The Future Of CreditMattersBlog.com

Law school has ended. Graduation is over. Bar preparation is now under way. Let the fun begin. My legal direction is all figured out. But what about CreditMattersBlog.com? That's what today's blog entry is about.

Many people have asked this question during the past six months: what's going to happen to the blog after graduation? I've always maintained that I would like to keep the blog going -- even after I was a lawyer. But I've recently had second thoughts about that. It was one thing to blog while I was a full-time law student (no big deal). But it's another thing entirely to think that I can blog while I am a full-time lawyer.

I've been able to blog from class; I won't be able to blog from court. What's more, my blogging has always been on my time. Now, it will be on my employer's time. Even if I could get my employer's permission (and I am sure I could), I would still feel odd about not giving the firm 100% of my time. First and foremost, my top priority is to the firm and my clients. Anything that takes away from that is, quite frankly, unacceptable to me.

The decision -- to blog or not -- is a tough one for me. It's so tough, in fact, that I consulted some of my closest confidants earlier this week -- to see what they thought of the situation. Here are some of their thoughts (each quote comes from a different person):

"Announce you're taking a leave of absence, and that the blog will remain up for posterity's sake...."

"Why not announce you are taking two to three weeks off and then you will come back with an extremely reduced schedule?" This person, by the way, thinks that I am "addicted" to writing. This person doesn't think I can stop writing even if I tried. This person is probably right, but I will have plenty of legal writing to do. It shouldn't be difficult to get my writing "fix."

"Everyone understands that your career is a top priority and no one will blame you for this move (in fact most of us can't figure out how you have kept your busy schedule along with your day-to-day involvement with the blog!)." When I initially consulted these people, I said that I planned to end my blog. Hence, the comment about "this move."

"If the cost of maintaining CreditMattersBlog.com is not very high, I would definitely keep it open. Perhaps you can give bi-weekly, or monthly commentaries on the state of credit in the U.S." I value this person's advice tremendously, by the way.

And finally, there was this one: "Personally, I think you should announce the way you think you'll really be heading. I would urge you to eschew sugarcoating your announcement, as I think a good bulk of your readers have grown fond of your blog and have built up something of a trust with you."

That last comment is the one that resonated most with me. During the past week, I've given it considerable thought. Will my future legal career allow me to blog on a regular basis? What's more, what will the blog be like during the next 60 days, when I am preparing for the bar exam?

Let me answer both of those questions -- taking the last question first. During the next 60 days, I will be studying for the bar. I will be dedicating all of my time to that endeavor. Period. The blog, at best, would be an afterthought. My guess is that I would have gone on hiatus for the next two months. There would not have been any blog posts.

Now, the longer-term question: will my future legal career allow me to blog on a regular basis? No. The days of blogging every day are over. I'm not kidding myself on that score.

Meanwhile, I could blog once every other week or even once every month, but I don't think that's what this blog is all about. Indeed, I'm convinced that most of my readers visit CreditMattersBlog.com not because of the stuff I write but because of the comments that my readers leave. I have a vibrant community here. The blog has logged nearly 17,000 comments in less than a year. That's a huge contribution by my readers. If I'm correct about the lure of my blog, this blog loses a lot of its appeal if I decide to write once a month.

So, let's cut to the chase. This is my plan: I don't plan to post a single blog entry for the next two months or so. After the bar exam (at the end of July), I could see myself posting a blog entry here and there. However, my activity will be inconsistent at best. What does this mean? It simply means that my blog -- as you have known it -- is no more.

Still, I do reserve the right to make a cameo appearance every now and then. If there is some earth-shattering news that I think my readers would be interested in, I'll write. (If you're interested in receiving those rare dispatches, I would advise you to get on my mailing list. You can subscribe to my blog posts here.) Otherwise, I don't expect to contribute much new material to this blog. By the way, I will also leave the comments section open. But the same rules still apply: all spam will be deleted (my readers never see spam because I delete it as soon as it appears). Also, no personal attacks will be allowed. By and large, my readers have always attacked issues -- and not each other. I'll continue to monitor all comments, though, just to make sure that doesn't change. I'll also be responding to comments as time permits. Ditto email.

