12 posts categorized "New Research"

March 07, 2011

Georgia cities lead the nation in credit card debt

  Savannah4

The reason for the founding of Georgia, the United States’ thirteenth and final original colony, is unclear.  Some say that the state was founded for and settled by debtors. However, the truth is that Georgia’s founder, James Oglethorpe, only proposed this idea.  After a charter for the colony was approved by King George II in 1732, there were already enough people to settle the southern territory without debtors.

Fast forward about 279 years to today.  One would think that Georgia was indeed founded as a debtors colony and that the state's current denizens share their forefathers’ inclination to assume too much debt. 

According to new research released by Experian, one of the major U.S. credit bureaus, three Georgia cities are among the top 25 U.S. cities where consumers carried the most debt on their credit cards in December 2010.  They are Atlanta, Augusta, and Savannah, the very site where Oglethorpe chose to begin his settlement.  Despite a decrease from the previous year, debt amounts still remain relatively high.  Atlanta’s average bank credit card debt is $4,690; August is $4,575; and Savannah is $4,570.

James Oglethorpe, moved by witnessing first-hand the atrocities of debtors prison in London, dreamed of starting an American colony that gave debtors a chance to start anew. It did not happen quite as he planned.  Nevertheless, now that Georgia cities lead the nation in credit card debt, it seems as if Oglethorpe’s dream did come true, but with an ironic twist.

Read the list of the 25 top cities with the most credit card debt at CNNmoney.com.

January 20, 2011

Prepaid cards are the new axis of credit evil

  Twilight-MasterCard

A few weeks ago, I praised the launch of the Kardashian prepaid card.  Now, much to my chagrin, I am eating my words.  And the Kardashians are being sued for $75 million for withdrawing their endorsement of their “Kard”, which failed miserably and drew a wave of objections for its exorbitant fees. 

Despite the Kardashian debacle, prepaid cards are growing in popularity. According to the USA TODAY, “The total amount of branded prepaid cards is expected to exceed $440 billion by 2017, quadruple the estimated value in 2009, according to independent research commissioned by MasterCard.” Put another way, when the tween stars from the movie “Twilight” are used to sell financial services, something big is brewing.    

As if on cue, consumer activists and politicians have refocused their criticism from traditional credit cards to prepaid cards. Consequently, the relatively good image of prepaid cards is fading fast. No longer are they being touted as a safe or responsible alternative to unsecured credit cards, especially for consumers aiming to build credit. 

Opponents of prepaid cards highlight the excessive fees for features that are normally free with more mainstream products.  For example, there are fees to load the card, withdraw money, maintain an active account, and even cancel the card. Also, prepaid cards are not heavily regulated and do not fall under the Credit CARD Act. One of the most expensive cards (endorsed by popular radio host Tom Joyner) charges an $8.95 monthly fee to keep the account active.

On the other hand, proponents argue that having such cards are better and less expensive than using a check cashing business, a popular option for the unbanked.  Furthermore, they tout the flexibility of the cards to pay bills and make everyday transactions. 

In short, despite the recent spate of criticism and political cries for regulation, I still think the concept of a prepaid card is solid.  Moreover, there are good options on the market. In fact, Walmart offers a product with very low fees. As is the case with many credit products that thrive on misdirection and deceit, we must better educate all consumers, especially the most vulnerable ones, about the dangers of really bad products. Otherwise, the bloodsucking vampires will prevail.

Read more about this topic at USA TODAY.

November 30, 2010

Just when you thought you knew something about mortgage securitizations

  Mortgageflowchart

If you ever needed more proof of just how complicated the mortgage crisis is because of securitization, you’ve got it. Try to follow all of these transactions for one mortgage without getting a headache. It took one year to put together this flow chart.

View a higher resolution chart with an introduction at ZeroHedge.com.

November 25, 2010

The shocking stats of credit card debt in America

Ccgraphic
Instead of reading the esoteric reports provided by the Federal Reserve or financial analysts, check out this user-friendly chart which is an excellent overview of credit card debt in America.  View the entire chart at CreditSesame.com.

 

November 21, 2010

Survey: Seniors too embarrassed to ask for help, a major cause of financial trouble

Seniors

One of the biggest obstacles to achieving good financial health is the lack of communication.  Put another way, a great majority of Americans does not like to talk about money.  Crippled by feelings of shame and misguided optimism, Americans with financial problems often do nothing to improve their lot, hoping for a miracle.

