| Forecasts & Statistics |
| Product Trends |
| Industry Trends |
| Issue Archive |
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| Higher Interest Rates and Oil Prices are Slowing the Global Economy |
| We are in one of those odd economic environments where bad news is good news. And, the good news is that rising interest rates and some unexpectedly sharp oil price hikes are putting the brakes on the global economy. |
| Consumers are Pragmatic but Optimistic |
| The University of Michigan's Index of Consumer Sentiment slipped a bit in August but remained above levels witnessed one year earlier. In another sign of a slowing economy, consumers reported the smallest income growth in more than three years in the August, 2000 survey conducted by Michigan's Survey Research Center. |
| Consumer Credit Growth Slows |
| As consumers cut back on their third quarter spending, the growth in their auto and credit card balances also slowed. Federal Reserve Board statistics show that non-mortgage borrowing slowed in July to a 7.7% annual pace (seasonally adjusted). |
| Auto Sales in 2000 Likely to Set Another Record |
| Economists and auto industry analysts gathered at the Federal Reserve Bank of Chicago's seventh annual Auto Outlook Symposium this summer to forecast auto sales and industry trends. The consensus was that sales of cars and light trucks this year will likely hit 17.3 million units, about a half a million more units than last year's record-setting pace. |
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| Frequency of Leasing Drops |
| CNW Marketing/Research reports that during the first six months of 2000 personal-use leases of domestic new motor vehicles fell to 28.9 percent from 31.0 percent in the same period of last year. Table also shows that sales of new domestic motor vehicles rose to 6.14 million from 6.02 million in the previous six-month period, an increase of 2.1 percent. |
| Sears is Shifting Credit Customers to MasterCard |
| In a bold move designed to ignite its receivables growth, Sears, Roebuck and Co. has begun asking its proprietary cardholders to convert to its general purpose MasterCard product. If successful, the move could have major implications for other bank card issuers since the Sears private-label card base has $26.8 billion of receivables, ranking it seventh in the nation among all credit card issuers. |
| Virtual Credit Cards |
| MasterCard International is marketing a credit card restricted to use on the Internet. It is designed to have a separate credit line so that it does not absorb a credit line on an existing MasterCard. |
| Comfort Levels Among Credit Card Holders |
| BAIGlobal reports findings from its recent survey of credit card holders regarding their willingness to use their cards. For the entire sample of credit card holders, 81 percent said that they were comfortable when using their card in person. |
| American Express Offers Safer Online Shopping |
| American Express has announced a new service to protect the personal privacy of its cardholders. In a full-page advertisement in the New York Times it announced a "new way for Cardmembers to shop online using a random unique number for each purchase they make. |
| Aggressive Solicitations |
| In spite of the increasing pressure on their profit margins, banks and American Express are still soliciting new customers with low, or even zero teaser rates. A tabulation of 33 bank solicitations in Credit Card News shows only six with no annual fees, of which three were different cards issued by Capital One. |
| Residential Mortgage Loans |
| Mortgage loans on new homes are more costly and less generous than in previous years. Table shows that since 1997 interest rates have increased to 8.20 percent from 7.76 percent, and the loan-to-price ratio has declined to 78.0 percent from 80.4 percent. |
| Need a BIG Mortgage? |
| Readers who need a home mortgage have a new source |
| $43 Million Scam |
| The Federal Trade Commission (FTC) reports that a California firm has bilked consumers out of $43 million by assessing charges on their debit and credit cards for X-rated shows on the Internet that they had not accessed and for purchases and services that they had not ordered. |
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| The Impact of Casino Gambling on Personal Bankruptcies |
| A new study conducted by the Credit Research Center at Georgetown University's McDonough School of Business examines the role that casino gambling may have played in explaining the rise in personal bankruptcies. |
| AOL and Citigroup Join Forces |
| America Online Inc. (AOL) and Citigroup have reached a long-term arrangement to offer a variety of financial products and services to consumers. It is a good fit. |
| Commercial Banks' Investment in Consumer Credit |
| The Federal Reserve has recently published data showing the percentages of commercial banks' assets that they have committed to consumer and residential mortgage credit. The data are provided for each year, 1990-1999. |
| First Union Drops Out |
| In last month's Spotlight we noted that the "current buoyant economy has not been as helpful to the bank credit card business as one might expect." Further evidence of the stress is provided by the report that First Union Corp. Charlotte, NC, has sold its $4.4 billion credit card portfolio to MBNA Corp. for an undisclosed purchase price. |
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| U.S. v. Visa/MasterCard |
| August 22 marked the end of two months of testimony and evidence in the antitrust case against Visa and MasterCard. The Department of Justice (DOJ) filed the case nearly two years ago. |
| Bankruptcy Lawyer Disbarred |
| The Associated Press reports that the New York State appeals court has disbarred Andrew Capoccia for continuing "to employ the courtroom strategy of filing claim upon claim against opponents even though he had been warned that they were often 'without merit' and sometimes bordered on the frivolous." |
| Payday Loans Subject to TILA |
| The Federal Reserve Board's revision of the Truth in Lending Act (TILA) to cover payday loans became effective October 1. There are several significant changes affecting firms in that field. |
| Bankruptcy Reform in UK |
| The British government has released a paper, "Bankruptcy—A Fresh Start" that has caused considerable concern to managers of firms extending credit in the UK. The major change proposed is to shorten the discharge period from three years to six months for "good" bankrupts. |