In November 2012, the U.S. District Court for the Eastern District of New York preliminarily approved a settlement agreement in the In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation. As a result, merchants may now charge their Visa and MasterCard customers supplemental fees to recover the cost incurred when credit cards are used as the form of payment
http://www.mondaq.com/unitedstates/x/237790/Financial+Services/Previously+Banned+Fees&email_access=on
Showing posts with label Credit Cards. Show all posts
Showing posts with label Credit Cards. Show all posts
Thursday, May 9, 2013
Wednesday, May 4, 2011
Credit Cards
FED SAYS CREDIT CARDS EASIER TO GET, BUT DOES ANYONE WANT ONE?
Banks were more willing to approve credit card applications in the first three months of 2011, according to a new survey from the Federal Reserve, but it was less than clear whether consumers really want them, according to a CreditCards.com report yesterday. According to the Federal Reserve's latest survey of senior loan officers—a quarterly poll of U.S. banks regarding their lending practices—credit card issuers were much more likely to approve applicants in the first quarter of this year, as banks are continuing to ramp up the flow of credit after slowing it to a trickle during the economic recession. There were mixed signals when it came to demand, however. The Fed noted that "demand was little changed for credit card loans" in the early months of 2011, ultimately showing a net decrease of about 3 percent. However, when the survey asked about both new credit card accounts and increases in existing credit lines, respondents said demand had gone up substantially (a net 16 percent). Those two results would seem to indicate that while people aren't really looking for new credit cards, they want access to more credit on the plastic they already carry
http://dizzy.abiworld.org/t/1520839/201584/7232/0/
Banks were more willing to approve credit card applications in the first three months of 2011, according to a new survey from the Federal Reserve, but it was less than clear whether consumers really want them, according to a CreditCards.com report yesterday. According to the Federal Reserve's latest survey of senior loan officers—a quarterly poll of U.S. banks regarding their lending practices—credit card issuers were much more likely to approve applicants in the first quarter of this year, as banks are continuing to ramp up the flow of credit after slowing it to a trickle during the economic recession. There were mixed signals when it came to demand, however. The Fed noted that "demand was little changed for credit card loans" in the early months of 2011, ultimately showing a net decrease of about 3 percent. However, when the survey asked about both new credit card accounts and increases in existing credit lines, respondents said demand had gone up substantially (a net 16 percent). Those two results would seem to indicate that while people aren't really looking for new credit cards, they want access to more credit on the plastic they already carry
http://dizzy.abiworld.org/t/1520839/201584/7232/0/
Monday, March 21, 2011
Credit Card Rules Amended by Fed to Avoid Issuance to People Who Cannot Pay
http://www.bloomberg.com/news/print/2011-03-18/credit-card-rules-amended-by-fed-to-avoid-issuance-to-those-who-can-t-pay.html
The Federal Reserve approved a rule that would require credit card issuers to consider consumers' individual incomes before extending credit, Bloomberg News reported on Friday. Credit card applications generally cannot request "household income" because that term is too vague for issuers to evaluate whether customers will be able to make the required payments on the accounts, according to a statement from the Fed on Friday. The rule is needed to prevent making credit available to consumers who lack the ability to pay, the Fed said. The change is supposed to limit issuers from giving cards to college students, yet some lawmakers are concerned that stay-at-home spouses will suffer.
http://maloney.house.gov/documents/financial/creditcards/20110112AbilitytoPayCommentFedLetter.pdf
The Federal Reserve approved a rule that would require credit card issuers to consider consumers' individual incomes before extending credit, Bloomberg News reported on Friday. Credit card applications generally cannot request "household income" because that term is too vague for issuers to evaluate whether customers will be able to make the required payments on the accounts, according to a statement from the Fed on Friday. The rule is needed to prevent making credit available to consumers who lack the ability to pay, the Fed said. The change is supposed to limit issuers from giving cards to college students, yet some lawmakers are concerned that stay-at-home spouses will suffer.
http://maloney.house.gov/documents/financial/creditcards/20110112AbilitytoPayCommentFedLetter.pdf
Wednesday, March 2, 2011
Credit Card Data Tells Mixed Story
While the average debt on credit cards in December decreased by 4 percent compared with the same month a year before, Americans still carried an average of $4,284 on credit card statements in December 2010, according to data released this week by the credit monitoring company Experian, the New York Times reported today. The most recent consumer credit report from the Federal Reserve showed that revolving credit, which is mostly credit card debt, increased by 3.5 percent in December at an annual rate, the first such increase in 27 months. Card spending (including credit, debit and electronic benefit-transfer cars) was up 6.5 percent in December compared with spending at the same stores a year earlier, according to First Data, which processes merchant transactions.
http://www.nytimes.com/2011/03/02/business/economy/02debt.html
http://www.nytimes.com/imagepages/2011/03/02/business/02debt-ch.html?ref=economy
http://www.nytimes.com/2011/03/02/business/economy/02debt.html
http://www.nytimes.com/imagepages/2011/03/02/business/02debt-ch.html?ref=economy
Friday, January 21, 2011
Debit Card Predators
The Federal Reserve took a wholly inadequate step last year when it required banks to get people to opt in to the overdraft plan before charging them fees, according to a New York Times editorial today. The banks almost never explain how the system works or what it will cost according to the editorial, and as a result, low-income debit card holders are still being exposed to predations from which credit card holders are protected. New FDIC rules require banks to clearly explain overdraft costs. Most important, if a customer is charged a fee for overdrawing his account more than 6 times in a 12-month period, the bank must offer a less costly alternative. The editorial advocates for the Federal Reserve to adopt the FDIC?s rules, but if it does not, the Bureau of Consumer Protection should make fixing the debit card rules a top priority when it starts work in six months.
http://www.nytimes.com/2011/01/21/opinion/21fri2.html
In related news, Rep. Barney Frank (D-Mass.), one of the authors of the financial regulatory overhaul, said that he is ready to work with the Republican majority to force changes in a Federal Reserve proposal to cap debit-card ?swipe? fees, Bloomberg News reported yesterday. The Fed?s proposed limits on so-called interchange fees may reduce annual revenue for U.S. banks by more than $12 billion. Visa Inc. and MasterCard Inc., which set the fees and pass the money to card-issuing banks, tumbled more than 10 percent after the proposed rules were made public on Dec. 16, based on investor concern that the caps will damage their business model. Read more.
