More Reasons to Worry About Credit Card Companies

• Report this Comment On April 13, 2009, at 4:12 PM, Mediforce wrote:

  Citizens are getting wise to the credit card companies which have become "legal loan sharks".

  I teach students every day and expalin how bad they can make their lives by taking these teaser rate cards. If you want a happy financial life, stay away from credit cards. If you have to have one, get it through a credit union and not a bank.

  Suze Orman is becoming a folk hero at our college because of her anti-credit card stand to protect the consumer.

• Report this Comment On April 13, 2009, at 4:33 PM, husehubby wrote:

  You guys are trully fools and know not what you speak of.

  You change your minds like the wind from one week to the next.

• Report this Comment On April 13, 2009, at 5:55 PM, jc09058 wrote:

  Both points you raise under your bullets are valid and correct.

  BUT, what the Federal Consumer Credit report does not cover is information about Debit Card usage. With MasterCard and Visa you must take Debit Cards into account to determine what the real impact to both corporations with the reduction of credit card activity.

  Each time plastic is used, whether it is a credit or debit card, both MasterCard or Visa will collect a transaction fee. As I've seen out on the street, people are be cutting back on credit usage but their are not cutting back on debit usage. If anything, it is increasing each time a new checking account is opened. I don't remember the last time I've heard of a bank offering a checking account without a Debit card, but I do know it's been a long time since I've seen one.

  When banks stop offering debit cards or the Fed starts tracking Debit Card usage and it starts dropping, I will be a little more concerned about MasterCard and Visa. Until then I will be looking at the corporation 10Q and 10K reports which shows the Payments Volume and Transaction Counts. I might add that Visa Debit transaction increased 14% (US wide) and 38% (Non-US) from a year ago in their 1st quarter 10Q on 9 Feb 09.

  Mr. Housel, I will be happy to continue reading your articles provided you look at the whole picture for MasterCard and Visa. They are unique in relation to the credit card business because they are a transaction handler only. You can't even compare them to Discover or AmEx because they are issuers as well and have all of the same risks as the other issuing banks.

  While credit card activity will impact MasterCard and Visa, I don't think it will be quite as bad because of Debit Cards. FYI: Credit transactions for Visa were

  1% (US wide) and 16%(Non-US) during the same period. Yes, Credit transactions for the US have dropped but Debit cards have picked up the slack and the Non-US side is pure gravy.

  While I was in Banking years ago, I don't work for Visa or MasterCard. I know their business because I worked for MBNA.

  Disclosure: Long and Happy with Visa

• Report this Comment On April 13, 2009, at 6:00 PM, fxtrder wrote:

  Still trade at premium multiples? Every heard of a debit card? Visa and MasterCard make money on both credit and debit traffic.

  MasterCard and Visa get paid for the volume of credit and debit volume and are not exposed to defaulting accounts. American Express is exposed.

  Thank goodness for disclaimers. We can clearly see why so little was discussed about American Express.

• Report this Comment On April 13, 2009, at 6:49 PM, chopchop0 wrote:

  Visa will do better than MC in this climate because of their increased share of the debit market.

  Long and bullish on Visa.

• Report this Comment On April 13, 2009, at 8:12 PM, RoanH wrote:

  I know that the senate has recently passed a bill dealing with all the fees credit companies are charging.

  snagged from the headlines

  http://www.creditfast.com/scripts/openExtra.asp?extra=38

  With card companies slashing credit lines and consumers peeved that their interest rates have gone up I am not surprised by the 9.7% decline in revolving credit.

• Report this Comment On April 14, 2009, at 1:22 PM, corteo wrote:

  Rich3800 was very correct in saying that responsible use

  of credit cards is always justifiable.

  Mediforce talks about irresponsible use of credit ,which

  ,ofcourse , Suzie Orman would caution students about.

  People living above their means is not justifiable, students and adults alike, but I bet Suzie Orman would love to

  have bought into the ipo's of both Visa and Master card

  as I have. There are certain practices that the issuing banks will need to address going forward, regarding some

  ot the changing terms that gov. have been investigating, but then again, that is really an issuing bank issue rather

  than a Visa or MC. problem.

  The expansion of debit card usage is

  enormous , not to mention that most state governments

  are utilizing them to cut costs of distribution for entitlements. Social security will probably be distributed that way too in the future in additon to health-stimulus programs on the horizon. These companies both have large moats around them and should do well for long term investors as they are both very well run can capitalized.

• Report this Comment On April 15, 2009, at 1:25 AM, rlcato wrote:

  As you know the credit card (CC) companies just charge everyone that carries or displays there symbols. They charge the banks a % just to carry their card. Shops are charged a %. The banks hikes the rates up. That's just extra cash to them. You can't get a bank loan but you can still get a CC. My dog has one but he has trouble holding a pen. (I just let it sit in a folder unused with his paid vet receipts.)

  Can you tell me why our governments are not looking in to this. They've said nothing about CC predatory tactics that they implement. Talk about tight-lipped? The constant changing of rules and dates. Look at your statement due-date. The time the minimum amount is due and the time the interest is added grows WIDER: sometimes 10 DAYS! If you pay in that range you're penalized. Then the CC's take forever to send your next statement. You can't really pay ahead of time for you run the risk of making a double-payment and then you'll have to make yet another payment all within about a month. That's just madness!

  For the sake of jc09058,I'm Non-US.

  Here in Australia, CC's would go for you in the airports or shopping malls wanting you to sign up. I'll have to admit, they've lightened up considerably (thank goodness) but they're still around just waiting for you. The new thing are these very low interest and transfers to low interest CC's so it sounds like the CC's are moving more business overseas.

  Thanx for the tip RoanH

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