Finally, it's been my great pleasure to serve everyone during the past ten months and change. Additionally, your daily participation has been appreciated. Tremendously appreciated. I could not have maintained this blog without your help.

That's about it. This, sadly, is where we say goodbye and go our own way.

I leave you with a quote and a video (below): "Don't cry because it's over. Smile because it happened." ~ attributed to Theodor Seuss Geisel (Dr. Seuss)



Smile. Ear to ear.

Take care. Read More...

Open Thread -- Open Topic/Off Topic

The blog has more than 600 entries. Additionally, there are well over 17,000 comments. Not surprisingly, some threads, though long and interesting, are old. Some of my readers are not likely going to post in those old threads -- for fear that no one will see them (except me). As an aside, I get an email any time someone posts a comment at CreditMattersBlog.com. I have a LOT of email. Anyhow, one of my readers made a suggestion this morning. I think it's a good one.

From here on out, I am going to create an "open topic/off topic" thread. I'll do that on Monday morning. The blog entry can be used for just about anything. As always, no attacks on each other will be permitted. Otherwise, almost anything goes. You can talk about anything. Importantly, though, you can use the thread to talk about credit issues that have not been addressed at my blog. Or you can talk about stuff that I have written about -- stuff that might have been written about months ago (where you might not want to post in the old thread).

I have no idea how many of my readers want this feature. It could be that none of my readers are interested in this kind of thing. Tell you what. I'm going to give this a whirl. If very few people post in it, I will assume that it's not something my readers want. If that's the case, don't be surprised if I discontinue it. If, however, I see that the thread is active, I will keep bumping the thread to the top of the blog each Monday.

We'll see how it turns out.

Thanks for reading. Thanks for supporting the blog. And thanks for sharing. Read More...

Paying With Cash Could Soon Pay Off

Cash-carrying customers could catch a break if a couple of Senators have their way. Senators Durbin and Bond are trying to push legislation that, if passed, would allow retailers to offer discounts to debit-card users and put an end to restrictions that payment networks such as MasterCard and Visa place on retailers who charge less for non-credit-card transactions.

From the Wall Street Journal:

"The extra charges the establishment has to pay for the use of a credit card are kind of hidden inflaters in the cost of the product," said Sen. Richard Durbin (D., Ill.), who is pushing the measure with Sen. Christopher Bond (R., Mo.).

Small banks and credit unions, which stand to lose revenue if consumers cut back card use, are pushing back, along with the rest of the card industry.

Retailers seeking the change "do not want to pay their fair share for the significant benefits they get when accepting debit and credit," said Trish Wexler, a spokeswoman for the Electronic Payments Coalition, a group representing bankers and credit card networks.

My guess is that this proposed legislation, which is part of the larger credit-card bill in front of the Senate, will not survive. Banks, which have every incentive to make sure that consumers keep using plastic, will do all they can to put this proposed legislation to sleep.

Read the rest of the story here. Read More...

What Does Your Credit-Card Company Know About You?

Whether it be debt collection or credit-card solicitation, those in the card industry know everything about you. They know where you shop; they know what you buy; and they know what each purchase means. The card industry has built psychological profiles to figure you out. And figure you out it has.

From the New York Times Magazine:

The exploration into cardholders’ minds hit a breakthrough in 2002, when J. P. Martin, a math-loving executive at Canadian Tire, decided to analyze almost every piece of information his company had collected from credit-card transactions the previous year. Canadian Tire’s stores sold electronics, sporting equipment, kitchen supplies and automotive goods and issued a credit card that could be used almost anywhere. Martin could often see precisely what cardholders were purchasing, and he discovered that the brands we buy are the windows into our souls — or at least into our willingness to make good on our debts. His data indicated, for instance, that people who bought cheap, generic automotive oil were much more likely to miss a credit-card payment than someone who got the expensive, name-brand stuff. People who bought carbon-monoxide monitors for their homes or those little felt pads that stop chair legs from scratching the floor almost never missed payments. Anyone who purchased a chrome-skull car accessory or a “Mega Thruster Exhaust System” was pretty likely to miss paying his bill eventually.