http://www.bloomberg.com/news/print/2011-01-20/debit-card-swipe-fees-changes-supported-by-u-s-house-s-barney-frank.html
http://www.nytimes.com/2011/01/21/opinion/21fri2.html
In related news, Rep. Barney Frank (D-Mass.), one of the authors of the financial regulatory overhaul, said that he is ready to work with the Republican majority to force changes in a Federal Reserve proposal to cap debit-card ?swipe? fees, Bloomberg News reported yesterday. The Fed?s proposed limits on so-called interchange fees may reduce annual revenue for U.S. banks by more than $12 billion. Visa Inc. and MasterCard Inc., which set the fees and pass the money to card-issuing banks, tumbled more than 10 percent after the proposed rules were made public on Dec. 16, based on investor concern that the caps will damage their business model. Read more.
http://www.bloomberg.com/news/print/2011-01-20/debit-card-swipe-fees-changes-supported-by-u-s-house-s-barney-frank.html
Wednesday, January 19, 2011
Bank of America Credit Card Charge Offs
Home Online Resources Bankruptcy Headlines
January 19, 2011
Analysis: Oral Arguments Before the Supreme Court in Stern v. Marshall
by Prof. Jean Braucher
ABI Resident Scholar
The Supreme Court heard oral argument yesterday in Stern v. Marshall on the issue of whether a bankruptcy court may adjudicate a compulsory counterclaim brought by a debtor against a creditor who filed a proof of claim. The Court explored the constitutional scope of the power of bankruptcy courts, which are Article I courts. Justice Sonia Sotomayor opened the questioning about the authority of bankruptcy courts to adjudicate proofs of claim in light of Article III. Justice Elena Kagan also asked whether the 1984 bankruptcy law had brought the bankruptcy courts under the control of Article III courts, solving the constitutional problem identified in 1982 in Northern Pipeline Construction Co. v Marathon Pipe Line Co. The bankruptcy jurisdiction issue arises in a long-running legal battle between Anna Nicole Smith, whose real name is Vicki Lynn Marshall, and Pierce Marshall, the son of Smith's deceased husband, Texas oilman J. Howard Marshall II. Both Smith and Pierce Marshall, are now deceased, but their estates continue to pursue the legal issues. Pierce Marshall filed a proof of claim in Smith's chapter 11 case, asserting that Smith had defamed him as "greedy and miserly" and as scheming to keep her from inheriting from her husband. Smith responded with a compulsory counterclaim for tortious interference with a gift expectancy, which the bankruptcy court decided in her favor. The case has been to the Supreme Court once before. The bankruptcy court's decision conflicts with a later Texas probate court decision for Pierce Marshall. The current appeal is from a decision of the U.S. Court of Appeals for the Ninth Circuit, holding that Smith's counterclaim was not so closely related to Pierce Marshall's defamation claim that it must be resolved to allow or disallow his claim and thus was not "a core proceeding arising in" a bankruptcy case, within the bankruptcy court's power to adjudicate. Click here to read a transcript of yesterday's oral arguments in Stern v. Marshall.
FDIC Sets Out Rule to Resolve Claims Against Failed Firms
The board of the Federal Deposit Insurance Corp. yesterday approved a rule clarifying how the agency will treat certain creditor claims under its new authority to oversee the liquidation of failed non-bank financial firms, the Deal Pipeline reported yesterday. The authority was established by the Dodd-Frank financial reform bill enacted in July. The interim final rule approved yesterday differs in two ways from the proposal the FDIC issued in October. One, it clarifies that fair market value will be the basis for deciding the worth of collateral on secured claims and that contingent claims will be handled consistent with bankruptcy law. The rule also addresses other concerns raised in comments from the public, including concern that the proposed prohibition of any additional payments to holders of long-term debt - those with initial maturities of more than 360 days - meant that shorter-term creditors would be likely to receive such payments. Under the interim final rule, however, short-term debt holders are unlikely to meet the criteria for receiving additional payments beyond the pro rata share provided to the long-term debt holders, the FDIC said. Read more. (Subscription required.)
Panel Begins to Set Rules to Govern Financial System
The new regulatory board charged with overseeing the stability of the financial system took its first big steps yesterday to set out tentative guidelines to limit trading by banks for their own accounts and to restrict the growth of the biggest financial companies, the New York Times reported today. The Financial Stability Oversight Council, the council of financial regulators created by the Dodd-Frank Act, also proposed rules as to which large financial companies that were not banks would be regulated by the Federal Reserve because they constituted a potential threat to the nation's financial system's stability based on their size. Under the proposed rules, banks would have to sell or wind down their proprietary trading desks, set up a supervisory system to distinguish prohibited trading from legitimate market-making and capital-raising activities on behalf of customers, and refrain from investing in or sponsoring hedge funds or private equity funds. Regulators now have eight months to draw up specific regulations on proprietary trading, which are likely to include new quantitative measures to differentiate between permissible and banned activities. The law calls for the Volcker rule, named for former Federal Reserve chairman Paul A. Volcker, who championed the idea, to be set by mid-September. Read more.
Federal Officials Studying How to Protect Housing Market
Federal officials took two steps yesterday to attempt to reduce the likelihood of a second financial crisis caused in large part by large declines in the housing market, the Washington Post reported today. First, the Federal Housing Finance Agency, which oversees the massive mortgage finance companies Fannie Mae and Freddie Mac, said that it would consider a new approach to how home loans are managed by banks. The second step would try to curtail reckless mortgage lending by more tightly regulating what firms can do with the loans they make. Currently, banks can pool mortgage loans together into an investment and sell that to investors around the globe, passing on all the risk associated with the loans. However, a report released by the Treasury Department, as required by the Dodd-Frank law overhauling financial regulation, endorsed the law's prescription that banks be forced to hold on to a portion of the investment, making it difficult for a bank to ignore the risks associated with lending. Read more.
WaMu Eyes March Bankruptcy Exit
Washington Mutual Inc. could be out of bankruptcy in March after reworking its recently rejected plan of reorganization, Reuters reported yesterday. Once the company's reorganization plan is approved and goes into effect, it will begin distributing more than $7 billion to creditors. Those creditors range from hedge funds that hold the company's securities including Centerbridge Partners LP to vendors such as phone companies and software providers. Bankruptcy Judge Mary Walrath rejected Washington Mutual's reorganization plan on Jan. 7, but she did approve a legal settlement it had proposed, giving the company a major victory. The company's settlement plan divided about $10 billion in disputed assets between Washington Mutual, the Federal Deposit Insurance Corp. and JPMorgan Chase & Co. Read more.
