UniBul Merchant Services - Credit Card Processing Gist

That’s exactly what a 12-year old teen with Asperger syndrome did, leaving his parents at a loss with how to get the charge off their credit card and the go-cart – off their driveway.

The parents called their credit card company and disputed the transaction, but the retailer disputed the chargeback and managed to keep the money. What is there to be done now?

“I suggest that the parents send a certified mail letter of notification to the go-cart company putting them on notice that if they do not arrange for retrieval of the cart by a specific date, the property will be considered abandoned and liquidated,” is the advice offered by Georg Finder, independent credit evaluator, although it is not exactly clear why the retailer should care, provided they already got paid.

“The parents could take the sporting goods company to court for violation of the credit charge and any subsequent derogatories that appear on their credit reports (collection accounts, etc.),” adds Finder, but he does not specify what the retailer did wrong.

At the end, CreditCard.com’s Sally Herigstad gives the best advice on how to deal with the issue:

Now that you know your son is capable of using your credit cards on the sly, it’s time to start storing your cards more securely. Don’t leave them lying by the computer or anyplace else unattended. If your son shows no remorse for essentially stealing $3,000 from you, I recommend you no longer keep your purse in the coat closet or your wallet on the nightstand. Keep your credit cards, cash and account numbers someplace safe from now on.

(Via CreditCard.com)

Total U.S. household debt fell to $13.5 trillion in 2009, a 1.7% drop from 2008, according to a report by the released Thursday. This is the first annual drop since the Fed began keeping records in 1945. The debt amounts to $43,874 per U.S. resident. Household debt includes mortgages and credit card balances.

The drop in household debt largely reflects the higher rates of defaults on mortgages and other obligations that job losses and the general state of the economy have contributed to. On the other hand, the defaults are leaving consumers with more cash to spend, stimulating the financial recovery.

U.S. households saved 4.1% of their disposable income in the fourth quarter of 2009, up from 1.2% in the first quarter of 2008. In the last quarter of 2009, consumer spending grew at an annualized rate of 1.7%, adjusted for inflation, up from a drop of 3.5% in the deepest part of the recession but still below the long-term average growth of 2.6%.

(Via FederalReserve.gov)

An often repeated advice is that you shouldn’t close your high-rate credit card, because you will hurt your credit score. Closing a credit card reduces your overall available credit and increases your debt-to-credit ratio (aka credit utilization), which is a component of your credit score.

Yet, although a higher credit utilization does hurt your score, perhaps not everyone should be concerned with it. At least that’s what Reuters’ Felix Salmon is arguing in his blog. He suggests that, if your credit card company wants to charge you a hefty annual fee, you should not accept it and close down your account instead, whatever the effect on your credit may be.

Salmon’s point is that, because a FICO official states that it is unlikely that a closed account “could reduce anyone’s FICO score by 100 points,” the damage will not be substantial enough to warrant paying the high fee. It’s worth pointing out, however, that the significance of the impact on your score will depend a great deal on your starting point. If your score is in the high 700s or even in the 800s, a reduction of 50-60 points will not make much of a difference. If you are starting out at the lower 700s or less, however, even a modest damage will make an impact.

(Via Reuters.com)

How long would it take you to pay off a $7,000 credit card debt, if you only made the minimum payment of $190 a month and your interest rate was 17.9%? Well, according to Marketplace’s Chris Farrell and the Federal Reserve calculator, the answer is 40 years and you would end up paying $18,457 while you’re at it.

This is actually a real-life situation where the debtor realized that she wasn’t making much of a headway and contacted the issuer to work out a deal and was offered a 60-month no interest pay-off plan. Is that her best option? Farrell uses the Fed calculator to test the alternatives.

We’ll go back to the Fed calculator and this time you’re going to pay $200 a month. The trick is to keep on sending $200 a month even though the required minimum payment will shrink with time. You ignore that lower minimum charge. By maintaining a $200 a month payment you could eliminate the debt in 4 years and fork over $2,974 in interest charges. That’s not great, but it’s a lot better than 4 decades and more than $18,000 in interest. Send in a consistent $350 a month and the debt’s gone in 3 years and $2,131 in interest; a $300 monthly payment, and its 2 years and $1,668 in interest. Of course, the numbers get better the more you put toward the debt, but the figures are also unrealistic.

(Via PublicRadio.org)

Discover Financial Services announced today that it will record an increase in reserves of $305 million pre-tax in the first quarter 2010, bringing its reserve coverage to about 12 months of losses. Accounting for the impact of the added reserve, Discover expects to report a loss of of $.22 to $.23 in the first quarter.

Discover also expects that the first quarter charge-off rate will be approximately 8.5%, up from 8.43% in the fourth quarter 2009. Charge-offs are loans that lenders do not expect to collect and write off their books as losses.

The issuer estimates its 30-day delinquency rate to be approximately 5%, down from 5.31% in the previous quarter. Discover believes that the delinquency rate may have peaked in the fourth quarter of 2009.

Unlike industry leaders Visa and MasterCard, Discover and bigger rival American Express both issue cards and process the transactions. Discover generates revenues from credit card interest and fees it charges its cardholders, as well as from processing fees it charges merchants who accept Discover cards.

(Via BusinessWire.com)

After months of ramping up interest rates, credit card companies are now beefing up their rewards programs, reports CNN Money’s Jen Haley.

Citibank, for example, is now giving you 20% more miles per dollar on their American Airline-branded cards. Cardholders previously received 1 mile per dollar. Under the new program, you can get 1.2 miles for every dollar you spend. The catch is that not everyone benefits from this upgrade. It is only reserved for good customers.

JPMorgan Chase is doing the same for its British Airways cards. Chase’s cardholders can get 1.25 miles for every dollar spent. The issuer is also ramping up its rewards program on its Marriott-branded cards.

Chase also upgraded its Freedom card. Up until now, cardholders were getting 3% in rewards on purchases made in certain categories. Now that has been upped to 5% for these categories and 1% on the remaining purchases.

(Via CNNMoney.com)

Several credit card companies are allowing consumers to design their own credit cards, says Adam Levin, from credit.com. “They’re allowing you to design a card that suits your lifestyle whether it’s a fixed rate card or variable rate card, different reward programs, different time frames, different due dates, grace periods.”

Each issuer allows different features to be customized. CitiGroup, for example, is letting customers choose their own balance transfer interest rate based on how long they think the payback will take.

Discover lets some customers choose between a low introductory interest rate on purchases for a shorter term or a longer term length at a higher interest rate. For example, you could choose 0% for 6 months or about 4% for 12 months.

American Express’ Zync cards allow cardholders to customize their rewards and benefits, ranging from restaurant discounts to extra air miles.

(Via ABC2News.com)