Tuesday, May 30, 2006

Trends in Creditcards

1. Industry Consolidation. In the 1990s there were 10 issuers of creditcards. Today, we are down to 5. The business hasn't been growing lately, so the issuers of creditcards are trying to steal business from each other. Now they are buying out competitors, and that means less competition. That is bad news for customers.

2. Growth in Small Charges. To grow the outstanding balances on creditcards, there is going to be more of a push to allow small charges. An MSN Money column says, "Research firm TowerGroup predicts the volume of small electronic payments -- 'micropayments' -- will grow to $11.5 billion by 2009 in the U.S. and $40 billion globally." Why do you think so many people have creditcards in their wallets, creditcards in their drawers, creditcards next to their phones, creditcards in purses, and more creditcards coming in the mail? Issuers of creditcards are pushing to replace cash. This is another trap to avoid.

3. Credit Card Fraud. Security of your account information is poor. Visa found only 17% of the 231 large merchants it questioned were following payment card industry guidelines regarding customer data security. You hear about some kind of identity theft every day in the news. This is a compelling reason to avoid creditcards altogether, and to monitor your credit report using an alert service to notify you when your credit is checked.

In addition, the issuers of creditcards are always updating their bag of tricks to trip you up into defaulting - so just close your account - or eventually get duped.

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