We all know that the first step to overcoming a problem is admitting that there is a problem. As trite as the saying is, it is true, especially when it comes to extirpating bad financial habits.  Fewer and fewer adults are willing to take that difficult first step of acknowledgement.

As evinced in a recent survey, this is increasingly the case with retirees who find themselves in dire financial straits.  Members of the so-called Greatest Generation continue to increase their credit card debt with no intention of paying it off before they die.  They ignore the warning signs of financial disaster, blaming the faltering economy or simply giving up.

An insightful article released in USA Today provides fresh data about this trend and stresses the importance of communication when fixing problems of personal finance.

October 05, 2010

Credit card delinquencies hit 9-year low

More Americans who’ve been behind on their bills are catching up, according to a quarterly report from D.C.-based American Bankers Association.

Read more about this as reported by The Washington Business Journal.

July 15, 2010

Who's right? The American Banker’s Association or The Standard & Poor’s/Experian Consumer Credit Default Index?

Who is right?

I am stumped.  Perhaps you can help me explain what seems like a contradiction. 

CNNMoney.com recently published the following headline: Credit card delinquencies fall to 8-year low.  This story is based on a report by the American Banker’s Association (ABA).  On the other hand, The New York Times published an article about how credit card default rates are still rising to record levels.  This story is based on a study completed by The Standard & Poor’s/Experian Consumer Credit Default Index. 

The ABA posits in the CNN article that “About 3.88% of bank credit card accounts were past due by 30 days or more in the first quarter of the year.”  However, The Standard & Poor’s/Experian Consumer Credit Default Index indicates, as reported by the New York Times that “In the three months through April the default rate on credit card loans had climbed to 9.14 percent, the highest since the index began to be calculated in 2004.” To be in default, an account must be at least six months behind, unless the lender has already written it off or the borrower has filed for bankruptcy.

Perhaps I am comparing apples to oranges. I can think of two reasons: 1) The ABA is looking at “bank credit card accounts”, perhaps a more restricted data set, and 2) the definitions of past due and in default differ.  But, do these reasons--and others unbeknown--adequately explain a difference of 5.26 percent?  Intuition tells me that the ABA number should be much higher, perhaps as much as double the 9.14 percentage.

I am sure that the key to resolving my confusion is a better understanding of each organization’s methodology in assessing the data.  However, the discrepancy just does not make much sense to me at all.  

What do you think?

May 22, 2010

Credit card default rates still rising to record levels

Standard & Poor’s/Experian Consumer Credit Default Index

The Standard & Poor’s/Experian Consumer Credit Default Index indicates that credit card default rates are still rising to record levels.  The default rate is now at 9.41 percent, the highest percentage recorded since the index began in 2004.

On a more positive note, as the unemployment numbers continue to improve, indices will begin to reflect an abatement of defaults.  In fact, some indices are already beginning to show the rate slowing down.  Naturally, there will be a lag in indicators as consumers get back to work and begin paying their bills.

Overall, the fact that default rates are so high does not bode well for a speedy economic recovery, which will be fueled, in large part, by a healthy and confident consumer. 

Read more about the newest statistics as reported by The New York Times.

February 09, 2010

Study reveals consumers paying credit cards over mortgages. What this really means.

It's going to get worse.

As soon as TransUnion released its research, news headlines announcing the results multiplied like foreclosures in Detroit. The first headline I saw read: “Consumers Paying Credit Card Over Mortgage”.  I was attracted to the story not because it was shocking, but because it confirmed what I already knew would happen.  Let me explain.  Imagine the following predicament:

Continue reading "Study reveals consumers paying credit cards over mortgages. What this really means." »

April 30, 2009

The numbers don’t lie: a side-by-side comparison of credit unions and banks

Simply put, credit unions are better than banksassuming that you want to keep more of your money.  You’ve heard me say it, but I haven’t provided comprehensive, empirical data that proves it until now. 

This morning, I received a press release by the Georgia Credit Union Affiliates that highlights the major differences between credit unions and banks as reported in a recent comparison index.  For example, in Georgia, the average interest rate for credit cards in 2008 was 11.53 percent for credit unions, compared to 12.41 for banking institutions. Furthermore, a Georgia credit union member who finances a new $25,000 car through a 60-month loan will likely save almost $400 in interest the first years as compared to a bank. 

