Credit Card Blog

In an attempt to generate additional giving this holiday season, the Salvation Army is giving patrons the opportunity to use their credit card when passing by donation kettles. In all, over 500 kettles will have credit card processing capability and are located in higher traffic areas throughout the United States.

However, before swiping your credit card, we recommend that you ask the Salvation Army representative, how your personal information is being secured. If your credit card information was stolen, you would likely not be held responsible for unauthorized charges, but in the case of a debit card which is tied to your checking account, you have little to no liability protection in these cases. For a small donation of a couple of dollars, identity theft is quite a price to pay.

From an innovation perspective, when patrons would place money in a kettle and not receive formal recognition for their donation, these kettles are equipped to print out a receipt which can be used for tax deductions. We applaud this advancement in technology which benefits a worthy cause. If you come across one of these “eKettles” this holiday season, just make sure that  you feel confident your credit information won’t be compromised.

The long lost retail art of using layaway instead of credit is making a comeback. A layaway program benefits consumers because it allows them to make payments in installments without incurring interest charges. Retailers are able to capture the sale and they don't have to release the item until it has been paid for. Therefore, consumers can reserve products early in the Holiday season, setup a payment program, and have the item paid in full by the time Christmas rolls around.

Because of the ease in obtaining credit and the associated purchase rewards, layaway programs had been viewed as archaic until recently. K-Mart reintroduced the concept last month based on customer feedback. Other retailers are reporting spikes in their layaway programs as well. WalMart abandoned their layaway program two years ago and doesn’t have plans to bring back, given the recent surge in interest. Retailers also report that an advantage of layaway programs is that they bring customers back into their stores.

With the recent credit crunch and consumers feeling cash strapped, it makes sense that layaway programs are becoming more popular. Oprah captured current conditions best: “Remember Layaway? That is where we are heading.” 

Other Resources:

• Wikipedia: Definition of Layaway
• NY Daily News:  Stores Drag Layaway Out of Storage
  

According to a recent National Retail Federation survey, consumers will be using more cash from their checking accounts to pay for holiday purchases this year versus their credit cards. While the change from a year ago isn’t dramatic, up to 41.5% from 40.1%, it does clearly illustrate a sign of the times. Conversely, people that plan on using credit cards to pay for holiday gifts dropped 1.2%. Consumers are starting to realize that there is a fundamental difference between having money in the bank to pay for goods and services versus “plastic money” which has led to nearly $1 Trillion in US credit card debt.

760 is the new 700. Prior to the credit market collapse, you could feel pretty safe in assuming that you would get the best of everything that credit had to offer with a score above 700.  You could feel confident that you had an excellent or good credit score that banks would deem attractive to obtain you as a customer. However, with the recent changes to the financial market, this safety blanket no longer exists.

As credit card companies tighten credit standards and group potential applicants into categories of lending risk, you may find yourself lumped together with other card holders who are having a difficult time. This means that if you have a score of 700, and 700 or less is shown as more being more risky based on a bank’s risk analysis – you could be affected. While a credit score of 700 isn’t anything to be discouraged about, its best to just realize that it isn’t as stellar of a score as it once was.

The best thing to do to raise your score: Pay your bill ahead of schedule and reduce your outstanding debt balances to under 25% of the available credit amount.

While it could be convenient to pay out of pocket medical expenses on your personal credit card, Consumer Reports states that this is a dangerous trend that could result in significantly higher interest rates for consumers. If a consumer misses a single payment or a promotional rate expires, card holders could be stuck with hefty fees on non-insurance covered items.

According to Consumer Reports, credit card companies have started targeting doctors and other medical professionals to encourage new credit card products on patients in order to avoid the hassles of bill collection. Often consumers are confused about what medical expenses their insurance will cover and what is truly considered “out of pocket”. Often it can take months for a doctor to receive payment for all services. By offering a “0% credit card offer”, medical professionals can receive payment right away, patients can pay on credit versus cash and credit card companies can obtain a new customer.

Consumer Reports notes that consumers could charge an estimated $135 Billion of out of pocket medical costs on credit cards by 2015. While potentially convenient, medical related charges on credit cards can add up quickly and end up leading to poor financial health. Rather than carry medical credit card debt, the best practice is to speak with your doctor’s staff up-front and try to negotiate a payment plan that avoids the use of plastic credit.

Consumer Reports: New Market for Credit Cards