Capital One Bank Will Refund More Than $2 Million Improperly Collected from Consumers in Bankruptcy
Bank of America Corp. yesterday said that the rate at which it wrote off credit card debt as uncollectible fell in December to its lowest point for 2010, Bloomberg News reported today. Charlotte, N.C.-based Bank of America wrote off 9.31 percent of credit card balances in December at an annualized rate, down from 9.92 percent in November. In November, total revolving debt held by U.S. consumers - which is mostly credit cards - fell to $796.5 billion. That's about 18.5 percent below the peak reached in the third quarter of 2008, and it is the lowest point since September 2004. Industry wide, the charge-off rate peaked in the second quarter of 2010 at 10.37 percent of balances, annualized, according to the latest Fed data. In the two years prior to the recession, it averaged 3.82 percent, Fed records show.
http://www.bloomberg.com/news/print/2011-01-18/bank-of-america-december-card-charge-offs-fall.html
January 19, 2011
Analysis: Oral Arguments Before the Supreme Court in Stern v. Marshall
by Prof. Jean Braucher
ABI Resident Scholar
The Supreme Court heard oral argument yesterday in Stern v. Marshall on the issue of whether a bankruptcy court may adjudicate a compulsory counterclaim brought by a debtor against a creditor who filed a proof of claim. The Court explored the constitutional scope of the power of bankruptcy courts, which are Article I courts. Justice Sonia Sotomayor opened the questioning about the authority of bankruptcy courts to adjudicate proofs of claim in light of Article III. Justice Elena Kagan also asked whether the 1984 bankruptcy law had brought the bankruptcy courts under the control of Article III courts, solving the constitutional problem identified in 1982 in Northern Pipeline Construction Co. v Marathon Pipe Line Co. The bankruptcy jurisdiction issue arises in a long-running legal battle between Anna Nicole Smith, whose real name is Vicki Lynn Marshall, and Pierce Marshall, the son of Smith's deceased husband, Texas oilman J. Howard Marshall II. Both Smith and Pierce Marshall, are now deceased, but their estates continue to pursue the legal issues. Pierce Marshall filed a proof of claim in Smith's chapter 11 case, asserting that Smith had defamed him as "greedy and miserly" and as scheming to keep her from inheriting from her husband. Smith responded with a compulsory counterclaim for tortious interference with a gift expectancy, which the bankruptcy court decided in her favor. The case has been to the Supreme Court once before. The bankruptcy court's decision conflicts with a later Texas probate court decision for Pierce Marshall. The current appeal is from a decision of the U.S. Court of Appeals for the Ninth Circuit, holding that Smith's counterclaim was not so closely related to Pierce Marshall's defamation claim that it must be resolved to allow or disallow his claim and thus was not "a core proceeding arising in" a bankruptcy case, within the bankruptcy court's power to adjudicate. Click here to read a transcript of yesterday's oral arguments in Stern v. Marshall.
FDIC Sets Out Rule to Resolve Claims Against Failed Firms
The board of the Federal Deposit Insurance Corp. yesterday approved a rule clarifying how the agency will treat certain creditor claims under its new authority to oversee the liquidation of failed non-bank financial firms, the Deal Pipeline reported yesterday. The authority was established by the Dodd-Frank financial reform bill enacted in July. The interim final rule approved yesterday differs in two ways from the proposal the FDIC issued in October. One, it clarifies that fair market value will be the basis for deciding the worth of collateral on secured claims and that contingent claims will be handled consistent with bankruptcy law. The rule also addresses other concerns raised in comments from the public, including concern that the proposed prohibition of any additional payments to holders of long-term debt - those with initial maturities of more than 360 days - meant that shorter-term creditors would be likely to receive such payments. Under the interim final rule, however, short-term debt holders are unlikely to meet the criteria for receiving additional payments beyond the pro rata share provided to the long-term debt holders, the FDIC said. Read more. (Subscription required.)
Panel Begins to Set Rules to Govern Financial System
The new regulatory board charged with overseeing the stability of the financial system took its first big steps yesterday to set out tentative guidelines to limit trading by banks for their own accounts and to restrict the growth of the biggest financial companies, the New York Times reported today. The Financial Stability Oversight Council, the council of financial regulators created by the Dodd-Frank Act, also proposed rules as to which large financial companies that were not banks would be regulated by the Federal Reserve because they constituted a potential threat to the nation's financial system's stability based on their size. Under the proposed rules, banks would have to sell or wind down their proprietary trading desks, set up a supervisory system to distinguish prohibited trading from legitimate market-making and capital-raising activities on behalf of customers, and refrain from investing in or sponsoring hedge funds or private equity funds. Regulators now have eight months to draw up specific regulations on proprietary trading, which are likely to include new quantitative measures to differentiate between permissible and banned activities. The law calls for the Volcker rule, named for former Federal Reserve chairman Paul A. Volcker, who championed the idea, to be set by mid-September. Read more.
Federal Officials Studying How to Protect Housing Market
Federal officials took two steps yesterday to attempt to reduce the likelihood of a second financial crisis caused in large part by large declines in the housing market, the Washington Post reported today. First, the Federal Housing Finance Agency, which oversees the massive mortgage finance companies Fannie Mae and Freddie Mac, said that it would consider a new approach to how home loans are managed by banks. The second step would try to curtail reckless mortgage lending by more tightly regulating what firms can do with the loans they make. Currently, banks can pool mortgage loans together into an investment and sell that to investors around the globe, passing on all the risk associated with the loans. However, a report released by the Treasury Department, as required by the Dodd-Frank law overhauling financial regulation, endorsed the law's prescription that banks be forced to hold on to a portion of the investment, making it difficult for a bank to ignore the risks associated with lending. Read more.
WaMu Eyes March Bankruptcy Exit
Washington Mutual Inc. could be out of bankruptcy in March after reworking its recently rejected plan of reorganization, Reuters reported yesterday. Once the company's reorganization plan is approved and goes into effect, it will begin distributing more than $7 billion to creditors. Those creditors range from hedge funds that hold the company's securities including Centerbridge Partners LP to vendors such as phone companies and software providers. Bankruptcy Judge Mary Walrath rejected Washington Mutual's reorganization plan on Jan. 7, but she did approve a legal settlement it had proposed, giving the company a major victory. The company's settlement plan divided about $10 billion in disputed assets between Washington Mutual, the Federal Deposit Insurance Corp. and JPMorgan Chase & Co. Read more.
