JAN DEBT

For the first time ever credit card outstandings for January increased over December, rising by GBP 296 million. However, year-on-year growth for credit card outstandings has been slowing, from an 8.6% rate in November to 7.8% for December to 7.5% for January. According to the The Bank of England, net credit card lending edged up to GBP 53.0 billion in January from GBP 52.8 billion in the prior month and compared to GBP 49.3 billion one-year ago. BOE noted that the GBP 300 million increase in January was boosted by a GBP 200 million desecuritization. The increase in total net lending to individuals in January (GBP 1.1 billion) was lower than the December increase and the previous six-month average. The twelve-month growth rate continued to fall, by 0.5 percentage points to 3.1%, and the three-month annualized growth rate slowed by 0.1 percentage points to 1.3%. The increase in net consumer credit in January (GBP 0.4 billion) was above the increase in December but below the previous six-month average. The annual growth rate of consumer credit continued to slow, to 4.6%; the three-month annualized growth rate fell by 0.4 percentage points, to 2.4%.

NOTE: Chart does not include about GBP10 billion from specialist lenders, retailers, and insurance companies. SOURCE: Bank of England

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Credit Card ABS Charge-Offs Hit a New High

Performance among credit card-backed securities deteriorated across all
key metrics in January. The charge-off rate increased to its highest
level ever and delinquency hit a 17-year high. According to “Moody’s
Credit Card Index” charge-offs for January hit 7.74%, compared to 5.48%
one-year ago. Delinquency rose to 5.94% compared to 4.51% for January
2008. Moody’s expects the charge-off rate index to hit double digits by
year end. Most analysts are predicting 9% charge-offs by December, but
it largely depends on the unemployment rate. Cardholder payments also
dropped in January by 16.39%, compared to 19.06% for January 2008.
Yield dropped to 16.58% from 18.54% one-year ago. The one-month excess
spread also declined to 5.81% in January, compared to 6.94% for January
2008.

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Reloadable Card White Paper Released

IA-based The Members Group has issued a white paper focusing on
reloadable cards. The white paper, “Reloadable Cards – It’s All in the
Marketing.” Reloadable cards not only offer a new product for existing
members; they also offer a springboard for the attraction of entirely
new groups of members – in particular, the travel, teen and underserved
markets. TMG is a financial services
organization dedicated to providing innovative customized solutions to
credit unions and financial institutions across North America. TMG’s
core products include credit, debit, ATM and prepaid solutions, as well
as online reporting, item processing, ACH, ALM and printing services.

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Consumer Confidence Continues to Set New Lows

The Discover U.S. Spending Monitor dropped two points in February to
75.7 due to economic confidence and spending intentions. More than 67%
of those surveyed gave the economy a “poor” rating and a Monitor-high of
82% of consumers said they intend to spend the same or less next month,
with 77% who said they actually managed to do just that in January. There were some underlying bright spots. For the second consecutive month, only 37% expected an added expense or income shortfall in the
next 30 days. This is the lowest this number has been in a year.
Furthermore, while 49% of consumers said they planned on having money
left over after paying bills in February, of those who did have money
left over, a record 81% said they expected to have the same or more
money left over than the previous month. This was the first time this
number broke 80% since September 2007 and the third straight month this
number has increased. The Discover U.S. Spending Monitor is a monthly
index of consumer spending intentions and capacity that is based on
interviews with a random sample of 15,000 U.S. adults.

U.S. Spending Monitor
Feb 08: 86.4
Mar 08: 85.1
Apr 08: 85.4
May 08: 86.8
Jun 08: 85.9
Jul 08: 85.2
Aug 08: 87.8
Sep 08: 86.5
Oct 08: 80.4
Nov 08: 79.7
Dec 08: 76.6
Jan 09: 77.8
Feb 09: 75.7
Source: Discover

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New Citi Forward Rewards Good Cardholders

Citi has introduced a new credit card that lowers the purchase interest
rate by a quarter percent when cardholders use credit wisely and rewards
them with “ThankYou Points” each billing period for paying on time and
staying under the credit line. The new “Citi Forward” card also offers a
variety of credit education and online features. Citi is also teaming up
with MySpace to offer “Citi Forward by MySpace,” a card that rewards
cardholders for both financial and social responsibility. “Citi Forward
by MySpace” cardholders will receive the same benefits and incentives
for using credit wisely as well as the opportunity to earn additional
“ThankYou Points” for completing socially responsible acts, such as
donating to a local food drive, going paperless, switching to energy
efficient light bulbs, volunteering and more.

