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Jonathan Tobin: Defending the Right to a Jewish State

Heather Hale: Compliment your kids without giving them big heads

Megan Shauri: 10 ways you are ruining your own happiness

Carolyn Bigda: 8 Best Dividend Stocks for 2015

Kiplinger's Personal Finance editors: 7 Things You Didn't Know About Paying Off Student Loans

Samantha Olson: The Crucial Mistake 55% Of Parents Are Making At Their Baby's Bedtime

Densie Well, Ph.D., R.D. Open your eyes to yellow vegetables

The Kosher Gourmet by Megan Gordon With its colorful cache of purples and oranges and reds, COLLARD GREEN SLAW is a marvelous mood booster --- not to mention just downright delish
April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review

Credit-card countdown: Banks gouge consumers ahead of new law

By Jennifer Waters




http://www.JewishWorldReview.com | (MCT) If you're one of the millions of Americans holding a credit card, this isn't necessarily news: Credit-card issuers are hiking interest rates, penalties and fees in full force ahead of stringent new laws that take effect in February.

In fact, 400 credit cards from the nation's 12 largest bank issuers — accounting for 90 percent of the $889 billion in outstanding consumer revolving credit — are still using most of the same tactics that the Federal Reserve has called "unfair or deceptive" and that will be outlawed in fewer than four months, according to a new report from the Pew Health Group's Safe Credit Cards Project.

"Until the law takes effect we're seeing that all the major credit-card issuers on the bank side are continuing to engage in these unfair and deceptive practices," said Nick Bourke, project manager of the Safe Credit Card Project. "The numbers of unfair and deceptive practices have grown and in some cases are worse."

Among the other findings:

—99.7 percent of bank cards allowed issuers to boost interest rates on outstanding balances — a jump from 93 percent in December

—95 percent of bank cards are applying payments first to low-rate balances, a practice the Federal Reserve has said will likely cause substantial financial injury to consumers

—90 percent of bank cards had penalty rate hikes with the vast majority imposed by so-called "hair triggers" of one or two late payments in a year. The median bank penalty rate was 28.99 percent.

As of July, interest rates spiked an average of 20 percent across the board from December of 2008 with some issuers jacking up rates 30 percent and in at least one case 50 percent — even on their best customers.

Many — but not all — of the interest rate increases were tied to user credit scores, which have been dropping as many consumers' credit lines have been cut or cancelled, Bourke said.

There's no question that the economic malaise and the millions of people without jobs has had a damaging effect on credit companies too. Credit-card charge-offs and delinquencies this year have doubled, even tripled in some cases, and are still hovering in record territory at the nation's largest banks with the outlook only worsening. Credit-card charge-offs retreated in September from August's record high, but are still in double digits, according to Moody's Investor Service.

Moody's charge-off index, a measure of credit-card loans that aren't expected to be repaid — slipped to 10.72 in September from August's peak of 11.49. However, loans at least 30 days late, considered a gauge of future losses, climbed to 5.97 from 5.8. Charge-offs and delinquencies closely follow the jobless numbers: As unemployment rises so too does bad debt.

"Some of (those interest-rate and fee hikes) occurred because of the economic environment we're in," Bourke admitted. "But the timing is pegged at getting a lot of changes in before the bill takes effect."

The American Bankers Association agreed that some higher rates are being pushed ahead of February, but said the embattled economy that is leaving issuers with boatloads of unpaid, unsecured debt is the real driver of such huge interest-rate increase.

"We have to take into account the losses in the credit-card space," said Peter Garuccio, ABA spokesman.

J.P. Morgan Chase, the nation's largest credit-card lender, reported that its credit-card division lost $700 million in the third quarter and expects losses to be higher next year. Bank of America's global card services division reported a loss $1.04 billion in the third quarter and Citi Holdings, which includes the private-label cards, mortgages and other consumer loans, showed a $1.9 billion quarterly loss.

Credit-card companies recognize the pain they are inflicting on many consumers. "We understand that customers don't like price increases, especially in difficult economic times," Citi said in a statement. "However, these actions are necessary given the doubling of credit card losses across the industry from customers not paying back their loans and regulatory changes that eliminate repricing for that risk."

The Pew study looked at rate and fee increases from January to July and doesn't include hikes made since then as issuers press consumers before the law takes effect Feb. 22. Nor does the study take into account the initial credit-card legislation that took effect in August.

American Express Blue card users, for example, weren't slapped with material interest-rate increases during the first part of 2009, but got smacked in recent months, according to BillShrink.com's research. Since then, published regular-purchase rates have shot up nearly 50 percent. Capital One's Platinum Prestige card's rate on new purchases surged 66 percent while Citi's CashReturns MasterCard's rate jumped 46 percent.