Capital One Bank Will Refund More Than $2 Million Improperly Collected from Consumers in Bankruptcy
Bank of America Corp. yesterday said that the rate at which it wrote off credit card debt as uncollectible fell in December to its lowest point for 2010, Bloomberg News reported today. Charlotte, N.C.-based Bank of America wrote off 9.31 percent of credit card balances in December at an annualized rate, down from 9.92 percent in November. In November, total revolving debt held by U.S. consumers - which is mostly credit cards - fell to $796.5 billion. That's about 18.5 percent below the peak reached in the third quarter of 2008, and it is the lowest point since September 2004. Industry wide, the charge-off rate peaked in the second quarter of 2010 at 10.37 percent of balances, annualized, according to the latest Fed data. In the two years prior to the recession, it averaged 3.82 percent, Fed records show.
http://www.bloomberg.com/news/print/2011-01-18/bank-of-america-december-card-charge-offs-fall.html
Monday, December 6, 2010
FDIC TIP- Advance-Fee Loan Scams: ‘Easy’ Cash Offers Teach Hard Lessons
Advance-Fee Loan Scams: ‘Easy’ Cash Offers Teach Hard Lessons
Looking for a loan or credit card but don’t think you’ll qualify? Turned down by a bank because of your poor credit history?
You may be tempted by ads and websites that guarantee loans or credit cards, regardless of your credit history. The catch comes when you apply for the loan or credit card and find out you have to pay a fee in advance. According to the Federal Trade Commission (FTC), the nation’s consumer protection agency, that could be a tip-off to a rip-off. If you’re asked to pay a fee for the promise of a loan or credit card, you can count on the fact that you’re dealing with a scam artist. More than likely, you’ll get an application, or a stored value or debit card, instead of the loan or credit card.
The Signs of an Advance-Fee Loan Scam
The FTC says some red flags can tip you off to scam artists’ tricks. For example:
A lender who isn’t interested in your credit history. A lender may offer loans or credit cards for many purposes — for example, so a borrower can start a business or consolidate bill payments. But one who doesn’t care about your credit record should give you cause for concern. Ads that say “Bad credit? No problem” or “We don’t care about your past. You deserve a loan” or “Get money fast” or even “No hassle — guaranteed” often indicate a scam.
Banks and other legitimate lenders generally evaluate creditworthiness and confirm the information in an application before they guarantee firm offers of credit — even to creditworthy consumers.
Fees that are not disclosed clearly or prominently. Scam lenders may say you’ve been approved for a loan, then call or email demanding a fee before you can get the money. Any up-front fee that the lender wants to collect before granting the loan is a cue to walk away, especially if you’re told it’s for “insurance,” “processing,” or just “paperwork.”
Legitimate lenders often charge application, appraisal, or credit report fees. The differences? They disclose their fees clearly and prominently; they take their fees from the amount you borrow; and the fees usually are paid to the lender or broker after the loan is approved.
It’s also a warning sign if a lender says they won’t check your credit history, yet asks for your personal information, such as your Social Security number or bank account number. They may use your information to debit your bank account to pay a fee they’re hiding.
A loan that is offered by phone. It is illegal for companies doing business in the U.S. by phone to promise you a loan and ask you to pay for it before they deliver.
A lender who uses a copy-cat or wanna-be name. Crooks give their companies names that sound like well-known or respected organizations and create websites that look slick. Some scam artists have pretended to be the Better Business Bureau or another reputable organization, and some even produce forged paperwork or pay people to pretend to be references. Always get a company’s phone number from the phone book or directory assistance, and call to check they are who they say they are. Get a physical address, too: a company that advertises a PO Box as its address is one to check out with the appropriate authorities.
A lender who is not registered in your state. Lenders and loan brokers are required to register in the states where they do business. To check registration, call your state Attorney General’s office or your state’s Department of Banking or Financial Regulation. Checking registration does not guarantee that you will be happy with a lender, but it helps weed out the crooks.
A lender who asks you to wire money or pay an individual. Don’t make a payment for a loan or credit card directly to an individual; legitimate lenders don’t ask anyone to do that. In addition, don’t use a wire transfer service or send money orders for a loan. You have little recourse if there’s a problem with a wire transaction, and legitimate lenders don’t pressure their customers to wire funds.
Finally, just because you’ve received a slick promotion, seen an ad for a loan in a prominent place in your neighborhood or in your newspaper, on television or on the Internet, or heard one on the radio, don’t assume it’s a good deal — or even legitimate. Scam artists like to operate on the premise of legitimacy by association, so it’s really important to do your homework.
Finding Low-Cost Help for Credit Problems
If you have debt problems, try to solve them with your creditors as soon as you realize you won’t be able to make your payments. If you can’t resolve the problems yourself or need help to do it, you may want to contact a credit counseling service. Nonprofit organizations in every state counsel and educate people and families on debt problems, budgeting, and using credit wisely. Often, these services are low- or no-cost. Universities, military bases, credit unions, and housing authorities also may offer low- or no-cost credit counseling programs. To learn more about dealing with debt, including how to select a credit counseling service, visit ftc.gov/credit.
Where to Complain
If you think you’ve had an experience with an advance-fee loan scam, report it to the FTC.
The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a new video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
Looking for a loan or credit card but don’t think you’ll qualify? Turned down by a bank because of your poor credit history?
You may be tempted by ads and websites that guarantee loans or credit cards, regardless of your credit history. The catch comes when you apply for the loan or credit card and find out you have to pay a fee in advance. According to the Federal Trade Commission (FTC), the nation’s consumer protection agency, that could be a tip-off to a rip-off. If you’re asked to pay a fee for the promise of a loan or credit card, you can count on the fact that you’re dealing with a scam artist. More than likely, you’ll get an application, or a stored value or debit card, instead of the loan or credit card.
The Signs of an Advance-Fee Loan Scam
The FTC says some red flags can tip you off to scam artists’ tricks. For example:
A lender who isn’t interested in your credit history. A lender may offer loans or credit cards for many purposes — for example, so a borrower can start a business or consolidate bill payments. But one who doesn’t care about your credit record should give you cause for concern. Ads that say “Bad credit? No problem” or “We don’t care about your past. You deserve a loan” or “Get money fast” or even “No hassle — guaranteed” often indicate a scam.
Banks and other legitimate lenders generally evaluate creditworthiness and confirm the information in an application before they guarantee firm offers of credit — even to creditworthy consumers.
Fees that are not disclosed clearly or prominently. Scam lenders may say you’ve been approved for a loan, then call or email demanding a fee before you can get the money. Any up-front fee that the lender wants to collect before granting the loan is a cue to walk away, especially if you’re told it’s for “insurance,” “processing,” or just “paperwork.”
Legitimate lenders often charge application, appraisal, or credit report fees. The differences? They disclose their fees clearly and prominently; they take their fees from the amount you borrow; and the fees usually are paid to the lender or broker after the loan is approved.