And this one:

Data-driven psychologists are now in high demand, and the industry is using them not only to screen out risky debtors but also to determine which cardholders need a phone call to persuade them to mail in a check. Most of the major credit-card companies have set up systems to comb through cardholders’ data for signs that someone is going to stop making payments. Are cardholders suddenly logging in at 1 in the morning? It might signal sleeplessness due to anxiety. Are they using their cards for groceries? It might mean they are trying to conserve their cash. Have they started using their cards for therapy sessions? Do they call the card company in the middle of the day, when they should be at work? What do they say when a customer-service representative asks how they’re feeling? Are their sighs long or short? Do they respond better to a comforting or bullying tone?

Enjoy the rest of the story here.

Related Articles:

When it Comes to Your Credit Card Company's Web Site, You're Not Anonymous

Are Your Shopping Choices Hampering Your Ability to get Credit Line Increases?

Are You A Bankruptcy Risk? Enigmatic Score May Tell Lenders

American Express Will No Longer Use Spending Patterns To Slash Credit Limits

Merchant Codes Make It Easier To Rate Credit Risk By Where You Shop Read More...

Advanta Shuts Down Credit-Card Lending Amid Surging Charge-Offs

Beginning next month, Advanta credit-card customers will no longer be able to use their credit cards to make purchases. The card issuer says that customers will be able to pay their existing balances over time. The halt in credit-card lending, which takes place on June 10, will affect some 1 million customers.

From Bloomberg:

Advanta has reported three consecutive quarterly losses and has seen its shares plunge from about $30 in June 2007 to $1.13 at the close of New York trading yesterday. The U.S. jobless rate reached 8.5 percent in March, a 25-year high, squeezing sales for small business owners. The economic slowdown affected Advanta’s customers across the country, Chief Financial Officer Philip Browne has said.

“We’ll be shutting down accounts for future transaction activities, but many of the customers will maintain balances and pay us off over time,” Browne said yesterday in a telephone interview. “We’ll have to service and collect on that, and that will be the first order of business for the company.”

Desperate times call for desperate measures. Advanta hopes the halt in lending is temporary. However, my prediction is that Advanta will not survive. The card issuer caters to small-biz owners. Small business has been ripped during this economic downturn. Still, Advanta's business tactics likely didn't help matters either.

The company reported a charge-off rate of 20% back in March. Given the card issuer's penchant for hiking rates to 30%+ on customers who are in good standing -- and who have not missed any payments -- it's not surprising that Advanta is now getting killed.

You reap what you sow.

Read the full story here. Read More...

Cartoon of the Day -- Excessive Credit-Card Rates?

Credit-card issuers have been vilified. These "monsters" have been slashing credit limits, instituting fees, and raising interest rates to levels that would make the mafia blush. So it's not surprising that editorial cartoonists have had plenty of material to work with lately.

Here are a few recent cartoons from Stuart Carlson (hat tip Shawnee, via creditboards, for the excessive rates cartoon):





Related Articles:

See More Cartoons of The Day Here

Read More...

Rising Credit Card Losses Are Next Challenge For Banks

It used to be that the card industry could predict credit-card losses by tracking the unemployment rate. No more. During the most recent earnings season, card issuer after card issuer talked about loss rates outpacing unemployment rates in the near future. The upshot is that it'll be a lot more difficult to predict just how bad -- and how high -- loss rates will ultimately get.

From the New York Times:

But if unemployment breaches 10 percent, as many economists predict, the rate of uncollectible balances at some banks could far exceed that level. At American Express and Capitol One Financial, around 20 percent of the credit card balances are expected to go bad over this year and next, according to stress test results. At Bank of America, Citigroup and JPMorgan Chase, about 23 percent of card loans are expected to sour.

Even the government’s grim projections may vastly understate the size of the banks’ credit card troubles. According to estimates by Oliver Wyman, a management consulting firm, card losses at the nation’s biggest banks could reach $141.5 billion by 2010 if the regulators’ loss rate was applied to their entire credit card business. It could top $186 billion for the entire credit card industry.