"I don't expect to see compliance on these rules from card issuers until they absolutely have to," said Samir Kothari, co-founder of BillShrink, the online consumer-credit service. "Some of these rules are so impactful on their businesses that they will wait until the absolute last minute to put them in place."

ABA's Garuccio noted, however, that bad economy or not, the legislation was bound to lead to higher interest rates and tighter lending policies that would leave some consumers out in the cold. "This would be an issue no matter what," he said.

The Pew study also doesn't include key changes that became law Aug. 20. Card issuers must now alert customers 45 days ahead of any increases and allow them to opt out, moves that eliminated the hair-trigger repricing and gave consumers the choice to say no.

In recent weeks, many cardholders have received those notices, some with pages of explanations. They've also been informed of new fees coming as card issuers look at ways to offset the loss of the hefty revenues streams they have long enjoyed from upping interest rates "at any time, for any reason," as the disclosures generally stated, as well as late and transfer fees.

Annual fees, for example, will turn up on the February statements of some cardholders with Bank of America — even for some consumers who pay off their cards regularly. The bank notified a limited group of cardholders that it will start charging $29 to $99 annually, with the rates dependent on the risk and profitability of selected accounts. The group cuts across all types of cardholders and is not focused on say, slow-paying consumers or just those who don't carry balances.

The fees, however, are purely a test for Bank of America to determine how consumers value their credit cards, spokeswoman Betty Reis said.

"We have not made any final decisions on whether we'll apply an annual fee going forward," she said.

Citigroup cardholders who don't put more than a specific amount on their cards — generally about $2,400 a year — are getting hit with annual fees. Then there are those banks that are charging inactivity fees if the credit cards aren't used during a specific time period.

Chase Card Services and United Airlines recently unveiled three premium credit cards with annual fees that range from $130 to $375.

Expect more of the same and then some from other card issuers that are likely to follow the herd.

"Actions like these are rarely singular events," said Bill Hardekopf, chief executive of LowCards.com, an online credit-card information resource. "One issuer takes a new step and the others likely follow."

Many cards, for example, have pared and even taken away cash-back and other rewards programs, BillShrink found. Others have substantially upped balance-transfer fees and default fees.

American Express, for example, has done away with a two-tier rate for missed payments. Instead of a "default rate" for one missed payment and a "seriously default rate," which was substantially higher, for two and more missed payments, it has only a default rate. However, that rate is now at the higher level, according to BillShrink.

"These are levers that credit-card companies can and will pull to try to make money when and where they can," BillShrink's Kothari said.

At the same time, issuers are launching new cards, cleaning up disclosures and offering flat rates. Bank of America brought out the BankAmericard Basic Visa card that features one basic rate for all transactions — charges, balance transfers and cash advances — that is 14 percent above the prime rate, no matter what that rate is. Other cards are tailored to what consumers want more, cash back, rewards or cheap introductory rates.

Chase is taking a similar route with its Blueprint cards, which let cardholder keep interest rates at 0 percent on everyday purchases that they pay off monthly and pay interest only on big-ticket buys that take months to pay off.

Citi is offering consumers a chance to earn back some of the 29.99 percent interest rate they'll be charged at the end of the month. Consumers who make their payment on time will receive a 10 percent credit of the total interest charge. Interest earned back in December and January will be fully credited on statements no later than February 2010 and monthly thereafter.

"We also recognize that customers are frustrated by complicated notices and a perceived lack of options," the company said.

"Nearly all of our customers now have the opportunity to earn back a portion of the increase each month. And eligible customers who do more business with us will have the most opportunity to reduce their rates," according to Citi.

The escalating rates and fees have not gone unnoticed in Washington. Last week Sen. Chris Dodd, D-Conn., proposed a bill to freeze interest rates and fees until the law was fully enacted. He charged that banks were raising rates "to squeeze customers" ahead of the Feb. 22 effective date.

"At a time when families are struggling to make ends meet, jacked-up rates can quickly create crushing debt," he said. "People need to be responsible with their money but they shouldn't be taken to the cleaners by outrageous fees."

On Wednesday, the House voted to limit banks' rate increases on existing credit and to move up the start date for many of the credit-card rule changes. The bill needs Senate approval and a signature by the president before it becomes law.

Every weekday JewishWorldReview.com publishes what many in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.

Rex Nutting is a columnist for MarketWatch.com. Comment by clicking here.


© 2009, MarketWatch.com Inc. Distributed by McClatchy-Tribune Information Services

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