It’s also a warning sign if a lender says they won’t check your credit history, yet asks for your personal information, such as your Social Security number or bank account number. They may use your information to debit your bank account to pay a fee they’re hiding.
A loan that is offered by phone. It is illegal for companies doing business in the U.S. by phone to promise you a loan and ask you to pay for it before they deliver.
A lender who uses a copy-cat or wanna-be name. Crooks give their companies names that sound like well-known or respected organizations and create websites that look slick. Some scam artists have pretended to be the Better Business Bureau or another reputable organization, and some even produce forged paperwork or pay people to pretend to be references. Always get a company’s phone number from the phone book or directory assistance, and call to check they are who they say they are. Get a physical address, too: a company that advertises a PO Box as its address is one to check out with the appropriate authorities.
A lender who is not registered in your state. Lenders and loan brokers are required to register in the states where they do business. To check registration, call your state Attorney General’s office or your state’s Department of Banking or Financial Regulation. Checking registration does not guarantee that you will be happy with a lender, but it helps weed out the crooks.
A lender who asks you to wire money or pay an individual. Don’t make a payment for a loan or credit card directly to an individual; legitimate lenders don’t ask anyone to do that. In addition, don’t use a wire transfer service or send money orders for a loan. You have little recourse if there’s a problem with a wire transaction, and legitimate lenders don’t pressure their customers to wire funds.
Finally, just because you’ve received a slick promotion, seen an ad for a loan in a prominent place in your neighborhood or in your newspaper, on television or on the Internet, or heard one on the radio, don’t assume it’s a good deal — or even legitimate. Scam artists like to operate on the premise of legitimacy by association, so it’s really important to do your homework.
Finding Low-Cost Help for Credit Problems
If you have debt problems, try to solve them with your creditors as soon as you realize you won’t be able to make your payments. If you can’t resolve the problems yourself or need help to do it, you may want to contact a credit counseling service. Nonprofit organizations in every state counsel and educate people and families on debt problems, budgeting, and using credit wisely. Often, these services are low- or no-cost. Universities, military bases, credit unions, and housing authorities also may offer low- or no-cost credit counseling programs. To learn more about dealing with debt, including how to select a credit counseling service, visit ftc.gov/credit.
Where to Complain
If you think you’ve had an experience with an advance-fee loan scam, report it to the FTC.
The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a new video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
Wednesday, November 10, 2010
NEW CREDIT CARD FEES ON THE WAY
Less than a year after the passage of new laws limiting banks' ability to impose certain fees on credit and debit cards, Bank of America Corp., Discover Financial Services, JPMorgan Chase & Co. and other lenders are using different tactics to boost their fee income, the Wall Street Journal reported today. Some are raising minimum payments on certain customers' accounts in order to increase late penalties. Others are ramping up credit-protection insurance programs and charging customers for coverage without permission. Still others are pushing aggressively into high-fee prepaid cards, which are exempt from most of the new rules. Banks already have rolled out a slew of new fees since the passage of the Credit Card Accountability Responsibility and Disclosure Act of 2009. Among other things, they have revived annual fees; shortened billing cycles; levied new charges on cards with low credit limits; increased balance-transfer, cash-advance and foreign-exchange fees; and begun aggressively marketing "professional cards" not subject to the restrictions of the Card Act. The Federal Reserve responded on Oct. 19 by announcing proposals that would ban hefty activation fees and prevent issuers from raising interest rates on promotional card offers until a borrower is more than 60 days late.
http://online.wsj.com/article/SB10001424052748703778304575590823786685984.html?mod=WSJ_hps_sections_personalfinance
http://online.wsj.com/article/SB10001424052748703778304575590823786685984.html?mod=WSJ_hps_sections_personalfinance
Friday, October 1, 2010
DELINQUENCIES FALL FOR TOP CREDIT CARD ISSUERS
DELINQUENCIES FALL FOR TOP CREDIT CARD ISSUERS
Moody's Investors Service reported Monday that U.S. credit card delinquencies fell in August as the six top issuers reported improved numbers, CollectionsCreditRisk.com reported today. Delinquent accounts, the rates at which customers are making payments late by 30 days or more, dropped to 4.70 percent in August from 4.93 percent in July, Moody's said. Chargeoffs for the six top issuers overall climbed to 10.03 percent in August from 9.3 percent in July, reversing a trend of several months of decline.
Moody's Investors Service reported Monday that U.S. credit card delinquencies fell in August as the six top issuers reported improved numbers, CollectionsCreditRisk.com reported today. Delinquent accounts, the rates at which customers are making payments late by 30 days or more, dropped to 4.70 percent in August from 4.93 percent in July, Moody's said. Chargeoffs for the six top issuers overall climbed to 10.03 percent in August from 9.3 percent in July, reversing a trend of several months of decline.
Sunday, August 22, 2010
Card Act
http://online.wsj.com/article/SB10001424052748704895004575395823497473064.html?mod=WSJ_hp_mostpop_read
The Credit Card Accountability Responsibility and Disclosure Act of 2009, known as the Card Act, was intended to reshape the contours of consumer finance. Among other things, it forces card issuers to give customers more notice about interest-rate increases and restricts certain controversial billing practices such as inactivity fees.
the Card Act stipulates that late-payment fees shouldn't be triggered on a Sunday or holiday, when there is no mail delivery. The Card Act also stipulates that issuers can't jack up rates on existing balances unless a cardholder is at least 60 days late. But there is a creative maneuver around that: the so-called rebate card Rebate offers aren't governed by the Card Act, and an issuer can revoke them suddenly and hit cardholders with high charges.
Shortening the billing cycle is another new tactic some banks may be using. The Card Act requires companies to provide a window of at least 21 days from when a statement is mailed and when payment is due.
Card Act rules forbid the waiving of annual fees based on "a customer's annual spending on the card." He adds, however, that "the rules will not prohibit cash-back rewards or similar incentives that encourage account usage."
Another potential trap: low-credit-limit cards, which are popular among college students.
The Card Act says a card's total annual fees can't exceed 25% of a borrower's credit line. But some issuers may be evading the fee restrictions by charging an upfront processing fee that doesn't fall under the 25% cap.
The Credit Card Accountability Responsibility and Disclosure Act of 2009, known as the Card Act, was intended to reshape the contours of consumer finance. Among other things, it forces card issuers to give customers more notice about interest-rate increases and restricts certain controversial billing practices such as inactivity fees.
the Card Act stipulates that late-payment fees shouldn't be triggered on a Sunday or holiday, when there is no mail delivery. The Card Act also stipulates that issuers can't jack up rates on existing balances unless a cardholder is at least 60 days late. But there is a creative maneuver around that: the so-called rebate card Rebate offers aren't governed by the Card Act, and an issuer can revoke them suddenly and hit cardholders with high charges.
