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Entries in Credit Cards (45)

Thursday
Apr072011

Survey: Consumers Not Shopping for Best Deals on Credit Cards

Stockbyte/Thinkstock(NEW YORK) -- Sure, many consumers shop around for the best bargains in the mall or at the supermarket, but what about for the best bank accounts or credit cards?

A new survey by financial industry regulator FINRA contends that most people do not.

"We're very surprised at how few people comparison shop for financial products," says John Gannan with FINRA.

"Only 32 percent of our respondents in our survey indicated they shopped around for a credit card," he says.

Some cards have low interest rates and others offer mileage rewards.  To shop around for these perks, consumers need only go online.

"It's very easy to go to a number of different websites to find literally hundreds of different credit card offers," says Gannan.

One such example is Bankrate.com.

Copyright 2011 ABC News Radio

Tuesday
Feb082011

Credit Card Interest Rates Gone Wild

Photo Courtesy - Getty Images(NEW YORK) -- Consumers may be feeling more confident to spend, and credit card companies are taking notice. First Premier Bancard in South Dakota got plenty of takers for a credit card with a 79.99-percent interest rate, aimed at people with poor credit.

Although the credit card had a sky-high interest rate, the company said 700,000 people signed up, according to the Credit Union Times. The average interest rate for a credit card plan was 13.78 percent in 2010, according to data released by the Federal Reserve this week.

"Consumers had been paying down their credit cards or consolidating their debt. But they appear to be feeling more confident and charging once again," said Jeff Kleintop, Chief Market Strategist for LPL Financial.

The Federal Reserve reported that U.S. consumer borrowing rose in December for the third consecutive month. Credit card usage increased in December for the first time since August 2008.

"In general, there isn't much credit available to high-risk borrowers and what is available is expensive for obvious reasons," said Kleintop. Banks charge higher rates for high-risk customers who may not be able to pay back their debt.

The bank has since decreased the APR to 59.9 percent. Chi Chi Wu, staff attorney with the National Consumer Law Center, said the 79 percent and 59 percent APRs are the highest rates she can recall seeing.

And while the credit card's interest rate decreased, the number of fees it has did not, according to Wu, an expert on subprime credit cards. Wu said First Premier Bancard is "notorious" for being a "fee-harvester" credit card company, in which high fees eat up most of an already low credit limit, leaving a customer with little useable credit.

Wu said there have been cases of enforcement actions against some high-interest fee-harvester companies since the late 90s. Then President Obama signed the Credit Card Accountability, Responsibility and Disclosure Act, or CARD Act, of 2009. That law regulated how credit card companies marketed their products, including a 25-percent cap on credit card fees.

But interest rates like 59.9 percent are allowed under the CARD Act, as long as it's not done retroactively. Wu said as long as they have a 25-percent cap on credit card fees, the high-interest rate cards are "perfectly legal."

Consider, however, that carrying a $1,000 balance on a card with a 59-percent APR and making the minimum payment of two percent means it will take 50 years to pay off the balance. Oh, and the interest charges along the way will be a cool $86,500,932,454. But if you pay three percent of the balance, that would knock the interest down to $231,468,110.

Copyright 2011 ABC News Radio 

Monday
Dec202010

Americans Choose Not to Make Holiday Purchases on Credit This Season

Photo Courtesy - Getty Images(POUGHKEEPSIE, N.Y.) -- Results from a recent Marist Poll report that most Americans are choosing not to use credit cards to buy gifts this holiday season.

According to the report, 56 percent of those polled said they are not using credit cards for their holiday shopping.  While 26 percent of adults are purchasing gifts on credit, nine percent are using plastic for most of their purchases and only an additional nine percent are charging all of their holiday purchases.

Marist adds that income and age both play a role in holiday consumer payment methods.  The poll revealed that 66 percent earning less than $50,000 annually plan not to use credit cards for any holiday gifts. 

The polling institute also says that young Americans are more likely not to use credit for holiday shopping.  Seventy percent of 18-29 year-olds are not using credit cards when buying holiday presents.

Copyright 2010 ABC News Radio 

Friday
Dec102010

Holiday Shopping: Americans Cut Back on Credit Card Use

Photo Courtesy - Getty Images(NEW YORK) -- Millions of Americans have cut up their credit cards since last year's holiday shopping season, meaning that this year, many are headed to the mall with cash in hand.

According to the credit bureau TransUnion, 8 million Americans have stopped using credit cards since the the third quarter of 2009. Seventy-eight million consumers either don't have access to a general purpose credit card or choose not to use one.

While some of the change in behavior is likely because credit card companies have severely clamped down on the availability of credit, there are also signs that some Americans are changing their ways. According to TransUnion's analysis, consumers on the whole are making "significant efforts" to use credit cards in a healthy way.

Copyright 2010 ABC News Radio 

Thursday
Dec092010

Electronic Payments on the Rise

Photo Courtesy - Getty Images(WASHINGTON) -- At least 75 percent of all non-cash payments in the United States are now made electronically, says a new report by the Federal Reserve.

With the exception of credit cards, all types of electronic payments increased from 2006-2009, according to the nation’s central banks.

Meanwhile, the paper check -- once the gold standard of non-cash payments -- has slid to under 25 percent of transactions.  The Fed also reports that debit cards have now replaced credit cards as the most-used non-cash instrument.

Copyright 2010 ABC News Radio

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