Credit card crackdown coming soon

The Fed is set to vote Thursday on a number of key protections for credit-card customers.

NEW YORK (CNNMoney.com) — Cash-strapped consumers might get some welcome news on Thursday when regulators vote to rein in controversial credit card practices.

The proposed rules, which have received overwhelming consumer support, prohibit banks from practices like raising the interest rates on pre-existing credit card balances unless a payment is over 30 days late, and applying payments in a way that maximizes interest penalties.

The Federal Reserve Board, the Office of Thrift Supervision and the National Credit Union Administration, are all expected to approve the regulation. The rules are expected to take effect by 2010.

“It will fundamentally change the relationship between cardholders and banks,” said Peter Garuccio, a spokesman for the American Bankers Association.

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Is Your Credit Card Information Secure?

Whenever you use a credit card, security is extremely important. Your card is the gateway to all of your finances, so it is critical to make sure that no one can access it. Credit card companies are constantly looking for innovative and creative ways to increase the security on your card.

Personal Keypads

One exciting feature was developed by a company in Australia. It’s a battery-powered credit card keypad to reduce fraud. With this feature, your credit card includes its own keypad directly on the card and you type in your PIN number to get a one-time code that will authorize your purchase. The card is being used in Great Britain, Israel, Switzerland and Italy. This exciting technology puts the keypad in your hand, rather than on the merchant’s counter, where someone may observe what you are doing,

Credit Card Sleeves

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Rising credit card bill delinquencies vex card securities

Mounting job losses and rising credit card delinquencies and defaults are placing a strain on a key capital-generating arm of the credit card industry — credit card asset-backed securities. Nervous investors in credit card-backed bonds shied away from the investments in October. But experts say the credit card securities are resilient and won’t likely implode like mortgage-backed investments.

Still, special trusts set up by most credit card issuers to manage investment portfolios totalling nearly half a trillion dollars are reporting rising charge-off and delinquency rates.

Charge-offs rising
“Those things are going up. At some point in time, that could be a problem,” warns Eric Higgins, a noted researcher on asset-backed securities (ABS) and a Kansas State University finance professor. Credit card securities bundle millions of credit card accounts into bonds backed by the future payments of cardholders. Banks use the proceeds of these investments to generate capital that helps finance credit card loans to other customers.

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Struggling debt collectors to debtors: Let’s make a deal

As credit card and other debt delinquencies have risen over the past six months, collecting on overdue and bad debt has declined sharply, industry observers say. The economic downturn and job losses have forced many debt collectors to try new tactics for getting money from cash-strapped debtors.Friendly debt collector

Among the new strategies:

* Accepting down payments on amounts owed instead of demanding payment in full.
* Stretching out payments over several months to give debtors a chance to pay off their debts slowly.
* Negotiating to receive a fraction of the amount owed if paid within a week or 10 days.
* Offering to report the debt — if paid quickly — as “paid in full” on the credit report instead of as a settlement, which remains on a debtor’s record for seven years.

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How to add a written statement to your credit report

Want to buy a house? Get a better credit card rate? Score a decent car loan? When it comes to telling your financial story, your credit report — and the credit score determined by it — always seems to have the last word. But you can write some of those words yourself.

A provision of the Fair Credit Reporting Act allows you to add comments to your credit report that can cover “any number of items or topics they wish,” according to Steven Katz, a spokesman for credit bureau TransUnion. Whether you use it to explain a dispute, a mistake or your own personal money apocalypse, the statement theoretically gives you more of a voice in your financial future.

There’s a lot of flexibility in the Act. For example, it allows, but doesn’t require, credit bureaus to limit the consumer statement to just 100 words, and the Big Three — Experian, TransUnion and Equifax — do just that. It also doesn’t specify how many statements an individual can add to their report, and the credit bureaus differ on this. Experian allows multiple statements — one general statement that applies to the report as a whole, and then one specific statement per item on your credit report — while TransUnion and Equifax allow only one statement on your credit report at a time, period.

Still, regardless of how much you’re able to write, a larger question remains: Do the statements actually work to a consumer’s advantage?

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Bad Credit Car Loans

One of the many difficulties for people with bad credit is acquiring financing for a car loan. Car loans can be difficult for people with bad credit. However, here are a few tips that might help you gain approval.

Car loans are usually one of the more difficult types of loans to attain if you have a history of bad credit, the reason being is that once you drive off the lot with your car, the car depreciates about 20% to 30% making your secured loan a risky proposition.

If you have bad credit there are many ways available to get a car loan, some of the them are having a co-signer, trading in a car that can be used as a down payment against the loan, or putting down a substantial amount of money towards the loan, usually 25% or more.

Co-signers are usually your best bet. A co-signer is a person that signs a legal contract to be financially responsible if you default on the loan. If a default occurs, the co-signer will be responsible to pick up the tab and may receive negative reporting on their credit report. A co-signer is also usually used for first time car buyers such as students who do not have established credit yet.

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Credit card debt continues to rise in America. When will the bailout help the economy?

Financially stressed Americans are turning to credit cards in greater numbers, according to the most recent economic data. Danielle Mathias-Lamb, a second-year nursing student, received a letter from Bank of America says it may raise rates when customers’ risk profiles worsen or when they are late or exceed their credit limit twice in a 12-month period. Meanwhile, universities promote credit cards issued by agencies who kick-back to them. Additionally, average student credit card debt soared, according to student loan agency Nellie Mae. The federal General Accounting Office, according to AP’s Martha Irvin, says college students are graduating with an average of $19,400 in student loans - a 58% increase after adjustment for inflation since 1993. Even students are learning how to go into debt up to their necks. But look what happened to that trend in the middle of this chart - - a plot of debt as a ratio to national income - - called the ‘debt ratio.’ If the economy performed with less debt each year per dollar of national income produced zilch extra national income. This proves America’s economy can grow without increasing debt at a faster pace.

House to Vote on Landmark Credit Card Legislation

Broad Based Coalition Urges Support for Bill to Curb Unfair Abusive Practices the United States House of Representatives prepared for the first time ever to consider legislation that would curb predatory credit card lending practices, a broad-based coalition of organizations today urged members of the House to support the bill and send it to the Senate for action.

In a letter sent to every member of the House, 22 consumer, civil rights, community, small business and labor organizations said that the Credit Cardholders’ Bill of Rights Act (H.R. 5244) proposed by Representative Carolyn Maloney (D-NY) would “curb some of the most arbitrary, abusive, and unfair credit card lending practices that trap consumers in an un-ending cycle of costly debt.”

“By passing this bill, the House of Representatives will be taking a strong stand against the traps and tricks that many credit card companies use to increase their profits at the expense of financially vulnerable consumers,” said Travis B. Plunkett of the Consumer Federation of America. “We applaud Representative Maloney for introducing this important bill and urge all members of the House of Representatives to vote for it.”

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