Shortening the billing cycle is another new tactic some banks may be using. The Card Act requires companies to provide a window of at least 21 days from when a statement is mailed and when payment is due.
Card Act rules forbid the waiving of annual fees based on "a customer's annual spending on the card." He adds, however, that "the rules will not prohibit cash-back rewards or similar incentives that encourage account usage."
Another potential trap: low-credit-limit cards, which are popular among college students.
The Card Act says a card's total annual fees can't exceed 25% of a borrower's credit line. But some issuers may be evading the fee restrictions by charging an upfront processing fee that doesn't fall under the 25% cap.
Free Credit Report
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Credit Cards
Credit card marketing to U.S. consumers has more than doubled in the past year, having skyrocketed to 1.1 billion offers in the second quarter of this year from just 419 million in the second quarter of 2009, CardWeb.com reported 8/20/10. While elevated, these figures are still far off the 1.5 billion pieces mailed in the second quarter of 2008 and the nearly 2 billion pieces that mailed in the third quarter of 2007. The volume of card mail even retracted slightly from the 1.2 billion mailings delivered to consumers' mailboxes in the first quarter of 2010. Research firm Mintel Comperemedia said that 28 percent of offers for new cards carried an annual fee, down from 33 percent a year ago, while 56 percent of mail offers promoted an introductory APR for both balance transfers and purchases, up from 37 percent a year ago. Additional Mintel findings show that the longer the length of the introductory period, the more likely it is that the balance transfer fee will be 4-5 percent rather than the standard 3 percent. Rewards programs accounted for 80 percent of offers for the second quarter 2010 and the mean APR for variable rate offers declined to 13.79 percent from 14.21 percent in the previous quarter.
Sunday, August 1, 2010
New Restrictions Placed on Debt Settlement Companies
“Too many of these companies pick the last dollar out of consumers’ pocket and, far from leaving them better off, push them deeper into debt, even bankruptcy,” Jon Leibowitz, chairman of the F.T.C., said in a statement announcing the regulations.
http://www.nytimes.com/2010/07/30/business/30debt.html
http://ftc.gov/opa/2010/07/tsr.shtm
New Directions for Credit Cardholders- Tips
1. If your credit card company has lowered your credit limit, it may cause your credit score to decline. This is because your score is based in part on the percentage of your credit limit that you are using and how much you owe.
2. Under the new law, card issuers now must generally tell customers about certain changes in account terms — in areas such as interest rate and fee increases — 45 days in advance, up from 15 days in the past. In that same notice, they must inform consumers of their right to cancel the card before certain account changes take effect. These notices may come with your credit card bill or through a separate communication.
3. “no-interest” offers-you must pay off the entire purchase by the time the promotional period ends to take advantage of the zero-rate offer. If you don’t, the lender will charge you interest from the date you bought the item. You would then have to pay interest — at the lender’s standard rate — from the date of purchase.
4. Rewards_ For more information about using rewards programs wisely, see our article “Points, Cash Back and Other ‘Rewards’ from Your Bank: How to Cash In on the Right Deal,” in the Summer 2009 issue of FDIC Consumer News at www.fdic.gov/consumers/consumer/news/cnsum09/bank_rewards.html.
5. Parents of young adults have a new opportunity to teach responsible management of credit cards. The new law includes protections for young consumers, including a requirement that anyone under 21 who wants to obtain a credit card must have a qualified co-signer on the account or must prove he or she alone can repay any debt. This is intended to protect young people from getting overwhelmed by credit card debt. But it also offers an opportunity for parents to teach their kids about responsible use of credit cards.
6. Take additional precautions against interest rate increases. “Although the law puts new limits on interest rate increases, you need to remain vigilant,” Manley added. For example, while card companies cannot increase the interest rate on existing balances except in certain circumstances, they may raise rates on extensions of credit for new purchases as long as proper notice is provided.
“If you receive a notice that your interest rate is increasing,” Manley said, “determine whether you have another way to make future purchases, such as by waiting until you have saved enough money for the purchase or by using a card with a lower interest rate.”
Rate increases also may come in another form. For example, some fixed-rate cards may be converted to variable-rate cards after a notice has been sent to cardholders. This would result in variable rates being applied to new balances.
Also note that a credit card company can increase the rate on an existing balance if the consumer fails to send the minimum payment within 60 days of the due date. So, it’s very important to avoid being more than 60 days late on a credit card. If you miss a due date, you can avoid a “penalty” interest rate on that existing balance by getting your payment in within 60 days. And if you’re more than 60 days late and that does trigger a rate increase, get current on your credit card payments as soon as possible and then start consistently paying on time. Card issuers are required to reduce the penalty rate if they receive prompt payments for six months.
In general, what else can you do to get the best rates? Keep in mind that a credit score is built up over long periods, not just over one or two years, so make all your loan payments on time. Even if you have past blemishes, you can improve your credit score over time by managing your credit well. Be aware that if you can only afford to pay the minimum amount due, you probably won’t get the best rates. But if you can pay more than the minimum each month — as much more as possible — that will work in your favor.
Also, carefully read the terms of a new credit card before using it. If the card has a high interest rate or fees, shop around for a better offer.
http://www.fdic.gov/consumers/consumer/news/cnspr10/new_realities.html
According to the American Bankruptcy Institute, more than 1.6 million Americans could file for bankruptcy by the end of 2010.
2. Under the new law, card issuers now must generally tell customers about certain changes in account terms — in areas such as interest rate and fee increases — 45 days in advance, up from 15 days in the past. In that same notice, they must inform consumers of their right to cancel the card before certain account changes take effect. These notices may come with your credit card bill or through a separate communication.
3. “no-interest” offers-you must pay off the entire purchase by the time the promotional period ends to take advantage of the zero-rate offer. If you don’t, the lender will charge you interest from the date you bought the item. You would then have to pay interest — at the lender’s standard rate — from the date of purchase.
4. Rewards_ For more information about using rewards programs wisely, see our article “Points, Cash Back and Other ‘Rewards’ from Your Bank: How to Cash In on the Right Deal,” in the Summer 2009 issue of FDIC Consumer News at www.fdic.gov/consumers/consumer/news/cnsum09/bank_rewards.html.
