Why Credit-Card Firms Are Sweet on You Again

Posted by administrator | 31/08/12 | Tagged Credit Card Debt

Why Credit-Card Firms Are Sweet on You Again
News from Businessweek:

Banks are returning to a practice they abandoned after the financial crisis: taking Americans’ credit-card debt, slicing and dicing it, and selling it off as bonds.

Believe it or not, that’s a good thing.

So far this year, banks and other companies that issue credit cards have sold $ 21 billion in bonds backed by those accounts’ debt, Bloomberg News reported on Aug. 29—up from $ 4.8 billion in the same period the year prior. Broadly, it’s a bet that consumers have their finances in order and will continue to be able to pay their monthly bills on time.

Bonds thrive when there’s predictability, and the credit-card business has become more stable since the crisis. The number of accounts 30 days past due peaked in March 2009 and again in November 2009, and has been declining ever since. Spenders are reining in their charging habits. Card issuers have cut off their least creditworthy customers, and reforms such as the CARD Act have forced them to be more careful about the riskiness of new customers. While all of this has put a crimp in credit-card companies’ growth, it has made for fat, steady revenue streams. In 2012, that’s not a bad position to be in.

“You may have to go back to the 1980s to see credit losses and delinquencies as low as they are right now,” says Bob Napoli, an analyst with William Blair. “It’s a sign that consume…………… continues on Businessweek

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Resurgence of credit card bond sales
News from gulfnews.com:

New York: Lenders from JPMorgan Chase & Co to General Electric Co’s finance unit are leading a resurgence of bond sales tied to credit card payments as relative funding costs drop to the lowest in five years.

Card issuers have sold $ 21 billion (Dh97.2 billion) of the bonds this year through August, the most in two years and up from $ 4.8 billion during the same period in 2011, according to data compiled by Bloomberg. JPMorgan, the largest US bank by assets, has offered $ 5.35 billion of the debt in 2012, triple the amount the New York-based lender sold in all of 2011, the data show.

Lenders are taking advantage of demand from investors betting on US assets as a haven from Europe’s fiscal crisis, speculating the economy is growing enough to keep consumers current on their bills even with unemployment above eight per cent for a 42nd month. Yields on top-ranked, five-year credit-card securities have narrowed to 18 basis points more than the one- month London interbank offered rate, the tightest level since 10 basis points in August 2007, Wells Fargo & Co data show.

“The revival is a rather opportunistic play on the part of card issuers able to refinance and, in some cases, extend the maturity of existing debt,” said Christ…………… continues on gulfnews.com

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7 credit card pitfalls to avoid

Posted by administrator | 31/08/12 | Tagged Credit Card

7 credit card pitfalls to avoid
News from KFMB News 8:

By Andrew Housser

Credit cards can be convenient, relatively secure, easy to use, and some even pay you back with rewards. But sometimes, those small rectangular pieces of plastic can spell trouble. Most consumers already know it is important to use credit cards wisely. Yet a misstep can result in unneeded, unwanted debt. Watch out for these common pitfalls as you use your credit card.

1. Cashing credit card checks.

It might seem like a good idea to use a check issued by your credit card company to pay off debt or make a big purchase you’ve been putting off. Here’s the catch: Credit card companies consider these checks to be the same as taking out a cash advance. Most creditors charge higher interest rates and special fees on cash advances. The best thing to do with these checks when they arrive in your mailbox is simply to shred them.

2. Making new charges on a card you opened for a balance transfer.

Transferring debt from a high-interest credit card to one with lower or no interest can be a smart move in many cases. It then can be tempting to use this new, lower or zero-interest card to make new purchases. But if you do not pay off the full amount when your promotional deal ends, you’ll be paying a high interest on the balance transfer plus the new purchases. In…………… continues on KFMB News 8

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Argentine Tax Agents to Track All Credit Card…
News from ABC News:

Argentina just made it more expensive for its people to use credit cards outside the country, and more dangerous for cardholders who aren’t paying all the taxes they should.

One measure published in Friday’s official bulletin adds a 15 percent tax every time people make a purchase outside the country using a card issued by an Argentine bank. Another requires the banks to report every credit card purchase — home or abroad — to the tax agency.

The moves target Argentines who have discovered that by using credit cards outside the country, they can get around increasingly tight currency controls and shelter their money from soaring inflation. Purchases outside Argentina using peso-denominated cards soared 48 percent in June compared to the year before, obligating the central bank to send $ 289 million out of the country in just one month. Overall capital flight soared to $ 23 billion in 2011.

AFIP chief Ricardo Etchegaray, the government’s top tax collector, presented the moves as populist measures that would only affect the wealthiest Argentines, and mainly when they travel outside the country — a reduced group of 168,000 taxpayers who charged $ 1.5 billion in the last 18 months.

But a closer look shows the measures go much farther, giving the government powerful new tools to combat widespread tax evasion.

Tax and customs…………… continues on ABC News

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