Wednesday, December 3, 2008

Retailers Pull Out All Stops To Get You In Store

NEW YORK (CBS) ― If you're trying to figure out how to pay for everything on your holiday list, this year you have a lot more options. Retailers and credit card companies have found ways for you to shop and save.

Emily Adams usually goes all out on holiday shopping, but not this year.

"It's very important that I watch every single penny that leaves my wallet," Adams said.

In fact, 59 percent of consumers are planning on downsizing their spending this holiday season. To entice you to open your wallet stores and credit card companies are getting creative. Some retailers are offering up to 25 percent off on an entire purchase if you open a new card.

At the Gap, Sears, Old Navy, Banana Republic and Macy's existing card-holders get extra savings, coupons and bonuses.

"If I can get a deeper discount this season because of the tough economy, I probably will," Adams said.

Kmart and Sears recently rolled out a zero percent interest and zero payments until June 2009 program. Online payment sites like E-bill-me, Google checkout and Pay Pal all are working with major retailers to offer instant holiday rebates, discounts and even deferred payments.

"Not having to pay anything for 90 days is great, but just be sure you have the money at the end of the 90 days because you'll get whacked again on penalties and interest," said Sally Greenberg of the National Consumers League.

But there is an impact on your credit when choosing these options; your score may fall. And check interest rates closely because they may rise after a low introduction and store cards typically carry much higher rates, as do many traditional credit cards.

"Credit card issuers raising interest rates on customers who have never been late on a single bill and these interest rates are sometimes 22, 29 even 36 percent," said Gerri Detweiler of

If you want to avoid paying with plastic altogether layaway is making a comeback at major retailers, as well as online.

If you don't break out the store card, traditional credit cards are also offering rewards for holiday shopping like bonus frequent flier miles and points. So check with your Mastercard and Visa issuers.

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Monday, December 1, 2008

Christmas shopping? Be careful!

The month ahead will be busy for criminals as well as for holiday shoppers, District Attorney Lynne Abraham and Deputy Police Commissioner Kevin Bethel warned yesterday.

"There is always somebody looking to separate you from your money; the best course of action is prevention," Abraham said at a news conference at which she and Bethel shared strategies for shoppers to protect themselves.

While Black Friday launched one of the busiest shopping weekends of the year, so-called Cyber Monday - when many holiday shoppers hit the Internet in search of deals this Monday - will offer plenty of opportunities for computer-savvy thieves, she said.

"Nobody is safe from thieves or cyber-crime," Abraham said. "If your identity is stolen, you could spend 18 months to three years in credit purgatory. Prevention is critical."

Her online-shopping tips:

* Use a credit card instead of a debit card. Most credit cards cap liability at $50, while there may not be a cap with a debit card, which is an open invitation for hackers to loot your entire bank account.

* Dedicate one credit card for online shopping only, so that you can more easily track your purchases - and unauthorized purchases.

* Never give out your Social Security number.

* Delete unsolicited bulk e-mail solicitations, which could be computer viruses or scammers. Instant-credit offers and "free" travel vacations often are scams, too.

* Beware of high-pressure sales and online auctions. They may be legal, but you may overpay.

In stores, she said, shoppers also should exercise caution:

* Guard your credit cards closely. A shifty retail clerk or restaurant server could swipe your credit card on a "wedge," duplicating the information on your credit card's magnetic stripe.

* Don't put your purse in a shopping cart; zip it closed, strap it around you and tuck it under your arm. Or carry your wallet in an inside pocket. Passers-by who "bump" into you might instead be skilled pickpockets.

* Stow purchases in your trunk so that they can't be seen and stolen. Park in a well-lighted area. Avoid parking next to vans, in which muggers may be hiding.

* Always accompany young children to the restroom, where unforeseen danger may lurk.

* Going-out-of-business sales: Check a company's policies before buying from one that's poised to close. Many purchases are final sales, no returns or exchanges. Also check to see if the company will honor coupons and previously purchased gift cards.