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Bankruptcy Filings Pace Slows in February

The number of U.S. consumer bankruptcy filings in February neared
100,000, rising 29% from one-year ago and 11% sequentially. The increase
is running under the widely held projections of a 35% gain for 2009.
According to the American Bankruptcy Institute and the National
Bankruptcy Research, consumer filings totaled 98,344 in February.
Chapter 13 filings constituted 30.2% of all consumer cases in February,
a 2.6% increase from January. According to the Administrative Office of
the U.S. Courts bankruptcy filings jumped 34% in the third quarter
compared to the year ago period, and increased 5% sequentially.
According to CardData (www.carddata.com) there were 290,000 filings in
the fourth quarter. In a recent American Bankruptcy Institute poll 65%
of respondents predicted that bankruptcies in 2009 would increase by at
least 35% over the nearly 1.1 million cases filed in 2008. Fifty-three
percent of respondents predicted that filings would increase by 35% or
more while 12% thought that filings would increase by about 35%. (CF
Library 1/08/09; 1/30/09)

BANKRUPTCY FILINGS
Jan 08: 66,050
Feb 08: 76,120
Mar 08: 86,165
Apr 08: 92,291
May 08: 91,214
Jun 08: 82,770
Jul 08: 94,124
Aug 08: 96,413
Sep 08: 88,663
Oct 08: 106,266
Nov 08: 99,925
Dec 08: 84,926
Jan 09: 88,773
Feb 09: 98,344
Source: ABI/NBKRC; CardData.com

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Consumers Adopting Mobile Payment

A new study released by SYNERGISTICS reveals that 18% of households with
Internet have done mobile payments. The report, “Mobile Payments: The
Consumer Perspective” evaluates consumer usage of mobile devices for
payments and banking applications, as well as the potential for future
growth. The advantages and concerns consumers identify, as well as
issues related to contactless technology are examined. This activity
has been somewhat wider among younger respondents. One-quarter of those
ages 18 to 34 have performed some type of mobile payment. Usage is
widest in the $35K to $49.9K bracket, reaching one-quarter of this group
before declining somewhat as income increases.

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PCI Releases Prioritized Approach

The PCI Security Standards Council has released “The Prioritized
Approach”, a new resource to promote card data security through adoption
of the PCI DSS. “The Prioritized Approach” framework was created to help
merchants who are not yet fully compliant with the PCI DSS understand
and reduce risk while on the road to compliance and is comprised of six
security milestones which include: Milestone One: If you don’t need it,
don’t store it; Milestone Two: Secure the perimeter; Milestone Three:
Secure applications; Milestone Four: Monitor and control access to your
systems; Milestone Five: Protect stored cardholder data; Milestone Six:
Finalize remaining compliance efforts, and ensure all controls are in
place. “The Prioritized Approach” was compiled after considering actual
data compromise events, feedback from Qualified Security Assessors
(QSAs) and forensic investigators and input from the PCI SSC Board of
Advisors. The framework gives practical suggestions on how to approach
compliance with PCI DSS to create the most immediate impact on card data
security in a merchant’s environment and creates a common
language to improve communication around compliance progress between
merchants, QSAs, acquiring banks and card brands.

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NitroSecurity Joins the PCI Council

Network security solution provider NitroSecurity has joined forces with
the PCI Security Alliance and PCI Security Standards Council.
NitroSecurity, a platinum member, joins
the group with the industry’s first integrated DAM and SIEM solution,
NitroView, used by those affected by PCI requirements to detect, track
and respond to abnormal or malicious activity across the enterprise.
The company brings its expertise to
all 12 requirements of the PCI Digital Security Standard (PCI-DSS)
through the integration of tools for monitoring credit card data
directly, and providing the analysis and reporting required to track all
access to that data. This combination of Log Management, Database
Monitoring, Intrusion Prevention, and SIEM into a single interface
facilitates all aspects of compliance: from the detection of where
sensitive data exists, to absolute visibility into who accesses that
data. NitroSecurity offers an on-demand webinar, which discusses how to
use SIEM, Database Activity Monitoring (DAM), and Log Management to meet
all 12 requirements of PCI-DSS.

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Vesta Corporation Names a New CMO

OR-based e-payment solution provider Vesta Corporation has hired Chris
Parsons, previously with VeriSign, as Chief Marketing
Officer. As Senior Vice President of Strategic
Development for VeriSign, he led the company’s international
expansion activities in India, China and EMEA (Europe, Middle East, and
Africa) — providing the major source of growth for the company for three
years. He also served as Senior Vice President-Strategy, Alliance and
Business Development for BellSouth, guiding the Telco provider’s
business development efforts and establishing strategic alliances with
Cingular, IBM and Cisco. While Chief Marketing Officer at MCI
Systemhouse, Parsons led the development of the company’s business
divisions in Korea and Japan.

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