The last time Advanta was in the news, it was at the beginning of the year and at that time their small business credit cardholders were receiving letters that they could not longer make any new purchases. This time around it seems that the news has not gotten any better as Advanta Corp filed to reorganize under Chapter 11 bankruptcy protection.
Like so many other companies, the reason behind this bankruptcy is because they feel they would not meet the obligations of paying their debt, even after listing $363 million in assets and $331 million in debt. However like many other large corporations who file bankruptcy, there is a twist. The twi
Experts at PricewaterhouseCoopers say the moves will be necessary to cope with a 50% rise in bad debts on credit cards, expected to be close to £5bn by the end of next year.
PwC predict a personal debt timebomb where as many as 1,000 customers a day will find it necessary to seek help because they cannot cover repayments.
Because of this, they suggest banks will look at new ways to make money.
Many credit cards already carry an annual interest rate of more than 20% on outstanding balances, but this could climb above 30%. Cardholders may also have to pay £25 a year simply to have an account.
The banks are also expected to turn away customers who are not considered profitable.
The PwC study, called ‘Precious Plastic’, said: ‘Levels of write-off of this magnitude have never been experienced by the UK industry before. <
The popularity of prepaid cards has significantly increased in the past years. Demands for these alternative plastics have exploded and it is predicted to have at least $7.2 billion in transactions every year. Some employers have in fact chosen to issue prepaid cards instead of a paycheck. These cards are actually re-loadable spending cards. Although cards carry the Visa and MasterCard logo, they should not be mistaken for a debit/credit card or even gift cards. People use is to pay without having to open a bank account or applying for a credit line. You just have to add money to its balance and it works the same way as debit or credit cards. If you cannot open a bank account for some reason or you cannot trust yourself in handling a credit card, they say this is the next big thing.
Others have pointed out the other ways and reasons prepaid cards are a popular choice these days.
Our friends at Americans for Financial Reform shared this video with us, and we thought you’d enjoy it, too. This short cartoon by Mark Fiore highlights the absurdity of the ways credit card companies are trying to get around the upcoming reforms.
Posted on : 07-11-2009 | By : admin | In : Credit Cards
0
As many of the consumers within the United States have turned to other ways to pay for goods and services, many in the credit card industry have had to look for other avenues to make money. One of these avenues seems to be putting more focus on regions around the world that don’t rely on credit cards as heavily as Americans. Although this strategy could be considered risky by some, Visa has recently shown that when it is done correctly the profits can be enormous.
According to recent news, Visa has found a sweet spot within the Latin America and Caribbean regions that grew not only their total volume on branded goods but most importantly their revenue. A
The last time Advanta was in the news, it was at the beginning of the year and at that time their small business credit cardholders were receiving letters that they could not longer make any new purchases. This time around it seems that the news has not gotten any better as Advanta Corp filed to reorganize under Chapter 11 bankruptcy protection.
As many of the consumers within the United States have turned to other ways to pay for goods and services, many in the credit card industry have had to look for other avenues to make money. One of these avenues seems to be putting more focus on regions around the world that don’t rely on credit cards as heavily as Americans. Although this strategy could be considered risky by some, Visa has recently shown that when it is done correctly the profits can be enormous.