Credit card rates hit a 13-year high
Posted on January 31st, 2011
Banks have pushed up average credit card rates to the highest level in 13 years, turning the screw on customers battered by soaring living costs.
Families reeling from higher fuel, energy and food bills are being squeezed ’till the pips squeak’, critics said.
The average credit card interest rate has hit 18.9%, despite the Bank of England’s base rate having been at a 300-year low of just 0.5% for nearly two years.
The last time the average rate was so high, in February 1998, the gap between it and the Bank of England base rate was 13.85%. Today it is 18.4%.
Some banks, including those majority-owned by the taxpayer, are effectively charging more than 50%, once annual fees are taken into the equation. This is delivering massive profit margins to the finance giants.
Tags: Card Rates, Credit Card, Credit Card Rates, High
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Rental History to Be Included in Credit Reports
Posted on January 27th, 2011
Credit bureau Experian announced last week that positive rental history will be included on credit reports going forward.
The move should help underbanked consumers, such as college students and recent immigrants, build credit history.
In the past, only subsets of negative rental activity were included on credit reports, so consumers’ credit scores could only be hurt by their rental history.
The company said one-third of the country rents and argued that on-time rental payments should be included to reflect the “true creditworthiness” of those who pay on time each month.
Banks and lenders also stand to benefit from the change, as they’ll be able to update their underwriting procedures to automatically capture a consumer’s rental payment obligations from a credit report, instead of inputting it manually.
They’ll also have a more accurate understanding of a consumer’s total monthly obligations to assist in making future credit offerings.
Experian noted that the addition of positive rental history on credit reports will boost credit scores for more than one in three consumers in the highest risk VantageScore® score band to at least the next highest score band.
VantageScore uses both a number and letter grade (A, B, C, D or F), and has a credit score range of 501-990.
It’s unclear if the more popular Fico score will utilize positive rental history, but it’s fair to say it would make sense.
All the more reason to ensure you make your rent payments on time each month.
Fewer Account Write-offs Predicted
Posted on January 25th, 2011
Consumers are starting to handle their finances better, which has resulted in lower write-offs, according to a report by six major card issuers. Write-offs, accounts 180 days past due that are deemed uncollectable, peaked in the second quarter at 10.66%, according to Federal Reserve statistics. In the two years prior to the recession, they averaged 3.82%.
Projections are that there will be fewer write-offs in the coming months due to the fact that the weakest borrowers have already been written-off over the last few years. Between October and November, Citi Group led the way with the biggest decline in write-offs, falling from a little more than 1.5%. American Express saw a drop from of .3%. While Discover Financial Services said its write-offs fell .11%; Bank of America Corp. write-offs fell to .23%.
Two issuers saw a rise in write-offs. Capital One showed an increase of .30%. J
Can I correct a mistake on my credit file?
Posted on January 24th, 2011
If there’s a mistake on my credit score how can I correct it?
James Jones, from Experian, replies: ‘Significant mistakes on credit reports aren’t very common but they can of course happen.
By law the information on your credit report should be accurate and up to date. If do you disagree with something on your report you should attempt to rectify it in one of two ways.
Your first option is to contact the organisation that registered the data in the first place.
In most cases this will be a bank or other lender. If they agree with you, they will amend the files at each credit reference agency they have sent the data to.
Alternatively, you can get back in touch with the credit reference agency you obtained your report from and raise a data dispute with them.
Tags: Credit, Credit File
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Best Credit Card Practices Under the New Laws
Posted on January 24th, 2011
In the past, the best credit card practices have mostly revolved around cautious spending. The recipe seems simple enough: use your credit card carefully, make your monthly payments, and keep your balance relatively low. That way you have your card if you need it and you don’t have to worry about going into debt.
In this day and age, though, credit card companies are — like everyone else — increasingly worried about the economy, and the new CARD Act doesn’t help matters. By limiting the cards’ abilities to make random rate increases, the Act has a number of creditors worried about their profit margins.
That could mean big problems for you — unless you know the best credit card practices.
1. Don’t use your card in unusual places.
It seems strange, but using your credit card somewhere you’ve never used it before can lead to its cancelation. Read full post…
Tags: Card Practices, Credit Card, Credit Card Practices, Practices
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Should I Transfer My Credit Card Balance?
Posted on January 24th, 2011
A: Because standard interest rates are so high nowadays, it usually (but not always) makes sense to transfer the credit card balance to a 0% promotional offer. Here are three things to consider…
When deciding whether or not you should transfer a credit card balance, it’s important to remember that there is almost always a fee of 3% to 5% of the balance.
So when asking should I transfer my credit card balance, consider the length of time you plan on having the debt and the current interest rate you are paying.
If your current APR is in the double-digits and you plan on carrying your balance for 6+ months then it’s almost always cheaper to do a balance transfer. However, if you plan on paying off your balance in full within 3 months then it won’t make sense, unless maybe your current APR is in the 20’s.
There is not a single bank that I know of that allows you to transfer a credit card balance internally to take advantage of a promotional offer (i.e. from one
Tags: Balance, Card Balance, Credit Card, Credit Card Balance
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