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The BillMyParents prepaid debit card will allow parents to give their teenager a card that will help them learn the ropes of dealing with fiscal responsibility, according to a report from SanDiego.com. In addition, because this type of account has a preset spending limit parents can load as much as they want onto their child's card and don't have to worry about their child saddling them with credit card debt.

The account carries no activation fee and a monthly charge of $3.95, the report said. In addition, when it's used to withdraw cash from an ATM, there is a $2 fee. However, parents will also be able to get text message alerts detailing where and when the card has been used.

Many consumers have turned to prepaid cards in recent months because they are no longer able to borrow from lenders as a result of defaulted credit card debt.

A number of recent polls have found that younger consumers say they will be more conscientious about improving their finances in the coming year than their older counterparts, according to U.S. World and News report. For instance, a recent Fidelity Investments poll found that about half of Americans between the ages of 18 and 34 made a New Year's resolution related to their finances, compared with just 30 percent of those over the age of 55. Nearly 60 percent of young consumers were also more likely to be interested in setting up a financial plan than those between the ages of 35 and 64 (39 percent) or retirees 65 and older (16 percent).

Further, the poll found that 65 percent of those in their 20s and 30s want to start saving more money, while only 38 percent of those between 35 and 54 responded similarly, the report said.

In addition, a large percentage retirees have little or no interest in altering their finances for the better in 2011, the report said. A survey by Principal Financial Group found that 47 percent of retirees don't intend to change their financial plans in the new year, compared to 29 percent of those currently in the workforce. Among the workers who did indicate that they had a resolution, the most popular was a desire to reduce credit card debt totals and increase savings. However, retirees who wanted to improve their finances said they simply wanted to reduce their monthly spending.

Meanwhile, consumers across all age groups believe they will have a better time with their finances and debt in 2011 than they did in 2010, though young people remain more optimistic, the report said. A recent Gallup poll found that 69 percent of those between 18 and 34 believe this year will be better, while only 51 percent of those 55 or older felt the same way.

Many consumers have already drastically altered their attitudes toward credit card debt, and are now using debit and cash to make everyday purchases more often. In addition, those who do use their credit cards are making a greater effort to pay off their outstanding debt every month rather than let it carry from one to the next.

The rate at which consumers were unable to put money toward their outstanding credit card debt increased slightly in the third quarter of 2010, according to the latest statistics from the American Bankers Association. Delinquent accounts – those 30 days or more behind – increased to 3.64 percent nationwide, up from 3.62 percent at the end of the second quarter.

This marked a reversal of a year-long trend in which delinquent credit card debt declined significantly. This was likely as a result of a more stagnant job market, according to ABA chief economist James Chessen.

"I think we'll see momentum return and delinquencies improve over the next six months," Chessen said. "There's less uncertainty about the economy now, and consumers and businesses feel more confident. Improvements hinge on a consistent increase in new jobs."

Delinquent and defaulted credit card debt is often associated with unemployment because many jobless consumers may lean more heavily on these accounts to make ends meet and add significant amounts to their outstanding balances.

Certain provisions of the Credit Card Accountability, Responsibility and Disclosure Act state that financial institutions may not send preapproved accounts to consumers under the age of 25. But, despite this, many lenders are still mailing college students offers of this type, according to a reportfrom the Wall Street Journal.

A new study by professor Jim Hawkins at the University of Houston Law Center found that, of the more than 300 undergraduates surveyed, about 76 percent of those under the age of 21 said they received a preapproved credit card offer in 2010, the report said. In addition, 73 percent said they have seen credit cards marketed to students off-campus during the academic year.

The relationship credit card lenders have with college students has recently become a focal point for lawmakers, the report said. Many universities were recently revealed to have agreements with financial institutions that give them a certain percentage of the credit card debt incurred on university-branded accounts in exchange for marketing rights to the campus. As a result, schools are now required to disclose any such contracts they may have with lenders.

About a third of all freshmen already had a credit card when they arrived on campus, the report said. Another 29 percent of those under 21 who had gotten an account since school began said they listed their student loans as income in order to qualify.

Under the Credit CARD Act, anyone who is not yet 21 that applies for a credit card must either have an adult co-sign on the account or else prove that they have sufficient income to cover the cost of any credit card debt they incur. By listing their student loans as income, many young adults are successfully circumventing this protection.

However, when it came to paying their credit card debt, 64 percent of students said they planned to do so themselves, while 21 percent said they would expect someone else to pay it, the report said.

Many consumers now graduate from college with thousands of dollars in credit card debt spread across a number of accounts.

The nationwide amount of revolving credit – which is made up almost entirely of consumers' credit card debt – slipped once again in November, according to the latest monthly statistics from the Federal Reserve Board. Consumers successfully reduced the amount they owe on these accounts by 6.3 percent. This accounted for a decline of $4.2 billion to $796.5 billion, down from the $800.7 billion observed at the end of October.

Credit card debt has taken a large tumble since the recession began, and has dropped nearly $100 billion since the end of the third quarter in 2009, the Fed report said. However, the decline seen in November was the smallest in months.