* Gift cards: Many have expiration dates and progressive fees.

Abraham and Bethel also urged shoppers to avoid these holiday scams:

* Name-a-Star. While it sounds romantic and has become popular, only the International Astronomical Union names stars - and they are not for sale.

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Thursday, November 20, 2008

Troubles Are Deepening At Target's Credit-Card Unit

NEW YORK -(Dow Jones)- New data indicate that delinquencies for Target Inc.'s (TGT) securitized credit-card portfolio are rising at historic rates and the trend is accelerating.

The sharp deterioration raises questions about a stepped-up role by partner JPMorgan Chase & Co. (JPM).

Target says it can hold out at least through next month before the banking giant would begin exercising its right to step in and mandate underwriting and risk-management changes.

Delinquencies for Target's $8.71 billion securitized credit-card portfolio in October jumped to a rate of 8.1%, or by 230 basis points, to $709 million, on a year-over-year basis. This is the third month in a row that year-over-year delinquencies have risen at such a historically fevered pitch, Credit Suisse said.

Around 20%, or 47 basis points, of the overall 230 basis-point rise came just last month.

The 8.1% total is the portfolio's highest monthly level since at least 2001, industry data show. It came as net charge-offs for Target's portfolio topped 10% for a second consecutive month, coming in at 10.2%. Charge-offs rose to 10.1% in September.

And problems have been getting worse.

Aggregate collections fell to an 11% rate of average receivables in October, down 281 basis points from a year ago.

Roughly $333 million, or 4%, of average receivables are four or more payments behind.

A little over $150 million, or 1.73%, of average receivables had experienced three missed payments at October's end.

Target also reported that customers with two missed payments account for $225 million, or 2.59%, of average receivables.

The figures are contained in a regulatory filing by Target on Thursday and give a fuller picture of how the company's credit-card operations are boring a major hole into the company's profitability.

Target on Monday said third-quarter net income dropped 24% on reduced profit from the credit-card division. Bad-debt expense more than doubled to $314 million from a year earlier as more customers defaulted on credit-card bills.

The deteriorating economy is trouncing the credit-card division's performance and raising questions about whether JPMorgan Chase may take a greater hand in the operation.

Target in May sold 47% of its stake in the credit-card unit to JPMorgan Chase for $3.5 billion. Under terms of the sale, the portfolio's performance must remain "sufficiently strong."

If "substantial unanticipated portfolio deterioration" occurs, JPMorgan Chase would gain the right to direct Target's credit-card team to put in place alternative underwriting and risk-management practices until sufficient improvement is seen.

According to Jefferies retail analyst Daniel Binder, Target told him that its "2008 outlook anticipates performance above" the threshold at which JPMorgan Chase can exercise this degree of involvement.

A Target spokeswoman declined to discuss what may occur beyond then, saying only that Target is "firmly in control of our credit-card operations."

A JPMorgan Chase spokeswoman declined to discuss the situation.

Still, 2009 is just over a month away and economic conditions are showing signs of further deterioration. The Federal Reserve on Wednesday said the U.S. economy could contract for as much as a year.

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Monday, November 10, 2008

Solon calls for removal of credit card fees

A lawmaker on Monday called on credit card companies to scrap "unwanted" and "burdensome" surcharges following the recent passage into law of a measure installing a credit information system.

Citing Republic Act 9510 or the Credit Information System Law, Cebu Representative Eduardo Gullas urged 15 member firms of the Credit Card Association of the Philippines (CCAP) to immediately remove annual membership fees and extra charges on late payments.

"Issuers no longer have any excuses to continue penalizing credit card holders with no oppressive extra fees and charges, now that we have a new law enabling them to ferret out bad creditors and effectively reducing transaction costs," Gullas said in a statement.

Signed by President Arroyo last October 30, RA 9510 creates the Credit Information Corp. (CIC), which would ease credit processing and lessen transaction costs for credit card issuers, lenders as well as clients. The new credit information system is also expected to minimize the risk of defaults, with CIC providing standardized information on the credit history and financial condition of potential borrowers.

