News
- Debt: A way of life?
- Bankruptcy Filings Down
- Financial Challenges For Youth
- Get Out Of Debt Scams
- Credit Card Debt Trends - No Change
- MasterCard® Takes The Lead
- Credit Cards....and Credit Cards
- Credit Reporting Industry Once Again Warns
Consumers About False E-Mail
Debt: A way of life?
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According to a recent survey by Amerix, 35% of Americans indicate that at least once a year they are contacted
by creditors regarding outstanding debt. Further, 15% are more than $15,000 in debt. Just less than
40% of those with consumer debt feel their debt really isn't a problem yet. While getting out of debt isn't
easy, according to Kathleen Gurney PHD, "...by changing the relationship that individuals have with their
money, it is within the reach of all Americans."
Bankruptcy Filings Down
For the first time in 4 years, bankruptcy filings for the first half of 2004 were down. Still one in
every 67 households filed bankruptcy. Filings grew the fastest in Colorado. Utah led the nation with
1 in every 35 households filing for bankruptcy, nearly twice the national average.
Financial Challenges For Youth
Consumers for Responsible Credit Solutions (CRCS) has issued a warning that many graduating high school seniors are leaving home without the requisite skills for handling personal credit and debt. That lack certainly suggests serious financial problems on the horizon for many young adults.
How those young folks handle their finances can mean the difference between a bleak or bright future. What would you guess is the average credit card balance for 75% of the college students? If you guessed $3100, you'd be right! Surprised?
And how well do you think high school seniors understand personal finance basics (income, money management, taxes, spending, savings)?
A recent nationwide test revealed test scores at just 52%...an "F" in any grade book. Credit card companies are issuing cards earlier than ever, including high school seniors. For many, this is a financial train wreck waiting to happen.
CRCS encourages parents and their young people to discuss responsible use of a credit card before they leave home. And, parents need to take a practice role in making certain their children understand and have some hands-on experience in money management. Check your school district curriculum to discover what is being taught and when. Good reading resources are readily available at your library, local bookstore and, of course, on the Internet.
Get Out Of Debt Scams
"Too many Americans are drowning in debt and are turning to the Internet for some questionable advice" according to Collector Magazine (June 2004: "Web of Lies.") There is little question that some Americans are drowning in debt; still others are paddling hard to stay afloat. The causes range from economic set backs, to divorce, medical and personal problems, as well as poor money management skills.
Desperate people often do desperate things in an effort to gain control and to rid themselves of such overwhelming financial burdens. And in those efforts, the Internet emerges as a potential "fix." Multiple web sites have appeared offering a range of solutions that turn out to be fraudulent schemes. Some sites are "free" while others charge large fees. Regardless, the advice or solutions are costly, fraudulent, and simply ineffective.
According to Collector Magazine these nonsense schemes include:
- Convincing consumers that their own names are trademarked, and that they can prohibit creditors from using such names on demand letters, lawsuits, or other court filings.
- Giving the consumer some language to use that will stop creditors from attempting to collect on legitimate debt.
- Telling the consumer that banks involved in issuing a credit card never made a valid loan because no gold exchange hands and gold is the only legal tender.
There are others. There will be more. Consumers do not need to resort to such scams. Debt burdened consumers can successfully and legally negotiate with creditors or their representatives. PRM, for example, has a balance transfer program (Encore Program) available for those who qualify as a method of debt resolution. Seek advice from a legitimate counseling service or an attorney. Collector Magazine's advice on such "too good to be true" schemes is "Forget Them." Our advice is Caveat Emptor.
Credit Card Debt Trends - No Change
According to information published recently in the August issue of Collector magazine, Americans have
maintained a below expected momentum to rectify personal debt issues. In a survey taken in very
early January 2003, Americans ranked getting out of debt as their number one personal "new year's
resolution" ahead of losing weight and cessation of smoking. Don't know how they are doing
on the weight-smoking issues, but, as far as credit card debt is concerned 30% of those Americans with
credit card debt (48% of our population) have taken no steps to reduce their debt loads.