5. Parents of young adults have a new opportunity to teach responsible management of credit cards. The new law includes protections for young consumers, including a requirement that anyone under 21 who wants to obtain a credit card must have a qualified co-signer on the account or must prove he or she alone can repay any debt. This is intended to protect young people from getting overwhelmed by credit card debt. But it also offers an opportunity for parents to teach their kids about responsible use of credit cards.
6. Take additional precautions against interest rate increases. “Although the law puts new limits on interest rate increases, you need to remain vigilant,” Manley added. For example, while card companies cannot increase the interest rate on existing balances except in certain circumstances, they may raise rates on extensions of credit for new purchases as long as proper notice is provided.
“If you receive a notice that your interest rate is increasing,” Manley said, “determine whether you have another way to make future purchases, such as by waiting until you have saved enough money for the purchase or by using a card with a lower interest rate.”
Rate increases also may come in another form. For example, some fixed-rate cards may be converted to variable-rate cards after a notice has been sent to cardholders. This would result in variable rates being applied to new balances.
Also note that a credit card company can increase the rate on an existing balance if the consumer fails to send the minimum payment within 60 days of the due date. So, it’s very important to avoid being more than 60 days late on a credit card. If you miss a due date, you can avoid a “penalty” interest rate on that existing balance by getting your payment in within 60 days. And if you’re more than 60 days late and that does trigger a rate increase, get current on your credit card payments as soon as possible and then start consistently paying on time. Card issuers are required to reduce the penalty rate if they receive prompt payments for six months.
In general, what else can you do to get the best rates? Keep in mind that a credit score is built up over long periods, not just over one or two years, so make all your loan payments on time. Even if you have past blemishes, you can improve your credit score over time by managing your credit well. Be aware that if you can only afford to pay the minimum amount due, you probably won’t get the best rates. But if you can pay more than the minimum each month — as much more as possible — that will work in your favor.
Also, carefully read the terms of a new credit card before using it. If the card has a high interest rate or fees, shop around for a better offer.
http://www.fdic.gov/consumers/consumer/news/cnspr10/new_realities.html
According to the American Bankruptcy Institute, more than 1.6 million Americans could file for bankruptcy by the end of 2010.
Monday, July 19, 2010
Credit-card debt drops 10.5% in May
by Becky Yerak
Posted Thursday at 2:49 p.m.
Paying down credit-card debt appears to be on the upswing.
Consumers cut their outstanding revolving debt -– overwhelmingly credit cards -– by an annualized, seasonally adjusted rate of 10.5 percent in May, the Federal Reserve reported Thursday. That’s on the heels of an 11.8 percent drop in April. Revolving credit is a line of credit allowing consumers to pay all or part of an outstanding balance, and, as the balance is paid, it becomes available to spend again as credit.
But it might be premature to say that consumers have been scared straight.
The monthly consumer credit numbers tell only part of the story because it’s not yet known how much debt banks or merchants will charge-off, or remove from their books because they’ve deemed it uncollectable. The Fed’s charge-off numbers are released quarterly, and the first quarter’s 10.1 percent rate tied for the highest since the beginning of 1985, the latest period for which figures are readily available.
“Unfortunately we won’t know until the charge-off data comes out for the second quarter whether the reduction was actually due to consumers paying down their debt or the banks writing bad debt off the books,” Odysseas Papadimitriou, a former Capital One executive who is now founder and chief executive of credit-card research Web site Cardhub.com, said.
In the first quarter, for example, about 40 percent of the decline in credit-card debt was due to charge-offs, Cardhub.com said.
And though consumers did pay down $36 billion in credit-card debt in the first quarter, that’s still 23 percent less than they repaid a year earlier, it said.
Another reason for the drop in outstanding revolving debt: lenders have been tighter with credit with existing cardholders, giving them less rope to get in over their heads, a new study shows.
New credit-card limits from banks are just 40 percent of what they were in 2006, according to Equifax. And even year-over-year reductions in average credit limits -– to $4,000 from $4,600 -– means 13 percent less credit available for cards with the same credit score, the credit-data business said.
Finally, consumer bankruptcy filings nationwide totaled 770,117 in the first half of 2010, up 14 percent from a year earlier, according to the American Bankruptcy Institute. The bankruptcy process cancels many debts.
“All these factors suggest there is less credit in the system,” said Equifax, which has credit files on nearly 200 million U.S. consumers.
Indeed, there’s evidence consumers with active cards are paying them down, one study shows.
Though home-equity lines that consumers once used like personal ATMs are shrinking, credit-card debt per borrower is falling nationally, statewide and in the Chicago area, according to TransUnion.
Credit card debt per borrower in the Chicago area averaged $5,119 in the first quarter, down 10 percent from a year earlier and 6 percent from the fourth quarter, the credit-reporting firm found.
“We anticipate the decreasing trend in credit card debt that started in the second quarter last year to continue well past the second quarter this year,” TransUnion director Ezra Becker said.
Meanwhile, personal savings rates as a percentage of disposable personal income were 3.5 percent in the first quarter of 2010, down slightly from 3.7 percent in the year-ago quarter, according to the U.S. Bureau of Economic Analysis. But it’s up significantly from the 1.2 percent rate in the first quarter of 2008.
http://chicagobreakingbusiness.com/2010/07/revolving-consumer-debt-down-0-5-in-may.html
Equifax, which has credit files on nearly 200 million U.S. consumers.
Posted Thursday at 2:49 p.m.
Paying down credit-card debt appears to be on the upswing.
Consumers cut their outstanding revolving debt -– overwhelmingly credit cards -– by an annualized, seasonally adjusted rate of 10.5 percent in May, the Federal Reserve reported Thursday. That’s on the heels of an 11.8 percent drop in April. Revolving credit is a line of credit allowing consumers to pay all or part of an outstanding balance, and, as the balance is paid, it becomes available to spend again as credit.
But it might be premature to say that consumers have been scared straight.
The monthly consumer credit numbers tell only part of the story because it’s not yet known how much debt banks or merchants will charge-off, or remove from their books because they’ve deemed it uncollectable. The Fed’s charge-off numbers are released quarterly, and the first quarter’s 10.1 percent rate tied for the highest since the beginning of 1985, the latest period for which figures are readily available.
“Unfortunately we won’t know until the charge-off data comes out for the second quarter whether the reduction was actually due to consumers paying down their debt or the banks writing bad debt off the books,” Odysseas Papadimitriou, a former Capital One executive who is now founder and chief executive of credit-card research Web site Cardhub.com, said.
In the first quarter, for example, about 40 percent of the decline in credit-card debt was due to charge-offs, Cardhub.com said.