If you are a die-hard numbers person, read the cogent excerpts from the report below, proving that credit unions in Georgia are better options for consumers: 

Continue reading "The numbers don’t lie: a side-by-side comparison of credit unions and banks" »

February 09, 2009

Beware: These mortgage companies can hurt your credit

Since the launch of this web site just three weeks ago, I have received thousands of messages detailing your credit challenges.  From rising interest rates to credit card limit reductions–I have seen it all.  This valuable information has provided my team and me with a good sample to determine helpful theories.  The NewCreditRules.com team takes the data you provide to us and uses statistics to find patterns, strong correlations, etc. that will help you better manage your credit. 

Continue reading "Beware: These mortgage companies can hurt your credit" »

January 08, 2009

Federal Reserve Bank study proves credit card redlining

Graph While online recently, I came across a compelling blog created by a group of attorneys.  One of the lawyers who commented on my situation with American Express provided a compelling argument against the discriminatory practice of assessing one’s credit worthiness based on where he or she shops or lives.  The lawyer provided a link to a cogent study completed in February 2008 by a brilliant economist and Harvard alumnus who works for the Federal Reserve Bank of Boston.  Researcher Ethan Cohen-Cole provides a thorough mathematical analysis that translates into strong evidence proving the practice of credit card redlining.   In short, he concludes that credit card redlining is alive and well.  Cohen-Cole’s e-mail is in the report. Feel free to contact him. I did, and he was eager to help.  

You can read the study online at the Federal Reserve’s web site.  

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About Me

Greetings! I’m Kevin D. Johnson, a business owner who has recently assumed the role of consumer advocate and internet activist. Atlanta, Georgia is my home.

My Story

Upon returning from my wonderful honeymoon in Jamaica in October 2008, I received what I thought was an ordinary American Express bill, but to my surprise it was a disappointing letter informing me that my credit line was reduced by about 65% for a highly suspicious and discriminatory reason. Considering my excellent credit score and pristine payment history, it just didn’t make sense. However, what does make sense are the unfair and insidious policies that I have uncovered when asking why. It is time to change them.

Good Morning America tells my story.

The Goal

I created this web site to document and share my challenging journey to change what is wrong, unfair, and unjust in the credit card industry. The ultimate goal of this web site is to inform consumers of ways to stand up for themselves against treacherous business practices and to educate consumers about how to improve their credit. Finally, I hope to encourage a more open dialogue with credit card companies about their policies–good and bad.

Success

I am proud to say that this blog's unyielding demand for change led to an important amendment in the final Credit CARD Act signed by President Obama on May 22, 2009. Despite this major accomplishment, there is still more work to be done.

View video of bill hearing in Maryland

Testifying at a bill hearing in Annapolis, Maryland

Speaking Engagements

In an effort to educate as many people as possible about financial management, especially about how to manage the current credit crisis, I have begun to speak around the country at colleges, universities, corporations, chamber of commerce meetings, congressional hearings, trade organization meetings, etc. Having acquired a wealth of information that will help to empower people and to improve their financial future, I feel that sharing this information is the least I can do to make a positive impact. For information on my availability for speaking opportunities, please send an e-mail to Jennifer Silverman at jennifer@silvermanworldwide.com.


Speaking at a university

Disclaimer

All information provided on NewCreditRules.com is provided for information purposes only and does not constitute or substitute for professional financial advice. Information on NewCreditRules.com is subject to change without prior notice. Although every reasonable effort is made to present current and accurate information, NewCreditRules.com makes no guarantees of any kind. This web site may contain information that is created and maintained by a variety of sources both internal and external. These sites are unmoderated forums containing the personal opinions and other expressions of the persons who post the entries. NewCreditRules.com does not control, monitor or guarantee the information contained in these sites or information contained in links to other external web sites, and does not endorse any views expressed or products or services offered therein. In no event shall NewCreditRules.com be responsible or liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any such content, goods, or services available on or through any such site or resource.

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  28. Beware: These stores could harm your credit! (Part I)

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Great Resources

  1. ChangeInTerms.com

  2. Complaints.com

  3. ConsumerAffairs.com

  4. Consumerist.com

  5. CreditMattersBlog.com

  6. CreditSlips.org

  7. DefendYourDollars.org

  8. Epinions.com

  9. GotaClassAction.com

  10. My3Cents.com

  11. PlanetFeedback.com

  12. RipoffReport.com
* List provided by ChangeInTerms.com.


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