As Economy Tanks, Will Plastic Fade?

Cash-strapped consumers claim companies charge fees without reducing debt

(NEWSER) - State attorneys general are being overwhelmed with complaints about “debt settlement” companies that promise consumers relief from mounting bills but rarely deliver, the New York Times reports. The number of such companies, which often collect fees of 15% of the total debt to negotiate with creditors, has tripled in recent years as consumers who binged on credit now face a reduced capacity to pay. More»

Consumers see way to limit spending; banks adjust fee tactics

(NEWSER) - Credit is no longer the king of cards, Business Week reports. As banks get stingy with credit and consumers look for ways to reel in their "charge it" ways, more and more are turning to debit cards—so many, in fact, that Visa projects debit spending could exceed credit this year. This year's 13% climb in debit purchases may seem like good news for banks, as debit cards users have no payments to default on, but they don't rack up interest, either. More»

With unemployment rising, companies modify, reduce debt

(NEWSER) - With unemployment nearing 10%, credit card companies are doing something once unheard of: forgiving debt, or modifying it in the customer’s favor, the Washington Post reports. Companies are loathe to discuss the practice, lest it inspire more delinquencies, but according to one industry report, roughly 3 million people got some kind of modification last year. “Issuers are looking to get something rather than nothing,” explains one analyst. More»

Florida, California have credit problem, Forbes shows

(NEWSER) - The recession has many Americans tightening their belts, but some just can’t seem to put away the plastic. Forbes checked in with Equifax and compiled a list of the country's most credit card-happy cities. Conclusion? Florida might have a problem.

1. Miami: Average household credit card debt: $9,797, or 22.6% of income.
2. Tampa: $7,685, or 17.1%.

Consumer credit remains frozen, even at banks flush with bailout funds

(NEWSER) - Though US taxpayers own $172.5 billion of shares and warrants in 208 financial institutions, most of them still can’t get a loan. Interbank lending rates have fallen since TARP funds have been paid out, but consumer lending remains tight and average credit card rates are virtually unchanged from October 2007, Bloomberg reports. "If you’re taking money from the public purse, we should get something in return, and we’re really not,” says an econ professor. More»