Monthly Payment Rates Approach 22%

Monthly payment rates, the amount that cardholders pay on their credit card debt, soared in April setting a new industry record. Driven by higher minimum payments, the monthly payment rate was nearly 100 basis points over the prior record set in February. Rising interest rates have also played a role in driving the MPR north. Among credit card-backed bonds, the monthly payment rate was 21.74% in April, compared to 19.10% in the prior month and 18.52% one-year ago. According to FitchRatings, the payment rate averaged 19.97% during the first quarter and averaged 18.60% for 2005. Five years ago the monthly payment rate hovered around 15%. FitchRatings also says that payment rates bounced back after a decline in Marchâ™s payment rate, which is a seasonal occurrence caused by fewer collection days in February.

Monthly Payment Rate
Nov 05: 18.78%
Dec 05: 18.90%
Jan 06: 19.97%
Feb 06: 20.85%
Mar 06: 19.10%
Apr 06: 21.74%
Source: FitchRatings

Details

ADS Renews Harlem Furniture Card Deal

Alliance Data Systems has signed a long-term renewal agreement to continue providing private label credit card services for IL-based The Room Place at Harlem Furniture and its 16 stores. Under terms of the agreement, Alliance Data will continue providing Harlem Furniture with private label credit card services including account acquisition and activation; receivables funding; card authorization; private label credit card issuance; statement generation; remittance processing; customer service functions; and marketing services.

Details

Discover Wins a Brandweek Award

The “Discover Card” has been awarded top honors for the ninth consecutive year in the “2006 Brandweek Customer Loyalty Awards. Discover Card was recognized with a Gold Award in the credit card category. The Customer Loyalty Award builds upon the other best-in-class distinctions Discover has been awarded, including “Best in Class” for fraud information and protection services from the January 2006 Credit Card Monitor Report, as well as the number one ranking in online customer experience in a survey performed by Keynote Systems.

Details

ORCC eCollections Adds Best Offer Feature

Online Resources Corporation has added a “best offer” feature to its online collections service that enables creditors and consumers to agree on a settlement based on rules preset by the creditor or agency. Delinquent account holders can apply for payment programs, with rules specified by the creditor or agency, enabling them to privately and conveniently self-cure their delinquent status. Account holders sign on to the collections web site and opt to make their single “best offer” for a settlement plan. The system may accept this offer based on rules preset by the creditor or agency. If the offer is not accepted, the system counter-offers with a predetermined settlement amount. This ensures that the collector receives the maximum amount using this one-step process with the delinquent.

Details

Q1 Advertising Expenditures Rise 11%

Driven by credit card promotion, overall advertising for financial services rose 11% in the first quarter. This is the second consecutive quarter that the ad spend for financial services has topped $2 billion. According to TNS Media Intelligence, advertising expenditures for financial services for the first quarter was $2.15 billion, compared to $1.94 billion for 1Q/05. During the fourth quarter a record $2.6 billion was shelled-out. TNS says Internet display advertising led all media forms in percentage growth, rising 19.4% to $2.31 billion as leading blue chip advertisers continued to expand their online marketing programs. The top 10 advertisers in the first quarter spent $4.76 billion, a gain of 6.9% compared to the prior year period.

AD SPEND
1Q/05: $1.94 billion
2Q/05: $1.86 billion
3Q/05: $1.88 billion
4Q/05: $2.60 billion
1Q/06: $2.15 billion
Source: TNS Media Intelligence

Details

OneLink Hires Two Executives

San Francisco-based OneLink has hired Peter Collins as VP/Business Development and David Kuhn as VP/Marketing. Collins most recently served as Senior Vice President, Sales for Salis. Previously, Collins spent several years in senior positions at Cendant Corporation, where he was Vice President of Galileo International. OneLink Corporation is a provider of integrated booking and settlement processing services for travel suppliers and their distributors.Kuhn brings more than 20 years of experience to his new position, including nearly six years with Pegasus Solutions, Inc., a leading travel technology provider where he last served as Director of Product Marketing. While at Pegasus, Kuhn oversaw efforts that led to a 43 percent increase (year-to-year) in online sales.