(Source: Survey by market research firm for lawyers.com)
The survey also revealed that more than half (52%) of all credit card indebted Americans have had that credit card debt for two or more years. Debt is the biggest problem for adults between ages 25-45. One-third (34%) of Americans say they currently have between $1-$5000 of credit card debt; 14% have between $5000 to over $10,000. And here's an interesting finding in that survey: 6% of the group surveyed said they didn't know if they had any debt!
The Cambridge Consumer Credit Index indicates that the war with Iraq "had no impact on their willingness to use credit cards or take on other types of debt" for 84% of our population. 13% did decrease their use of credit cards and 3% increased theirs.
MasterCard® Takes The Lead
According to the Nilson Report (an industry trade journal), MasterCard®, for the first time in 25 years has overtaken Visa® to capture the lead as the largest credit-card brand. MasterCard's growth in 2002 was 15%. Credited with this growth (Visa's was basically flat in 2002) is an aggressive advertising campaign and increased merchant acceptance of the MasterCard®. Consumers worldwide used the card for 13.6 billion transactions… valuead at $1.14 trillion last year. Acceptance of the card by merchants increased 28% over the prior year. More transactions in more place for more money!
Have you seen the television advertising campaign referred to as the "Priceless" campaign now appearing on television running in 40 languages? (About half of MasterCard's business is outside the US.) The thrust of the ads is priceless moments---joys that money can't buy---such as scoring a hole in one. The tag line at the end reads along the line of "…for everything else there's MasterCard."
If you're like most folks you already have 17 credit cards. It kind of makes you wonder how there could be a need for any more or where the real market is. But MasterCard® executives see "great opportunity" for continued growth.
PRM resolves qualified debt through the Encore Credit Card Program, a balance transfer opportunity for selected clients. The client is able to obtain a credit card as part of resolving old debt. The card? MasterCard®, of course.
Credit Cards.....and Credit Cards
Even though there are currently 785 million credits in use in the US today, checks and cash still dominate as the US consumer's preferred form of payment. But, unlike checks and cash, the credit card industry is still growing, nibbling away at those other payment forms. According to a recent Dallas Morning News article(5-18-03), "...in the next five years there will be millions of cards with little microchips on them." Thanks to the efforts of the 6,000 financial institutions issuing credit cards, gone are the days of simply choosing between a few nationally-recognized cards.
According to the Nilson Report*, by 2010 credit cards will capture a 47% share of payment system options. Bank One Corporation (Chicago) reports that credit cards accounted for more than 30% of their first quarter income. The trend is clear: plastic!
Issuers must be novel in their approach to this ever-increasing market. The standard card for standard use must move beyond a standard attitude in order to compete. MasterCard has begun to offer special-purpose cards such as ones that handle per diem travel costs. Visa has a reloadable card for child support payments and one that allows parents to contribute to and set spending limits for a teenager's personal card. Other issuers are rapidly moving to chips imbedded in cards so the consumers don't even have to swipe their card in order to complete a transaction. And, the next time you use your American Express card at a local grocery store you can earn airlines miles. Not to be out done...Disney has entered into a credit card relationship that allows points to be earned for that next fun vacation to DisneyWorld.
The Credit Card industry is here to stay. But watch for other changes designed to capture more market share and the imagination of consumers at every economic level.
*The Nilson Report is an industry publication covering consumer payment systems worldwide, published twice a month.
Credit Reporting Industry Once Again Warns Consumers About False E-Mail
Have you recently received an email from a well intended friend telling you that starting July 1st the credit bureaus will be allowed to release your personal information to anyone who asks for it? That email also contains instructions for "opting out" of that process.
According to Card News publication, the Consumer Data Industry Association announced in early April to be wary of this FALSE email regarding consumer credit reporting companies. They have, in fact, published three such releases and the Federal Trade Commission did the same as early as 2001 when the first emails on this subject started circulating.
Contrary to claims made in this email, credit reporting agencies do not provide personal consumer data to "anyone who requests it." Federal law prohibits such practice. The law allows for reports to be provided to credible or legitimate businesses that have a "permissible purpose" under law. (For example: extension of credit, insurance, employment).
The opt-out feature and phone number referred to in the same email has been in effect since 1997!
Perhaps this is the price we pay for a cheap delivery system of information that in the past would have at least required an envelope and stamp. Best thing you can do is hit the Delete key on your key board and NOT pass it on, as requested, to friends.