Category: Credit Cards

People with an iPhone deal with an average of $6,872 in credit card expenses every month, according to a new study from mobile payment management company Pageonce. This figure takes into account not only existing credit card debt, but also new transactions that may alter their balance, as well as fees and charges they may face every month.

The other groups studied – users of BlackBerries, Android phones and Windows Mobile – saw their monthly credit card expenses range between $5,076 and $5,693, the report said. Altogether, the average iPhone user had an outstanding credit card debt balance that was 35 percent higher than users of different handsets.

A Wall Street Journal report on the study noted previous findings conducted by other researchers have shown iPhone owners tend to be older and more affluent than people that use other smartphones.

Despite consumer spending climbing 2.2 percent so far this year, none of the four major credit card issuers in the U.S. have seen a marked increase in the number of transactions they process, according to a report from Smart Money. Visa, MasterCard, Discover and American Express have all reported lower or steady rates of purchases involving credit card debt.

However, debit card use is expected to expand somewhere between 8 and 12 percent by the end of the year, and the dollar amount spent on these cards is up 15 percent, the report said. Meanwhile, the amount put on credit cards has risen just 1.9 percent. One credit expert told the site consumers have increased their cash spending largely because they are leery of dealing with additional credit card debt.

People have made a greater effort to reduce their credit card debt recently by paying more into their accounts every month and spending less on their cards.

The number of open credit card accounts across the country declined once again in the third quarter, as it did in the previous three periods, according to the Federal Reserve Board's latest household credit report. But the rate at which Americans shut down old accounts as a way of avoiding credit card debt slowed, as 217 million accounts were closed during the four quarters ending September 30, and 158 million new ones were opened.

Further, the number of credit account inquiries within the last six months, a measure of demand for consumer credit, rose for the second-straight quarter, the government report said. Even still, the number of open balance declined from 381 million to 378 million in the third quarter, proving consumers are less willing to take on credit card debt.

Many may be shying away from credit card debt in light of the recent economic downturn, and demand for new accounts isn't likely to increase until the economy improves further.

Some consumers who are trying to avoid additional credit card debt have opted instead to make purchases on layaway, a practice that faded in popularity as credit cards became more common, according to a report in the Buffalo News. With this method, a consumer makes a purchase over the course of a short amount of time, rather than all at once, and only gets the item once the total owed is paid in full.

As a result, more stores are starting to bring back the practice, with popular retailers like Burlington Coat Factory, Sears and Kmart either expanding or reintroducing their layaway options, the report said. Consumers without enough cash on hand to make a sizeable purchase all at once may find this method preferable to one resulting in more credit card debt.

Many consumers have made a more concerted effort to reduce their reliance on credit card debt in recent months thanks to the national economic downturn.

The national total for revolving credit – the kind that can be added to and subtracted from month to month, and most often associated with credit card debt – consumers carried in September declined 12.1 percent between August and September, according to a report from the Federal Reserve Board. It marked the third consecutive month in which Americans reduced their reliance on credit cards.

Commercial banks saw the amount of credit card debt, and other types of revolving credit, they handled decline most significantly, the government report said. While they dealt with $620.4 billion in August, that figure dropped to $611.9 billion in September. That total is also down from the $623.4 billion observed at the end of the second quarter.

Many consumers have recently changed the way they deal with their credit card debt. They have cut down on their spending with these accounts, while simultaneously increasing their monthly payments to more quickly reduce their total balance.

Though the landscape of the credit card industry has changed considerably since the passage of the Credit Card Accountability, Responsibility and Disclosure Act, allowing Americans to better handle their finances, a majority say they're not happy with lenders, according to Consumer Reports. Many people have successfully cut their credit card debt to a national median of $3,793 – down about $1,100 from last year.

However, only 45 percent of consumers said they are either completely or very satisfied with their credit card lenders, the report noted. In addition, 16 percent believe they've been treated unfairly by the issuer, though that figure is down from 21 percent last year. Respondents said they were most unhappy with banks imposing annual fees, cutting the maximum amount of credit card debt they can take on, canceling their account without notice or raising minimum payments.

Consumers have reduced their credit card debt in recent months by upping the total of their monthly payments while spending less.

Chase recently announced it would eliminate the fee on all credit card debt accrued in other countries for cardholders using its British Airways Visa Signature card, which used to be 3 percent of the purchase price, according to a report from USA Today. This charge was attached to all transactions completed abroad, even if they were made in U.S. dollars.

The British Airways card follows two other Chase travel accounts in waiving fees on transactions in foreign countries, the report said. It previously nixed similar charges on credit card debt for its Priority Club Select and Hyatt accounts. However, Chase also reduced the amount of bonus miles it offers to new cardholders, from 100,000 in the fall to just 50,000 currently.

Many credit card lenders have recently restructured introductory offers in an effort to draw in more consumers who may have tried to reduce their use of these accounts.

Many credit card lenders recently began offering accounts that gave consumers six months of interest-free spending as a way to lure old borrowers back into the credit system, according to a report from television station New York 1. These offers show lenders want more consumers who may have had credit trouble in the past to begin taking on credit card debt again.

However, consumers should be aware that zero percent interest offers typically also carry higher transfer fees than other cards, the report said. In many cases, they range from 7 to 9 percent. Others may carry caps on the amount of credit card debt a person can transfer to the new account.

Many lenders have increased their rewards offers in recent months as consumers have relied less on cards, by taking on less credit card debt and increasing payments on their monthly bills.

The heads of two major online handlers of credit card debt – eBay and Boku parent company Andreessen-Horowitz – recently participated in a discussion in which they agreed using a mobile phone is the safest way to make a purchase online, according to a Mashable report. John Donahoe, eBay's CEO, also noted that he expects consumers' mobile phones will soon replace their wallets.

The reason for this, Donahoe said, is phones don't save any financial information unless the user sets them to do so, Mashable reported. Marc Andreessen, speaking on behalf of Boku, said consumers will routinely take on credit card debt with their mobile phones rather than traditional payment methods in the near future.

Consumers who want to take on credit card debt to make a purchase on their mobile phones should be careful that their handset isn't using a Wi-Fi connection, as this may make it easier for someone else on the network to access some of their personal information.

About 90 percent of those surveyed said they would use primarily use cash to make purchases this holiday season, up from 85 percent last year, according to a new study from United Services Automobile Association. Meanwhile, 41 percent of consumers said they plan to take on credit card debt between now and the holidays.

"The survey findings indicate that adopting better money habits as a result of the Great Recession isn't a fad, but more of a long-term trend," said Joseph Montanaro, a financial planner with USAA.

However, 50 percent of those planning to use cash have been saving throughout the year, down from 56 percent in 2009, according to the report. Meanwhile, 42 percent of respondents said they will use cash because they're worried about what additional credit card debt would mean for their finances.

Many consumers have successfully reduced their credit card debt in recent months by scaling back their spending and increasing their monthly payments.