Quote of the Month:
"The data pouring out from the 2000 census reveal many important trends affecting the outlook for and marketing of consumer credit."
| Forecasts & Statistics |
| Product Trends |
| Industry Trends |
| Issue Archive |
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| Consumers Are Becoming More Pessimistic |
| Consumers grew increasingly alarmed about declines in their current financial condition during April. Increasing pessimism among upper income households (those with incomes over $50,000 per year) is dragging down various indices of consumer confidence. |
| No Recession Yet According to Small Business Survey |
| Less gloomy news is apparent in a recent survey of 500,000 small business members of the National Federation of Independent Business. The Index of Small Business Optimism fell slightly to 97.8 (1986 = 100) due mostly to declines in capital spending and job openings. |
| Is Attorney Advertising Causing the Bankruptcy Spike? |
| Personal bankruptcies are being filed at a torrid pace across the United States. According to data compiled by Visa's Issuer Risk Notification Service, 458,114 petitions were filed this year during the 16-week period ending April 21, 2001, up 25.8% from the same 16-week period in 2000. |
| Population Trends |
| The data pouring out from the 2000 census reveal many important trends affecting the outlook for and marketing of consumer credit. The census counted 281.5 million Americans, up by 13 percent from 1990 and the largest 10-year increase in our history. |
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| Credit Card Mailings and Responses |
| BAI Global has provided an eleven-year record of the increases in mail solicitations for credit cards and the declining rates of response to those mailings. Last year card issuers mailed over 3.5 billion solicitations, a new record. Response rates also set a new record (low) at 0.6%. |
| Capital One Aiming for Superprime Customers |
| One of the largest contributors to the direct mail surge of card offers last year was Capital One. The company mailed approximately 1 billion offers, or 30% of total direct mail card solicitations in the U.S. |
| Pumped Up GM Card |
| Household Credit Services has picked up 650,000 new customers for the General Motors MasterCard in the year since re-introducing the card with new terms. Originally launched in 1992 the old edition still holds the record for most successful card launch. |
| AMEX Card Unit Records Strong Earnings Growth |
| The Travel Related Services (TRS) division of American Express had net earnings in the first quarter of 2001 of $522 million, up 16% from the first quarter of 2000. TRS revenues were up 8% due to growth in both charge volume and outstandings. |
| Cardholder Identification |
| When an online retailer receives a telephone call from a consumer ordering merchandise and paying for it with a credit card, how does the retailer know that the card really belongs to the caller? For that matter, how does the real cardholder know that his or her card number is being used? They don't. |
| Person-to-Person Payments Over the Internet |
| Another innovation from Europe is the development of a procedure for sending money over the Internet, usually from one individual to another. The system is especially efficient and cost-effective when shipping money from one country to another. |
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| Credit Counseling |
| An important provision of the new bankruptcy law that some commentators have overlooked is the requirement that consumers filing for bankruptcy must first complete credit counseling. While the Senate and House bills differ in some respects, they agree on the requirements for credit counseling before a consumer files for bankruptcy. |
| More Cash for Cash |
| The U.S. Public Interest Research Group has reported that the average charge for using an ATM that does not belong to your bank is now $2.86, almost three times the level in 1999. As the article in U.S. News and World Report points out, there are usually two fees involved: the $1 to $2 for a "foreign" ATM not belonging to your bank, and the $1 to $2 fee that your bank may assess. |
| Credit Education |
| Legislators often pass laws regulating consumer credit as a result of highly publicized "horror cases" in which some consumers have been hoodwinked by an unconscionable credit grantor. (Of course, consumers are also deceived sometimes when they pay with cash.) Basically, such problems arise because the market works. The avaricious creditors and the incompetent consumers find each other. |
| Loan Sharks |
| We have not heard much about loan sharks recently, possibly because they are aging. According to an article in a recent New York Times, John Faraci, 78, and Anthony Geraci, 76, appeared before the Federal District Court in Brooklyn and "pleaded guilty to charges of extorting nearly $15,000 from a Brooklyn restaurateur with interest rates of 3 percent to 5 percent a week." |
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| Exporting Interest and Fees |
| Since the late 1970s, banks chartered in a state by either state or federal authorities have been able to export their interest rates and fees to citizens of other states in which they are not chartered, even if banks chartered in that state would not be permitted to assess those charges. However, a case involving GE Capital's Monogram Credit Card Bank is threatening its ability to export rates by challenging whether a bank is really a bank. |
| GLB Deadline Pushing Some States to Ease Privacy Rules |
| Last year state legislatures across the country were considering more restrictive rules governing the use of personal financial data. Although the privacy fervor has only marginally subsided, a more practical mood seems to have taken hold in several states. |