The reason for this is likely because consumers used their credit cards more often than in other months as a result of their holiday shopping expenses. While most still opted to make gift purchases with cash and debit, some still took on credit card debt.
 

The lender will soon launch a test program that will give some cardholders the ability to choose between taking on credit card debt to make a purchase, or redeeming their rewards points, according to a report from Time Magazine. Citi's announcement that it will soon launch its Thank You Prestige 2G card, which will allow users to switch between these payment options by pushing a button on the piece of plastic, came at the popular Consumer Electronics Show in Las Vegas.

The card will also feature a fully programmable magnetic strip, which can have the payment information stored on it altered at any time, the report said. Next generation credit card manufacturer Dynamics Inc. is behind the new innovations.

Many consumers may soon be able to choose between taking on credit card debt and using debit when making a purchase, as Dynamics also has a card that allows multiple accounts to be stored on it.

A proposed rule from the Federal Reserve Board would alter current transaction fee rules so that networks could only charge a percentage of the purchase price, usually between 1 and 5 percent, when consumers take on credit card debt to make a purchase, according to a report from Bloomberg News. Meanwhile, debit transactions would cost merchants only a flat rate of just pennies.

Because of this, a purchase of $1,000 made with a credit card will still net lenders about $20 or so, while a similar purchase made with debit will only earn the new cap level of 12 cents, the report said.

Prior to the implementation of the newest regulations, credit networks were allowed to prevent companies from encouraging customers to pay with cash or other options that would result in lower transaction fees. But now, this practice is allowed, and it's likely that merchants will try to implement it in an effort to save money, the report said.

If approved, this latest change could spell huge losses for all credit networks, but it would affect American Express the most, because the company does not issue debit cards, the report said. The lender could lose as much as $38 billion a year as a result of consumers relying more heavily on debit and cash rather than taking on credit card debt.

"American Express is increasingly exposed," Chris Brendler, an analyst at Stifel Nicolaus recently wrote to clients, according to the report. "This significantly increases the threat of discounting as merchants will have much greater incentive to push consumers toward lower-cost debit cards."

However, some studies have found that consumers may not be receptive to companies that ask them to use certain payment methods, the report said. In one, 84 percent of respondents said they would be unlikely to continue patronizing a business if an employee tried to persuade them to use something other than their preferred payment method.

Merchants have long objected to these transaction fees because they cost even small, privately-owned companies as much as tens of thousands of dollars a year.

Like many major financial institutions, Bank of America is now testing accounts available only to new customers in select parts of the country, with an eye toward rolling them out nationwide, according to a report in the Atlanta Journal-Constitution. These will have higher monthly fees than existing accounts, but many can also be waived if the consumer takes on credit card debt using a Bank of America-branded card.

Taking on credit card debt with on a bank account will allow consumers to bypass fees as high as $15 a month in some cases, and also gain access to accounts with more benefits, the report said.

Many lenders have lost out on large profits as a result of new regulations which limit credit card debt and other banking fees, and are now trying to recover them by introducing new charges or increasing existing ones.
 

In retrospect, 60 percent of Americans say they leaned too heavily on their credit cards prior to the recession, and should have made a greater effort to pay down their credit card debt, according to a new survey from TD Ameritrade Holdings. Another 50 percent said they should have used cash more often to make purchases.

In addition, 25 percent believe that the money troubles they faced hindered their ability to pay down their credit card debt, the report said. Another 71 percent said they should have spent less and saved more, while 60 percent responded that they should have taken more responsibility in dealing with their finances.

Many consumers are now wary of taking on any credit card debt at all, and say they will go out of their way to avoid dealing with it, opting instead to spend within their means.

While the Credit CARD Act provided a number of protections for average consumers from predatory lending tactics, it also forced many financial institutions to stop granting lines of credit to those who had subprime credit scores or incomes, according to a report in the Wall Street Journal. As a result, they were forced to seek other types of credit, including payday loans, which can be more troublesome than credit card debt.

The new rules set forth by the laws caused many institutions to increase lending standards to better protect themselves from losses to delinquent and defaulted credit card debt, the report said. In addition, many also opted to slash credit limits for existing customers, resulting in over $1 trillion in potential credit being eliminated since the start of the recession. Further, they dropped some riskier borrowers – particularly those with low incomes who were more likely to default on their credit card debt – altogether, barring them from additional credit.

As a result of being dropped, combined with the more stringent policies lenders began enforcing, many low-income or subprime consumers were locked out of the credit system entirely, the report said. But they still needed lines of credit, even if they couldn't take on additional credit card debt. This in turn led them to seek payday lenders and other potentially dangerous financial products.

In addition, many banks have also seen their profits tumble as a result of the Durbin Amendment to the Dodd-Frank Act, meaning that they've cut other programs to help close gaps caused by the shortfalls, the report said. These programs include those that were popular among low-income consumers, such as free checking accounts. Instead, subprime borrowers have discontinued their normal use of these institutions, leading many to be under- or entirely unbanked, and putting themselves on more dangerous financial ground.

Many subprime consumers have not been able to open accounts that allow them to take on credit card debt for a number of months. This can lead to money problems and debt concerns because they may not have enough to meet their basic needs.