And though consumers did pay down $36 billion in credit-card debt in the first quarter, that’s still 23 percent less than they repaid a year earlier, it said.
Another reason for the drop in outstanding revolving debt: lenders have been tighter with credit with existing cardholders, giving them less rope to get in over their heads, a new study shows.
New credit-card limits from banks are just 40 percent of what they were in 2006, according to Equifax. And even year-over-year reductions in average credit limits -– to $4,000 from $4,600 -– means 13 percent less credit available for cards with the same credit score, the credit-data business said.
Finally, consumer bankruptcy filings nationwide totaled 770,117 in the first half of 2010, up 14 percent from a year earlier, according to the American Bankruptcy Institute. The bankruptcy process cancels many debts.
“All these factors suggest there is less credit in the system,” said Equifax, which has credit files on nearly 200 million U.S. consumers.
Indeed, there’s evidence consumers with active cards are paying them down, one study shows.
Though home-equity lines that consumers once used like personal ATMs are shrinking, credit-card debt per borrower is falling nationally, statewide and in the Chicago area, according to TransUnion.
Credit card debt per borrower in the Chicago area averaged $5,119 in the first quarter, down 10 percent from a year earlier and 6 percent from the fourth quarter, the credit-reporting firm found.
“We anticipate the decreasing trend in credit card debt that started in the second quarter last year to continue well past the second quarter this year,” TransUnion director Ezra Becker said.
Meanwhile, personal savings rates as a percentage of disposable personal income were 3.5 percent in the first quarter of 2010, down slightly from 3.7 percent in the year-ago quarter, according to the U.S. Bureau of Economic Analysis. But it’s up significantly from the 1.2 percent rate in the first quarter of 2008.
http://chicagobreakingbusiness.com/2010/07/revolving-consumer-debt-down-0-5-in-may.html
Equifax, which has credit files on nearly 200 million U.S. consumers.
Wednesday, June 23, 2010
SUPREME COURT TO HEAR CHASE’S APPEAL IN CREDIT CARD CASE
The Supreme Court, taking on a case affecting the rights of credit card customers, agreed yesterday to settle banks’ duty to give advance notice before raising the interest rate they will charge when a card user defaults on a payment, according to a SCOTUS Blog analysis. The Court granted certiorari despite the advice of the federal government that the case should be returned to lower courts to consider the Federal Reserve’s views. The government suggested that the case had little continuing importance, but bank card-issuers disagreed. A series of lawsuits, aimed at perhaps half of the entire credit card industry, followed a Ninth Circuit ruling that a customer had to be notified in advance if a card issuer was going to raise a rate due to delinquency or default — even though the contract with the issuer already had indicated that such a change would follow. Chase Bank USA (now a part of JPMorgan Chase & Co.) took the case on to the Supreme Court, saying that it was already clear that the Federal Reserve did not require any such notice. (In 2009, the Fed, later backed by a new law from Congress, imposed a 45-day advance notice requirement before implementing a default rate increase, but that only applies to increases that would go into effect after last August, and not the ones at issue in Chase Bank USA v. McCoy, et al., 09-329.) The case will be heard and decided in the term starting Oct. 4.
http://www.scotusblog.com/2010/06/credit-card-holders-rights/
Friday, June 18, 2010
Why your bank will NOT Negoitate your Credit Card Balance
Past-due credit card accounts initially remain with the original bank for collection. A bank will turn delinquent accounts over to a collection company that will use phone calls to try to collect this money. The phone collectors work on a contingency compensation program.
Bank collectors typically will not discount credit card debt. The banks believe that reducing credit card balances because of individual hardships will only lead to greater defaults once the "word gets out" that one bank or another is giving their customers a break. Banks have determined as a group that they are better off taking a hard line and getting a few people to pay their entire balance than by making settlement reductions and getting lesser amounts from a greater number of customers. Debt negotiation companies do not have significantly better results because banks will not negotiate with anyone.
Banks cannot keep non-performing credit card accounts on their books for longer than 180 days because of banking regulations and accounting rules. After 180 days the bank will turn their delinquent accounts to a broker in order to sell the bad accounts to investors.
The debt brokers sell better quality defaulted bank debt for 5% to 7% of face value. The investors in aged credit card defaults then hire their own debt collection companies to collect what they can on a contingency basis. Attorneys may buy debt, and some collection attorneys participate in credit card account investment groups. The attorney groups are more aggressive and more likely to file a lawsuit soon after purchasing accounts.
The credit card investors are much more likely to settle debt balances because they pay little for the delinquent accounts. My friend says that his investors are very happy to recover anything more than 20% of the face amount of delinquent credit card debts. Debtors and debto negotiation companies can reach favorable settlements with credit card account investors.
Therefore, debtors should not expect to successfully negotiate credit card balances outside of bankruptcy until the account has been delinquent at least 180 days. If you get notice that the account has been assigned to another owner after 180 days the bank has probably sold the account to an investor. At that point, you have a good chance to settle your debts for a small percentage of the amount due especially if you can offer a cash settlement.
Bank collectors typically will not discount credit card debt. The banks believe that reducing credit card balances because of individual hardships will only lead to greater defaults once the "word gets out" that one bank or another is giving their customers a break. Banks have determined as a group that they are better off taking a hard line and getting a few people to pay their entire balance than by making settlement reductions and getting lesser amounts from a greater number of customers. Debt negotiation companies do not have significantly better results because banks will not negotiate with anyone.
Banks cannot keep non-performing credit card accounts on their books for longer than 180 days because of banking regulations and accounting rules. After 180 days the bank will turn their delinquent accounts to a broker in order to sell the bad accounts to investors.
The debt brokers sell better quality defaulted bank debt for 5% to 7% of face value. The investors in aged credit card defaults then hire their own debt collection companies to collect what they can on a contingency basis. Attorneys may buy debt, and some collection attorneys participate in credit card account investment groups. The attorney groups are more aggressive and more likely to file a lawsuit soon after purchasing accounts.
The credit card investors are much more likely to settle debt balances because they pay little for the delinquent accounts. My friend says that his investors are very happy to recover anything more than 20% of the face amount of delinquent credit card debts. Debtors and debto negotiation companies can reach favorable settlements with credit card account investors.
Therefore, debtors should not expect to successfully negotiate credit card balances outside of bankruptcy until the account has been delinquent at least 180 days. If you get notice that the account has been assigned to another owner after 180 days the bank has probably sold the account to an investor. At that point, you have a good chance to settle your debts for a small percentage of the amount due especially if you can offer a cash settlement.
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