Q. What is the concept of a credit card and what are the types of credit cards?
A. A credit card is handheld plastic payment device that enables the user to access a line of credit to make purchases or obtain cash.
Q. What is the average number of days/weeks does it take for credit card approval?
A. Typically it takes 5-7 business days for approval, 10-14 business days for issuance.
Q. What do you have to do to activate a credit card?
A. Some issuers require you to activate your card by calling in to confirm receipt. However others may consider it activated if you use the card at least once.
Q. What is the average number of credit cards per cardholder?
A. There are currently 281 million people in the USA. Approximately 185 million Americans use credit cards. With a total of 1.2 billion credit cards the average number of cards per cardholder is 6.5 cards.
Q. How many cards were issued in 2000?
A. Approximately 200 million new cards issued last year worldwide.
Q. How much credit card interest does the average household pay each year?
A. $1000.00 which is $83.33 per month.
Q. What is the average US household amount owed to credit card companies?
A. That depends on how you calculate it. Considering there are 110 million U.S. households, the average debt per household would be about $6000. If you look at only households with at least one credit card, the average debt per household is about $8000.
Q. What is the average interest rate on a standard card, a gold card and a platinum card?
A. Typically, standard cards carry the highest interest rates, followed by gold and platinum cards. As of June 2001, the average rate is 17% for standard, 15% for gold and about 13% for platinum cards.
Q. How many creditworthy adults are there in the United States?
A. About 78% of U.S. households are considered creditworthy.
Q. What's the advantage of obtaining a business credit card?
A. It enables you to generally build credit in the business name. Also there are special business-specific perks available to business cardholders. Q. What is the difference between fixed APR and on-going APR? A. A fixed APR is an interest rate that has been set or fixed by the issuer and will not change unless the issuer amends the cardholder agreement. An on-going APR is the interest rate the card changes to after the introductory period.
Q. What if you have bad credit, which card will you qualify for?
A. Secured credit cards are the best.
Q. What type of card can I get when in bankruptcy?
A. A prepaid card only. After the bankruptcy proceedings you might consider obtaining a secured credit card to rebuild your credit.
Q. What is a charge off?
A. A charge-off is a loan loss. If you fail to pay on your credit card account for more than five months it is considered a charge-off for accounting purposes by the creditor.
Q. What is the best way to close a credit card account?
A. Call the issuer and ask them to close the account. It is also good to follow-up in writing. Then follow up with the issuer to make sure your account was closed and monitor your credit file to be sure it was reported properly as closed by you and not by the card issuer.
Q. What is considered to be a reasonable time of day for a debt collector to contact you?
A. Regular business hours or between 800am and 800pm.
Q. What is the best method for disputing charges on my credit card?
A. In writing. Include the transaction number, amount, transaction date, posting date, name of the merchant and the reason for the dispute. Most issuers provide a special form for this purpose and a special address. You may also call but it will need to be in writing to preserve your rights.
Q. Is a balance on a credit card better than a truck loan?
A. Yes. A truck loan is a secured debt while a credit card is generally an unsecured debt. Unsecured loans carry a higher value with potential creditors.
Q. Why do credit card rates stay high when prime rate falls?
A. This is due to three reasons: floor rates, fixed rates, and the way some rates are adjusted. Some issuers set a minimum or floor interest rate. Nearly half of all card issuers now use fixed interest rates for credit cards. A few issuers adjust rates on a quarterly schedule and use the highest prime rate in effect during the previous quarter as a basis for the rate adjustment.
Q. If you close your credit card accounts do you still have the same finance charges?
A. It depends on the issuer's policy. Under some state laws the finance charges will continue to be calculated under the same formula until the balance is paid off. However if the issuer closes your account you will often be subjected to a higher interest rate pegged to your personal credit risk.
Q. Some banks are inserting an arbitration clause in their agreements. Do I have an alternative to signing away my rights?
A. If this is a problem for you then seek credit cards from smaller institutions such as community banks and credit unions. The arbitration trend is currently limited to the top issuers.
Q. How can I get a Switch card?
A. There are 31 member banks and building societies in the United Kingdom that offer Switch cards. Contact them at www.switch.co.uk.
Q. Why are so many credit card companies headquartered in Delaware?
A. Delaware is a business friendly state. There are few regulations specific to the credit card industry. There is also no usury ceiling.
Q. Where can I find an extended grace period?
A. The best credit card program for an extended grace period is the Diners Carte Blanche card. Under their program you have two billing cycles to pay off the balance.
Q. What is two cycle billing?
A. Under two-cycle billing you will be charged interest for the past two billing cycles if you had no balance prior to the two billing cycles and if you did not pay off the balance in-full for the current statement. Essentially the card issuer is recapturing interest charges from you for a period when interest was not charged. If you pay off your credit card now and then stay away from two cycle billing.
Q. What are loyalty cards? Are they worthwhile?
A. Loyalty cards are also known as reward cards. They can be very worthwhile for the right type of cardholder. For example, a cardholder who charges a high amount each month and pays it off in full each month can generally benefit greatly under most rewards programs.
Q. What is the best way to go about credit card consolidation?
A. Take advantage of free balance transfer offers with 0% or low interest rates. Better yet obtain a home equity loan which generally offers lower interest rates plus is tax deductible.