And, so, cardholders should continue to expect reduced credit limits and tougher approvals. In other words, the beat goes on.

Read the whole story here. Read More...

Our Personal Finance Problem

I've been waiting for the perfect time to introduce my readers to one of my favorite bloggers -- and blog. Today is that day. One of my readers, CaughtShort, tipped me off to this blog back in March. I've been reading it ever since. The blog, Bad Money Advice, is operated by Frank, an unemployed hedge-fund manager who writes with a sharp pen.

Frank, who started the blog back in January, says that his blog is a blog about advice. More specifically, he -- in my mind -- is a watchdog who makes sure that people who write about money, be they mainstream journalists, radio personalities, authors, or bloggers, get it right.

Admittedly, he is not a personal-finance expert. "My qualifications for giving personal financial advice, and for criticizing the advice of others, are thin," Frank wrote in his maiden post back in January. "Then again, the qualifications of the established experts in this field seem no more substantial." Touche.

I have to tell you, life would be a whole lot easier if guys such as Frank were not around. Those who dispense faulty advice wouldn't have to worry as much about being taken to task. They could get it mostly right, or somewhat right, and leave it at that. However, with Frank looming in the background, personal-finance writers need to make sure they get it right. If they don't, Frank will be on the case soon enough.

As I said earlier, Frank's primary goal isn't to dispense advice of his own. His goal is to point out the really bad advice that others -- too frequently -- offer up. In doing so, though, Frank must, and does, offer advice of his own (so that he can clear up the original misinformation). In that way, Frank separates himself from the drive-by critic -- who often criticizes but offers nothing more.

Frank says that the premise of his site is twofold: "that personal finance advice ought to be taken seriously and that it needs to be a lot better than it is now." Frank's correct. And to that end, Frank is there to make sure that it is.

Bad Money Advice reached the 100-post milestone yesterday. The 100th post, titled "Our Personal Finance Problem," is the one that I think my readers should read first. The post captures the essence of what Frank -- and Frank's blog -- is all about.

Enjoy. Read More...

American Express: The Madoffs Did Not Leave Home Without It

If you've got some down time, you might want to check out some of Bernie Madoff's American Express statements, which are tied to his business platinum card. The statements, which are from last year, paint a picture of just how prolific these Madoffs were (there are a lot of "employees" on the account) -- when it comes to spending.

This is the stub for January 2008 (hat tip Josh):



Here is the stub for July 2008 (click to enlarge):



And here is a stub from August 2008 (click to enlarge):


Notice that Madoff also had a "hard" limit of $200,000 on his "no-preset-limit" card. Apparently, even the rich and fraudulent get hard limits. Who knew.

If you're interested in all of the purchases associated with the three AmEx statements, go here (hat tip DealBook). Read More...

National Addiction To Easy Credit Remains Consumers' Downfall

It really doesn't matter how much Congress attempts to curb credit-card abuses. Some consumers are too addicted to credit; no amount of legislation is going to help these folks. Michelle Singletary, writing for the Washington Post, says that some of the measures being pushed through Congress contain a number of exceptions and conditions that would allow card issuers to continue punishing cardholders. Meanwhile, Singletary predicts that the most vulnerable customers will actually opt in for this punishment.

From the Washington Post:

Congress and President Obama are trying hard to stop credit card issuers from allowing consumers to go over their credit limits. To reduce oppressive over-limit fees, credit card issuers would have to get a customer's permission to set up their account to process transactions that would place them over their credit line.

This "gives consumers control over their own credit behavior," said a senior administration official who is working with the Treasury Department on the president's credit card reform initiative.

I've stood in the store behind people who hand over their credit cards and close their eyes and silently pray that the charges will be approved.

Who do you think will opt in to allow over-limit purchases?

According to Singletary, those most likely to opt in will be those who can least afford it -- those who are already maxed out.

Later in the column, Singletary talks about clarity and transparency when it comes to card agreements and statements. She's all for that, of course. But she wants to take it a step further. She calls her idea a radical one. I figure she's joking, though. Maybe she's not.

You can read the entire column here. Read More...