: The top three issuers (Bank of America, Citibank and Chase) control more than 60 percent of outstanding credit card debt. Over the past twenty years, thousands of card issuers have been squeezed out of the market or sold to the largest banks.

In his article, Robert Manning cites this statistic: “A carefully guarded secret of the industry is that about a quarter of cardholders have accounted for almost two-thirds of interest and penalty-fee revenues. Nearly half of all

credit card accounts do not generate finance and fee revenues.”

Story by Robert D. Manning for the Washington Post

http://www.washingtonpost.com/wp-dyn/content/article/2010/01/29/AR2010012902504.html

BANKS NOT LOOSENING CREDIT YET, FED REPORTS

Credit lending isn’t as tight as it was a year ago, but it hasn’t loosened either. About 12% of banks said they were somewhat more willing to make consumer loans than they had been three months earlier, while 2% were much

less willing.

For credit cards, lending standards were tighter at 6% of banks and looser at 3%. More than a third of banks said they had reduced credit limits for new credit card customers. Demand for consumer loans dropped at about 41% of

banks, and increased at 8%.

Story by Rex Nutting for MarketWatch.

http://www.marketwatch.com/story/banks-not-loosening-credit-yet-fed-reports-2010-02-01-141600

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