Consumer credit dropped much further than was forecast, with the decline led by significant drop in credit card debt. Since 2002, credit card delinquencies fell to their lowest rate. As Americans save more and borrow a whole lot less, desperate credit card companies are coming up with new ways to gouge customers. New credit card rules aimed at curbing the usurious behavior of credit card companies may be giving some of their consumers a false sense of security.
Consumer credit drop will exceed forecast
A Federal Reserve report that was released on Thursday showed that consumer credit dropped at an adjusted annual rate of 4.5 percent in May–the fourth consecutive month of declining credit. Revolving debt, which includes most credit card debt, dropped by 10.5 percent ($ 7.3 billion) in May, as outlined by the Fed’s report. Non revolving debt fell by $ 1.8 billion in May. It was reported by Business Week that economists’ projections in a Bloomberg survey ranged from a decrease of $ 5.2 billion to an increase of $ 2 billion in May. Consumer credit increased only twice since 2008. Consumer spending, which accounts for about 70 percent of the economy and is what The US is counting on to revive the economy, can be weak as Americans pay down their debt.
Credit card delinquencies drop as well
With consumer credit, credit card delinquencies are declining. The American Bankers Association (also known as the ABA) reported that late payments for bank credit cards fell in the first quarter to the lowest level in eight years. Market Watch reports that bank card delinquencies–card payments at least 30 days overdue, fell to 3.88 percent of all credit card accounts in the first quarter, compared with 4.39 percent in the fourth quarter of 2009. Since 2002, the credit delinquency rate has been the lowest. They also said that overall consumer loan delinquencies declined, but only job creation will bring further improvement.
Credit card rules that are new and will be broken
Revenues are declining for credit card companies. But even with new credit card rules that are designed to protect consumers going into effect next month, credit card companies are trying harder than ever to burn customers with creative new fees. Banks can be able to get around new rules. For example, new rules cap late fees at $ 25 and do away with inactivity fees, but now more credit card companies are charging annual fees.
Hope you won’t notice – credit card companies
When it comes to the new credit card rules, consumers may think that credit card companies can’t raise interest rates on existing cards anymore. But in reality, they can do anything they want with new balances, as long as they give 45 days’ notice. If your credit card business sent you a letter that you didn’t open a when back and you also see your rate of interest skyrocket on your latest charges, that’s probably what happened. Plus, credit card companies can nevertheless cut credit limits and close any of their credit cards without advance notice, which will really hurt a credit score.
Always open credit card company mail
Many of the other credit card companies have lately hiked balance transfer fees; cash till payday fees and foreign transaction fees. Gerri Detweiler told CNN that read the mail you get from your credit card company is more significant now than ever. automatically assume its junk mail, since you really only have the 45 days to opt out if you actually read the fine print. And as all of the credit card companies become more desperate, they will not only raise existing fees but create all kinds of new fees.
Discover more information here:
Businessweek.com
businessweek.com/news/2010-07-08/consumer-credit-in-u-s-declined-more-than-forecast.htmlv
Marketwatch.com
marketwatch.com/story/credit-card-delinquencies-fall-to-8-year-low-aba-2010-07-07?reflink=MW_news_stmp
CNN Money.com
money.cnn.com/2010/06/30/news/economy/credit_card_act_new_rules/index.htm?postversion=2010063007
