Credit Card Solution

Credit card debt write offs

When banks write off credit card debt because they think its uncollectable, they call the process “charging off.” And during the darkest period of the credit crunch they were charging off all over.

Then, as the worst customers were weeded out and handed on to collection agencies, leaving behind more creditworthy ones, charge off rates dropped across the industry. Everyone relaxed a bit and executives awarded themselves bonuses. Sadly, they have to come up with a new excuse for the next round of bonuses, because that fall in the rate of charge offs came to an abrupt halt last month.

Credit card default figures

Before the recession, the rate of charge offs remained at somewhere between three and four percent fairly consistently. In the second quarter of this year, it was at 10.66 percent. And yesterday Associated Press quoted the Federal Reserve as saying that, in August, individual credit card companies reported the following charge off rates:

• American Express: 5.5 percent
• Bank of America: 11.72 percent
• Capital One: 8.19 percent
• Chase: 8.18 percent
• Discover: 7.98 percent

All except American Express told the Fed that August saw their charge off rates rise for the first time in some months. Amex’s held steady. Is this a blip or the start of a new credit card trend? It’s too early to say, but watch this space.

Credit card regulation hurts consumers?

Also yesterday, The Atlantic quoted Jamie Dimon, CEO of JPMorgan, on the topic of credit card regulation. Apparently, he called recently introduced rules, “misguided government intervention.” It is possible to take an alternative view. Had credit card companies not routinely regarded their customers with the same glint in their collective corporate eye that Count Dracula once reserved for his most attractive virginal prey, there would have been no reason for Congress to have legislated.

He went on to promise that his bank would be raising fees to compensate for losses resulting from the Credit CARD Act, and would also be withdrawing its provision of credit from about five percent of its card customers.

Credit cards for people in trouble

What happens if you’re one of those people who have lost their credit cards through default, or who may do so as a result of banks cutting back on lending? Well, earlier today, The Detroit Free Press suggested considering prepaid cards, although it warned that some of these can carry very high fees. The trick–as with all cards–is to shop around. A good place to start is with The Mango™ MasterCard® Prepaid Card

If you have enough spare cash to put down an upfront deposit, then a secured credit card could be a good alternative. Providing the one you choose reports to all three big credit bureaus, it gives you the chance to rebuild your credit score. Again, there are good and bad deals out there, so compare what’s on offer, starting with Orchard Bank Classic MasterCards® and the Public Savings Bank Secured Card.

Most popular / best credit cards according to IndexCreditCards.com visitors:

1. 1. Discover® More Card – 0% APR on balance transfers for 12 months & 6 months on purchases, 5% cashback bonus in popular categories, up to 1% cashback bonus on all other purchases
   
2. 2. Chase Freedom Card – 0% Intro APR and no Annual Fee, 5% bonus cash back in popular categories , 1% cash bank on everything else
   
3. 3. Citi^® Platinum Select^® MasterCard^® – 0% on purchases & balance transfers for Up to 18 months, APR as low as 9.99% variable. $30 statement credit.
   
4. 4. Blue Cash^® from American Express – Earn up to 5% cash back on gas, groceries and drug store purchases, and up to 1.5% back on all other purchases, no annual fee, fast approval under 60 seconds
   
5. 5. Slate ^SM from Chase – 0% Intro APR, Now with Blueprint, patented fraud protection
   
6. 6. American Express® Gold Card – 10,000 American Express Membership Rewards bonus points when you use the card for at least $500 in purchases within the first 3 months.
   
7. 7. TrueEarnings® Business Card from Costco & American Express – 4% cash back for annual gas purchases up to $6,000, 3% restaurants, 2% travel, 1% everywhere else, 0% APR on purchases for first 6 months
   

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