The National Foundation for Credit Counseling (NFCC), a viable alternative to hiring debt settlement companies, conducted an online poll of 2400 during the month of October, regarding debit card fees. Only three percent of responders would continue to use their debit card as usual if they were charged a fee.

Results

They were asked “If my bank were to impose a fee related to debit card use, I would…” Here is how they responded to the five choices: read more »

It is important to be aware of what is in your credit report and make sure the information is accurate.  This is your right under the Fair Credit Reporting Act (FCRA).   It is another thing to try to remove negative information that you know is correct – that is illegal.

The Federal Trade Commission (FTC) charged the operators of a credit repair company in Texas, RMCN Credit Services, of violating the Credit Repair Organizations Act.  The FTC complaint, which can be seen here, alleges the company made false statements to the credit reporting agencies and charged retainer fees of $2,000 to the consumers for services. RMCN advertised a six-month program to improve consumer’s credit reports and, according to the FTC, did not show the consumers the letters sent to the credit reporting agencies disputing all the negative information on the consumers’ credit reports.   Even after the investigation was completed by the credit reporting agencies and information was verified with detailed payment data, RMCN continued to send the dispute letters. read more »

The latest data from the Federal Reserve G-19 Statistical Release indicated that consumer credit dropped in August 2011, which was the most in one year. Total consumer credit was $2.4449 trillion in August 2011; compared to $2.4544 trillion in July. The decrease was $9.5 billion or -4.6% from July 2011, compared to an $11.9 billion increase in July 2011.

Non-revolving debt (credit cards)

Most of the decrease was attributed to non-revolving credit, which decreased by 5.2 percent or $7.23 billion from July 2011; compared to a rise of $15.48 billion in July 2011.  This was the largest decline since August 2008. Non-revolving debt included student loans, auto loans and mobile home loans.  Loans secured by real estate, such as home mortgages and home equity lines of credit, are not tracked for this report. read more »

PriceGrabber, a division of Experian (one of the three credit reporting agencies), conducted their first winter holiday shopping survey.  It was conducted from September 7 to 15, 2011 on 3,070 U.S. online shoppers.  Almost all plan to spend the same or less than last year and are looking for bargains. Approximately 49 percent of those surveyed plan to spend the same amount in 2011 as they did in 2010, 45 percent plan to spend less and 7 percent plan to spend more.  Most (68 percent) attributed the economic climate to their spending. read more »

Equifax, one of three consumer credit reporting agencies that houses over 200 million consumer credit reports and markets and sells consumer credit scores, released their latest National Trends Report the end of September. Equifax used data from their consumer and business databases to provide consumer credit information on the following markets: auto, banking, credit cards, mortgage and student loans. The study showed growth in auto and bankcard. There was more new credit available in the first half of 2011 (January thru June 2011) compared to the last two years.  There was $370 billion in new credit available from January to June 2011, compared to $327 billion in the same period in 2010, and $338 billion in the same period in 2009. read more »

Recording machines across the nation are being clogged with prerecorded phone calls from companies that claim to be able to negotiate significantly lower interest rates with your credit card issuers, if you just pay them a fee first. According to The Federal Trade Commission (FTC), the nation’s consumer protection agency, consumers who get these interest rate reduction robocalls should listen to them with extreme skepticism, and delete them. Many are scams.

The companies behind the sales pitches claim to have special relationships with credit card issuers. They guarantee that the reduced rates they offer will save you thousands of dollars in interest and finance charges, and will allow you to pay off your credit card debt three to five times faster. They claim that the lower interest rates are available for a limited time and that you need to act now. Some even use money-back guarantees as further enticement. (The FTC frowns heavily on guarantees) read more »

Citigroup mailed 346 million pre-approved credit card offers in third quarter 2011, according to Mail Monitor, a unit of research firm Synovate.  This is more than the population of the U.S., which is currently 310.6 million.  According to FICO, 200 million adults have enough credit information to generate a credit score.  Obviously, consumers are receiving more than one offer, since not all 200 million have credit scores that would qualify them for the credit card. In addition, Citigroup is also being more selective credit-wise of who receives the offer, which is usually the segment that doesn’t need any additional credit.

According to Synovate, credit card issuers are beginning to increase their solicitations after hitting their lowest volume in 2009 – the lowest in 17 years.  The proportion of households receiving the mailings has decreased and the credit qualifications have changed drastically, only those with good to excellent credit are receiving the offers. In 2011, 59% of households are receiving at least one credit card solicitation mailing a month, which is below the 10-year high of 75% and decade average of 65%. read more »

I want to clarify the myth about credit utilization percentages and credit scores.  I have heard and read inaccurate advice regarding charging everything on one credit card verses dividing it up among many cards.

First, what is credit utilization? Credit utilization is how much of your available credit limits on credit cards you currently have used up, expressed as a percentage.  Credit utilization is calculated for two categories, revolving and installment.  Revolving accounts are credit cards that don’t require payment in full and installment accounts are mortgages, auto loans and student loans.  For credit cards, utilization is how close you are to your credit limit.  For installment accounts, it is based on how much of your loan you have paid off.

Indebtedness represents 30% of your credit score, which is the second most important factor.  Both installment and revolving utilization are included in the score, along with individual account utilization. read more »

TSYS, a global payments processor, and Mercator Advisory Group, a research firm, conducted an online survey of more than 1,000 debit card users whose cards were issued by a financial institution. They were asked about their payment choices, debit card usage and feedback on being charged fees for debt card usage.

These questions were asked to determine how consumers will react to banks charging for debit cards.  Some financial institutions plan to charge for debit card usage in reaction to the Durbin Amendment to the Dodd-Frank Act, which becomes effective on October 1, 2011.  This amendment sets a cap on the fees banks can charge merchants for swiping debit cards issued by the bank.   The fee is half of the amount the banks received previously, and some banks are charging consumers for debit card usage to make up for the loss.

Those surveyed preferred to use debit cards for purchases and credit cards were a distant second. If they stopped using their debit card, most would use cash instead of credit cards.  More than half would close their checking account or stop using their debit card, if they had to pay fees to use it. There was no difference in responses by age, income or gender. read more »

Debit cards are being used more and more by everyone, especially the 18 to 24 age group (although with banks charging fees for debit card use, we’ll see if this changes).  This makes sense, because this age group doesn’t have as much credit. Others just want to stay out of debt and pay off their credit cards.

When should you use your debit card versus credit card? First, what is the difference between them? A debit card is connected to your checking account and is considered cash. A credit card is not connected to your checking account and you pay at a later time.

Debit cards are more convenient to carry than cash. You need to make sure you record everything you spend, so you don’t bounce checks and incur fees.  Since debit transactions are taken out of your banking account almost immediately, there is no float period.  If you have a dispute on merchandise, it is much more difficult to negotiate because the merchant has received your money, and debit cards don’t have dispute processes like credit cards. read more »