Q. Is there any way to find information about the stringent guidelines for credit card approval?
A. There are no guidelines for approval of credit card accounts to consumers. Issuers set their own underwriting standards, which vary widely.
Q. Is there any law that allows a debt collector to contact your friends or relatives?
A. To review THE FAIR DEBT COLLECTION PRACTICES ACT, please see: www.ftc.gov/os/statutes/fdcpa/fdcpact.htm
Q. What happens to a consumer's credit card debt if they die?
A. Unless a special insurance program is setup with the card issuer to cover the balance in the event of death, any outstanding balances are charged to the estate.
Q. What is a cash advance?
A. A cash loan made with a credit card. Cash advances usually carry higher interest rates than purchases, are accessed a special cash advance fee, and have no interest-free period or grace period.
Q. What are the basic operational and financial arrangements for affinity partnerships?
A. All affinity partnerships are unique. Most issuers are looking for deals that will generate at least 10,000 accounts. Most affinity deals are structured so that the issuing bank pays 50 basis points (0.50%) of the net purchase transaction volume with the affinity partner. However in the current competitive environment, many of affinity deals are sweetened with up front payments and a bounty for each new account generated.
Q. Who are the top card issuers in the United States?
A. As of September 30, 2001, the top ten card issuers in the USA, ranked by credit card loans, are in descending order: #1 Citigroup, #2 MBNA America, #3 Bank One/First USA, #4 Discover, #5 J.P. Morgan Chase, #6 Capital One, #7 Providian, #8 American Express, #9 Bank of America, and #10 Household.
Q. Is credit card debt increasing?
A. Yes, but at a much smaller pace during 2001. At mid-year, credit card debt was growing at an annual rate of about 1%-2%.
Q. How many loyalty credit cards have been issued in the U.S. for 2000 & 2001?
A. At mid-year 2001, there were 555.9 million bank credit cards in force in the U.S. About 250 million of these are cards issued through co-branded, affinity or loyalty programs.
Q. What is the current prime rate and average for 1998, 1999, 2000?
A. As of November 1, 2001 the prime rate is 5.5%. The average for 2000 is 9.21%. The average for 1999 is 7.98%. The average for 1998 is 8.38%.
Q. What is the average new cardholder acquisition cost for card issuers?
A. There is a very wide range since it depends on the consumer appeal of the offer. The current range is between approximately $50 per account for aggressively-priced programs marketed on the Internet, to $150 per account for a moderately-priced business card program.
Q. What percentage of issued cards remain inactive or not used?
A. Among the top issuers, approximately 40% of credit card accounts are considered "inactive".
Q. What percent of active accounts are paid off monthly?
A. Approximately 40%.
Q. What is the average yearly balance on a credit card?
A. The average balance per account is currently about $2500.
Q. What are the most accepted credit cards worldwide?
A. MasterCard/Eurocard, VISA, American Express, JCB, Diner's Club, and Discover.
Q. Many credit card companies allow their customers to access their accounts via their web site. Has this access been considered successful?
A. This has been very successful and is a fraud fighting tool since cardholders tend to monitor their accounts more closely and can detect fraudulent activity much faster.
Q. What is the number of credit card companies currently operating in the U.S.?
A. There are approximately 5,500 institutions issuing VISA and MasterCards. Including issuers of retail credit cards, like store cards, the total number probably approaches 7,000.
Q. Which of the major credit cards, is most widely accepted and how do the others compare?
A. VISA and MasterCard are the most widely accepted and are essentially tied in the number of acceptance locations worldwide.
Q. What is the average amount a college student owes in credit card debt?
A. Approximately $3000 is the average balance owed by graduating college seniors.
Q. What is the percentage of cardholders who are late with their payments 30 days or more?
A. About 3% of credit card accounts are past due by 30 days or more each month.
Q. How much money do credit card companies lose to fraud each year?
A. Credit card companies lose about $1 billion per year in the U.S. due to credit card fraud.
Merchants lose much more. If bankruptcy fraud is considered, the amount of fraud in the U.S. may be as high as $3 billion for credit card companies.
Q. What is the average amount charged to a credit card for one transaction?
A. About $70.00 for VISA and MasterCards
Q. In the past 20 years, what has been the most dramatic change in the marketing of credit cards?
A. Information technology. Twenty years ago most banks offered one or two products to all customers. Today, most issuers match customers with a wide range of card products. Some issuers are so sophisticated they can almost offer a completely personalized credit card.
Q. What is the highest rate on a credit card?
A. CompuCredit charges rates as high as 41%
Q. I have a credit card that I only used once in 5 years and I am always surprised that it is still an active card. Just how long do companies keep a credit card account open if it is not used regularly?
A. There is no time limit for an issuer to close an account for inactivity.
Q. How does the stock market performance (good or bad) affect the credit card business?
A. A good stock market usually translates into higher consumer confidence and spending; a bad stock market typically conveys a soft economy which means more consumers may become tardy with their payments.
Q. Are there debit cards that are tied with loyalty reward programs?
A. Yes. Chase and Bank of America offer debit cards that earn air miles. There are others available.
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