Quote of the Month:
"From an all-time peak of 3.45 billion mailings in 1998, [credit] card solicitations fell nearly 20% last year to 2.87 billion pieces, according to Mail Monitor, the direct mail tracking service of BAI Global Inc."
| Forecasts & Statistics |
| Product Trends |
| Industry Trends |
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| Rising Inflation Was Forecast Well Before the Markets Tanked |
| Investors who were clobbered by the stock markets' nosedive in mid-April should have been listening to professional economic forecasters. Economists got it right this time when they read the tea leaves in March and early April and found pervasive signals that prices were marching upward. |
| Fundamentals Still Sound, Consumers Still Optimistic |
| The problem for inflation fighters (and consequently equity owners) is that the U.S. economy has remained on a much stronger growth track than nearly everybody expected. Real consumer spending through the first quarter was still on a 5-6% growth track. |
| Will the Equity Market Wealth Effect Work in Reverse? |
| We don't envy Chairman Alan Greenspan and the Fed's Open Market Committee in the coming months. On the one hand, it now seems apparent that inflation is on the rise. Strong underlying demand in an economy where there are few qualified workers left to hire seems to be pushing prices up at last. On the other hand, a significant contributor to the strength in demand is the wealth effect associated with the stunning rise in equity values over the past few years. |
| Continued Surge in Non-Mortgage Borrowing |
| No pessimism was apparent in consumer spending and borrowing decisions through February, 2000. According to the Federal Reserve Board, consumer installment credit outstanding grew at an annualized pace of 15.7% in January and 10.2% in February, the strongest back-to-back monthly gains since the mid-1990s. |
| Final Tally on 1999 Personal Bankruptcies |
| Personal bankruptcies in the U.S. dropped by 8.3 percent during 1999 according to year-end statistics released by the Administrative Office of the U.S. Courts. A total of 1,281,581 personal bankruptcy petitions were filed, of which 909,779 (71%) were Chapter 7 cases. |
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| Card Mailings and Response Rates Continue to Fall |
| It seems that the high-water mark for direct mail credit card solicitations is behind us. From an all-time peak of 3.45 billion mailings in 1998, card solicitations fell nearly 20% last year to 2.87 billion pieces, according to Mail Monitor, the direct mail tracking service of BAI Global Inc. |
| MBNA'S Annual Report |
| MBNA Corp. had another good year in 1999. It continued to rely heavily on serving and developing affinity groups for its credit card. More than 4,500 organizations in the U.S., Canada and United Kingdom endorsed MBNA products to their members. |
| Growth of Zero Downpayment Mortgages |
| Given the exuberant state of the economy, more mortgage lenders have become willing to make mortgage loans that do not require a downpayment. |
| Teenager Credit |
| Parents who would like to educate their children in the wise use of credit without risking their own credit standing may wish to consider the PocketCard issued by a Visa affiliate. |
| Auto Lease Maturities Lengthen |
| According to LTR/8+ published by CNW Marketing Research, maturities on automobile leases rose in 1999 to an average of 42.3 months, up from 41.6 months in 1998 and a low of 40.2 months in 1995. |
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| Online Credit Shopping |
| Two recently released studies address, first, the frequency with which consumers apply for credit online and, second, the effect on consumers' credit ratings of applying for credit online. |
| Growth in eCommerce Auto Financing |
| Within the past year, there has been a remarkable growth in competition within the auto financing industry, according to a recent issue of Auto Financing Update. |
| The Electronic Marketplace |
| Banks, finance companies, and other suppliers of financial services to consumers face some daunting strategic decisions in entering and adjusting to the growth of e-commerce. |
| Loyalty Programs |
| One of the most striking developments in the credit card industry has been the creation and growth of loyalty programs. A report on the meetings of the Electronic Transaction Association in Credit Card News provides insights into this significant innovation in the industry. |
| Identity Theft |
| While the new high-tech world offers many advantages to consumers, it also spawns credit card fraud through identify theft. (See related item on public education in the next section.) In an excellent article in the Independent Bankers, Kelly Chills explains how one scam works and how to help prevent it. |
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| Consumers Union |
| Consumers Union, publisher of Consumer Reports, has published its list of the ten major needs of consumers in the year 2000. |
| Abusive, Costly, Predatory . . . |
| During the past months there has been an outburst of criticisms of the consumer credit industry for its lending practices to inner city or low-income consumers. |