The CIC would be 60 percent owned by the national government, while the remaining 40 percent will belong to qualified private institutional investors such as industry groups of banks, quasi-banks, and other credit-related associations.

Gullas reiterated that local issuers have been punishing consumers with needless fees.

Apart from annual fees and late payment charges, he said, credit card firms charge users an annual interest rate of up to 42 percent, which is almost four times the 11 percent being assessed by card issuers in the US. In other words, credit card companies in the country charge a 35 percent monthly interest, a huge amount compared to 0.91 percent in the US.

"Also, in the US and other countries, card issuers do not impose annual membership fees. Here, issuers collect anywhere from P750 to P1,200 per principal cardholder, plus an extra P500 for every supplementary cardholder. This is outrageous," Gullas said.

According to the Bangko Sentral ng Pilipinas, credit cards account for 5.5 percent of the total loan portfolio of banks, with credit card issuers reporting a total of P106 billion in receivables as of September, up 22.6 percent from a year ago. This is because more than five million Filipinos routinely use credit cards and the number is growing around 10 percent yearly.

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Tuesday, November 4, 2008

Reform credit-card practices

You know the financial landscape has shifted dramatically when the big banks and consumer groups agree about credit card debt. The banks, with the consumer groups' support, are asking federal regulators for the ability to forgive up to 40 percent of the unpaid debt of their most troubled customers.

Self-interest is at play, of course. Banks are worried that the most indebted card-card holders will walk away from their obligation much as thousands of homeowners have with mortgages they can't afford. A program to forgive some of the debt will make it easier for banks to collect on the other 60 percent. And if a consumer's credit-card problem is partially relieved, chances are better that mortgage payments will be made.

But the quicksand the banks are trying to pull people from is a hazard they themselves created.

The banks have established a credit-card payment structure that maximizes profit for them but drives costs up for consumers with exorbitant interest rates and late fees.

The House this year has passed a reasonable reform bill that takes some of the most unfair edges off the interest rates and late charges.

The Senate has the reform package on its agenda, and should pass it — with the support of the banks. Without more reasonable payment terms, credit-card users will continue to fall into the kind of debt the banks fear.

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Monday, November 3, 2008

DBS on Monday launched a new credit card targeted at owners and senior executives of SMEs.

The DBS World Business Card offers unlimited free access to over 300 airport lounges to enable bosses who now fly economy, instead of business class to enjoy the benefits of the airport lounge without incurring additional costs.

The card, which is by invitation only, also enables bosses to wine and dine their clients at affordable prices at top restaurants in Singapore and overseas.

DBS will send out invitations for the DBS World Business Card to 10,000 of its SME customer base from Monday.

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Sunday, October 19, 2008

Tame Your Credit Card Interest With Transfers

Paying down debt is one of the best steps consumers can take to get through a recession.

What's on your credit card is one of the most important types of debt to rein in. One way to get control over multiple cards with varying balances and interest rates is to transfer your balances to a new card with a lower rate. In fact, many cards advertise balance transfer rates as low as 0% for a set period, which is an appealing alternative to the annual interest rates of 15% or more.

But as is often the case with credit cards, the devil is in the details. If you are planning on a balance transfer to solve your revolving debt issues, here are a few things to consider.

Teaser rates don't last: Thanks to the Federal Truth in Lending Act, credit card companies are required to outline the card's fees and rates in a table called the Schumer Box. While the information has to be present in the table, it can be confusing, given the myriad of rates and percentages included in the summary. When you locate the table (often found under the "Pricing and Terms" section of the card's introductory materials), find the section that describes the balance transfer APR (annual percentage rate). There will be a number of rates listed, one of which is the 0% APR (or other low rate) that first caught your eye. That rate is the teaser rate, and it can last for just a few months or more than a year. After that introductory period, your rate will automatically switch to the card's higher regular rate.

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