Wall Street Journal:

Co-branded and affinity cards have become too expensive as credit-card companies try to reduce expenses amid the surge in late payments and delinquencies by card users. Issuers usually pay partner firms or groups an upfront fee and percentage of profits throughout the term of the contract.

Banks also fund the bulk of rewards programs and maintain customer accounts.

The retreat by J.P. Morgan Chase’s unit is part of an effort to stem card-related losses that are expected to haunt the company for the rest of this year. Chase now has about 110 co-branded credit cards, down from more than 200, and expects to eliminate more cards this year.

The Starbucks Duetto card, offered with coffee company Starbucks Corp., generated lots of buzz when it was introduced in 2003 because customers could use it either as a traditional credit card anywhere or turn it into a prepaid card by loading money onto it and using it at Starbucks.

“It was difficult to get the type of scale behind the program that we wanted,” said Gordon Smith, who runs J.P. Morgan’s credit-card business. “It was innovative and creative, but if these cards are small, there isn’t much earnings power for the partner or the bank.”

Chase is keeping its most successful partner cards, including those offered with Continental Airlines Inc. and Marriott International Inc. The bank also recently entered a new card partnership with Hyatt Hotels Corp.

Last fall, Citigroup dropped a three-year-old Home Depot Inc. co-branded card called Home Depot Rewards that could be used anywhere. The card “didn’t resonate with customers as we had hoped,” said Bill Johnson, who runs the bank’s card-partnership programs. Instead, the bank is continuing to promote its private-label Home Depot card, which can be used only in Home Depot stores.

Citigroup also is wrestling with jeweler Zale Corp. over the terms of its credit-card contract. The bank has threatened to terminate the contract early unless the chain, hit hard by sluggish sales, pays Citigroup a $6 million penalty. The contract is set to expire next year.
For retailers, the loss of card partnerships means they must now find new ways to retain customers. In addition to Chase, Royal Bank of Canada also is breaking off its relationship with Starbucks for its Canadian loyalty card. A Starbucks spokeswoman said the company is planning to introduce a new loyalty program soon.

Since the video appeared, our lawmakers have passed laws to regulate credit card interest rates and fees from being raised without notice.  This in turn have forced the banks and credit card companies to preemptively raise rates and fees before the law takes effect.  They (visa, mastercard, discover, and american express)  have also found a loophole that allows them to avoid the law by simply changing all fixed rate credit cards now to variable interest rate cards.  You will notice many statements you now receive with little credit card inserts with terms of agreement updates.

DEBTORS REVOLT BEGINS NOW!

And from this video, I think many others may be following suit. Youtube has many other users from middle America also posting similar frustrations and anger against their creditors. They seem to be taking the same action.

Re: DEBTORS REVOLT BEGINS NOW!

Re: DEBTORS REVOLT BEGINS NOW!

Kill Bank of America

BofA: Bend Over America

debtors revolt-my first video

There are many more videos on youtube you can watch.  I think this reflects the attitude of many Americans in today’s economic environment.  During these bailouts, banks received 0% interest rate loans from the taxpayers and they turned around and started raising interest rates to 19.99 to 29.99 and possibly higher rates.   What would happen if everyone simply stopped paying all their credit cards at the same time?

Nasdaq:

Consumer data collection firm TransUnion reported Monday that credit card delinquencies fell in the third quarter of 2009, the first time that had happened.

Typically, says TransUnion spokesman Clifton O’Neal, delinquencies rise in the third quarter – which the company defines as the period between July and September – due to vacation and back-to-school spending. But that trend was bucked this year as consumer sentiment shifts. People are using cards more wisely and paying down debt, a sharp reversal from the widespread profligacy of recent years.

Consumers’ change in attitude was reflected by both average borrower debt and the card delinquency rate: average debt declined to $5,612 from $5,719 in the previous quarter; delinquencies fell 5.98 percent from the second quarter to 1.10 percent of accounts outstanding.

That was the third quarter they made those claims on.  Then in October they mysteriously went up after “people became wise using credit cards and started paying down debt”.  Ha ha.  Sorry, I work in collections and know the real story behind credit card delinquency getting better despite unemployment getting worse. This report is more accurate and closer to the truth.

Nov. 23 (Bloomberg) —

U.S. credit-card delinquencies climbed last month to the highest level since February as five of the six biggest card lenders posted increases, Moody’s Investors Service said.

Loans at least 30 days overdue, a signal of future defaults, rose to 6.12 percent in October from 5.97 percent in September, Moody’s said in a report dated Nov. 20 and distributed today. So-called early-stage delinquencies, payments 30 to 59 days late, were unchanged at 1.66 percent.

Banks typically write off card loans after 180 days, and defaults fell last month to 10.04 percent from 10.72 percent in September, reflecting lower delinquency rates earlier in the year. Credit-card defaults and delinquencies tend to track U.S. unemployment, which climbed to 10.2 percent in October, the highest since 1983.

“Weak job creation, elevated bankruptcies and rising unemployment continue to weigh on results,” John McDonald, an analyst with Sanford C. Bernstein & Co., said in a Nov. 17 research note. “It still feels too early to declare victory.”

Write-offs may peak at 12 percent to 13 percent in 2010, Moody’s analysts Will Black and Jeffrey Hibbs said in the report.

JPMorgan Chase & Co., the biggest U.S. card lender, as well as Capital One Financial Corp. and Discover Financial Services this month posted October data that included their highest delinquency rates for 2009. American Express Co., the top performer this year in the Dow Jones Industrial Average, was the only of the six that didn’t report a rise in delinquencies.

As far as American Express bucking the delinquency trend, I will bet they are cooking their books.  Who are they trying to fool?  Oh yeah, their investors. They are not immune to a bad economy and high unemployment.  They just have more aggressive loan mitigation techniques that allow them to  re-age their credit cards to a current status with just one token payment regardless if you are 6 months past due.

We recently had legislation pass by Congress and that is why your rate has gone up.  It has nothing to do with your FICO score, credit report, or any changes in your “credit profile”.  It is simply the banks and credit card companies wanting  to maximize their profit and they don’t want to lose the opportunity to take advantage of you.  They certainly don’t care about offending you.  It is all about their bottom line and it is a preemptive move by the credit card companies.

Washington Post:

Credit card companies are raising interest rates and fees seven months before new rules go into effect that will limit their ability to do so, much to the irritation of Congress and consumer advocates.

Chase, for instance, will raise the minimum payment required of some of its customers from 2 percent to 5 percent of the statement balance starting in August. Chase and Discover have increased the maximum fee charged for transferring a balance to the card to 5 percent of the amount, up from 3 and 4 percent, respectively. Bank of America last month raised the transaction fee for balance transfers and cash advances from 3 to 4 percent. Card issuers including Bank of America and Citi also continue to cut limits and hike up rates, which they have been doing with more frequency since January.

“This is a common practice and will continue to be common, because issuers can do these things for really no reason until February,” said John Ulzheimer, president of consumer education for Credit.com, which tracks the industry. “It’s what I call the Credit Card Trifecta — lower limits, higher rates, higher minimum payments.”