Details

MLB Stadiums Embrace MC’s PayPass

The Chicago White Sox, Chicago Cubs and Cleveland Indians now accept MasterCard’s “PayPass” contactless payment option at their in-stadium concession stands. MasterCard has in-stadium deployment of contactless payments at a total of 12 MLB stadiums. MasterCard also reports that the Chicago Bears will take “PayPass” at the beginning of the 2006 NFL season. “PayPass” is currently accepted globally at 30,000 merchant locations, including 7-Eleven, CVS, McDonald’s, Regal Entertainment Group theaters and many others.

Details

Unbanked Sector Exceeds $10 billion

The unbanked sector now exceeds $10 billion and is quickly adopting prepaid cards to make purchases. The data compiled by Phoenix ESP Payments Research Group show that about 90% of households with incomes above $35,000 hold a credit card, but the percentage drops to less than 47% for lower-income households. Lower-income consumers are 45% more likely than their higher income counterparts to purchase prepaid cards and somewhat more likely to buy prepaid cards for use at specific retailers. Phoenix is in the process of conducting the first major syndicated research service to offer a detailed, data-driven examination of trends in the growing low-income financial services market.

Details

Falcon One Targets Access Fraud

Fair Isaac has introduced a real-time, multi-factor authentication solution that uses fraud analytics to provide maximum online fraud detection with minimal customer impact. The new “Falcon One for Online Access” may be deployed individually, or cooperate with other existing or added Fair Isaac fraud protection systems such as “Fraud Manager,” which is used widely in the credit and debit card industries Using both its transaction behavior intelligence and communications channel monitoring, “Falcon One for Online Access” provides continuous feedback on session risk to the bank’s web hosting system, allowing bank managers to determine the best level of intervention or confirmation at every level of risk. To assist with risk mitigation, “Falcon One for Online Access” provides optional transient passwords, an advanced identity authentication interview service, and a case management system for human or automated follow-up and confirmation of suspicious transactions.

Details

Overall Bank Profits Set a New Record

The FDIC reported that commercial banks and savings institutions posted record quarterly net income of $37 billion for the first three months of this year. Loan growth, particularly commercial lending, drove the 9.5% year-on-year increase. Charge-off rates on consumer loans declined in the first quarter, ending a two-quarter increase in consumer loan losses associated with new federal bankruptcy rules that took effect in October 2005. Net charge-offs of credit card loans declined to $2.9 billion, while net charge-offs of other loans to individuals fell to $1.3 billion — both five-year lows. Overall, asset-quality indicators remained quite favorable and no other loan categories exhibited significant activity in noncurrent loans or net charge-offs.

Details

Office Depot Intros New Loyalty Card

Office Depot, with more than 1,000 retail stores in North America, is launching a new loyalty card this week. The new “Worklife Rewards” card offers a guaranteed 5% back to frequent buyers who spend at least $200 on qualified purchases during a reward period. As part of the new loyalty program, Office Depot customers who meet the $200 threshold will continue to earn 5% back on all future qualifying purchases. Cardholders also earn an additional 15% back in bonus rewards on Office Depot Copy, print and ship services and double reward credits on Office Depot Brand ink and toner. The new card also offers online tracking of purchases. The “Worklife Rewards” card replaces the Office Depot “Advantage Program.”

Details

BMW/AMEX CARD

BMW Financial Services has inked a deal with American Express to introduce a two rewards credit cards. The card will target BMW’s 1.5 million customers in Great Britain. The deal includes issuance of a credit card for the “Mini” automobile in addition to the BMW card. BMW currently offers credit cards in the U.S., Germany, Japan, Australia, New Zealand, Austria and Spain. The U.S. BMW card is issued by BMW Bank of North America. BMW reportedly is planning to launch a credit card in the UAE later this year. BMW is also offering other financial services including savings products and insurance.

Details