Direct mail credit card offers to subprime customers in the United States jumped 41 percent in the first half of this year, compared with the first half in 2006, according to Mintel International Group. Direct mail offers targeted at customers with the best credit fell more than 13 percent.

As home values decline and lenders balk at writing subprime mortgages, these customers can no longer refinance and tap into home equity for cash. That leaves credit cards as their only option.

For credit card companies, the subprime market is a profitable one, analysts and consumer advocates say. Subprime customers, charged higher rates than those with better credit, are more likely to make minimum payments, maintaining balances that generate interest revenue for card issuers, consumer advocates said.

Credit card issuers have a successful record of managing the risk of lending to subprime customers, using sophisticated computer models to determine fees, interest rates, and lines of credit, industry analysts said.

The new “US Liberty Card” is the brainchild of Arkansas-based Nick-Lynn Technologies. The Company says low interest rates with the card and liberally negotiated payment arrangements allow individuals and businesses to avoid bankruptcy and reputation damage, and use their previous government-payment cash flow to stimulate business growth or personal spending revenues while the “US Liberty Card” pays the government in full.

The cardholder agreement also makes the card exempt from bankruptcy filings. The card is also a device offered to help collect back taxes. The cardholder secures and presents the card and the government collects 100% of back, unpaid business or personal tax debt.

 For more information visit: http://www.nick-lynn.com/uslibertycard.htm

Some lenders, such as USAA, are nudging up credit-score requirements across their auto loans, credit cards and personal loans. Bank of America Corp. and Capital One Financial Corp. recently raised fees and interest rates for some of their credit-card customers. And this month, Citigroup Inc.’s CitiFinancial Auto started charging higher auto-loan rates for borrowers with less-than-perfect credit.

All this comes as lenders continue to tighten guidelines on mortgages and home-equity loans and lines of credit as investors back away from subprime loans and other perceived credit risks. For the most part, lenders say the changes aren’t directly tied to the mortgage mess, but reflect concerns about an economic slowdown and uncertainty about interest rates. Still, some lenders are becoming more cautious about extending credit in weaker housing markets and to people who may have exposure to certain riskier mortgages.

Card issuers can afford to be more selective about whom they extend credit to and by how much because more consumers — increasingly locked out of home-equity loans and lines of credit — are using their credit cards more. This month, for example, the Federal Reserve said consumer credit rose at an annual rate of 6.5% in June to a record $2.459 trillion, the second straight sizable gain. The increase was led by an 8.4% rate of increase for revolving credit, the category that includes credit-card debt.

For consumers, it’s a good idea to look out for any change in terms and conditions from the issuers. Although issuers can change rates and fees at any time, many will allow customers to opt out of those changes and pay off any balances under existing terms — although they will typically have to close their accounts. In recent months, Capital One, for example, changed many of its fixed interest rates to higher variable rates, while Bank of America implemented a new monthly minimum finance charge of $1.50 on former MBNA credit-card customers this past spring to bring charges in line with its existing customers’ fees.

JetBlue Airways and American Express are having a promotion that nets you $10 off a one-way fare when you use your American Express card to book a ticket via www.jetblue.com/deals/americanexpress/myvacation.The discounts are combinable, so you can get up to $20 off on a round trip if both flights meet the rules of the promotion.This offer is valid for flights between Sept. 5, and Oct. 31, excluding Friday and Sunday travel. The offer expires on Aug. 31.

At the beginning of the twentieth century, people had to pay cash for almost all products and services. Although the early part of the century saw an increase in individual store credit accounts, a credit card that could be used at more than one merchant was not invented until 1950. It all started when Frank X. McNamara and two of his friends went out to supper.

In 1949, Frank X McNamara, head of the Hamilton Credit Corporation, went out to eat with Alfred Bloomingdale, McNamara’s long-time friend and grandson of the founder of the Bloomingdale’s store, and Ralph Sneider, McNamara’s attorney.

The three men were eating at Major’s Cabin Grill, a famous New York restaurant located next to the Empire State Building, to discuss a problem customer of the Hamilton Credit Corporation.
The problem was that one of McNamara’s customers had borrowed some money but was unable to pay it back. This particular customer had gotten into trouble, when he had lent a number of his charge cards (available from individual department stores and gas stations) to his poor neighbors who needed items in an emergency. For this service, the man required his neighbors to pay him back the cost of the original purchase plus some extra money. Unfortunately for the man, many of his neighbors were unable to pay him back within a short period of time and he was then forced to borrow money from the Hamilton Credit Corporation.

At the end of the meal with his two friends, McNamara reached into his pocket for his wallet so that he could pay for the meal (in cash). He was shocked to discover that he had forgotten his wallet. To his embarrassment, he then had to call his wife and have her bring him some money. McNamara vowed never to let this happen again.

Merging the two concepts from that dinner, the lending of credit cards and not having cash on hand to pay for the meal, McNamara came up with a new idea - a credit card that could be used at multiple locations. What was particularly novel about this concept was that there would be a middleman between companies and their customers.

Unfortunately, people needed to bring dozens of these cards with them if they were to do a day of shopping. McNamara had the idea of needing only one credit card.

McNamara discussed the idea with Bloomingdale and Sneider and the three pooled some money and started a new company in 1950 which they called the Diners Club.

The Diners Club was going to be a middleman. Instead of individual companies offering credit to their own customers (whom they would bill later), the Diners Club was going to offer credit to individuals for many companies (then bill the customers and pay the companies).
Previously, stores would make money with their credit cards by keeping customers loyal to their particular store, thus maintaining a high level of sales. However, the Diners Club needed a different way to make money since they weren’t actually selling anything. To make a profit without charging interest (interest bearing credit cards came much later), the companies who accepted the Diners Club credit card were charged 7 percent for each transaction while the subscribers to the credit card were charged a $3 annual fee (begun in 1951).

McNamara’s new credit company focused on salesmen. Since salesmen often need to dine (hence the new company’s name) at multiple restaurants to entertain their clients, the Diners Club needed both to convince a large number of restaurants to accept the new card and to get salesmen to subscribe.

The first Diners Club credit cards were given out in 1950 to 200 people (most were friends and acquaintances of McNamara) and accepted by 14 restaurants in New York. The cards were not made of plastic; instead, the first Diners Club credit cards were made of a paper stock with the accepting locations printed on the back.

However, the concept of the card grew and by the end of 1950, 20,000 people were using the Diners Club credit card.

According to a complaint filed by the FTC, the defendants marketed prepaid cards under a variety of names through Web sites and pop-up and e-mail advertisements that direct consumers to Web sites for the individual cards. These include Acclaim Visa, Impact Visa, Sterling Visa, VIP Advantage Visa, Vue Visa, Elite Plus MasterCard, Impact MasterCard, Secure Deposit MasterCard, VIP MasterCard, and Vue MasterCard. The defendants also market unrelated short-term loans on Web sites such as www.SuperAutoSource.com, www.SuperCashSource.com, and www.FastCashUSA.com.

The complaint alleges that through their prepaid card programs the defendants debited, without authorization, a $159.95 application and processing fee from consumers’ bank accounts, including from consumers who either had no contact with the defendants or had applied for an unrelated short-term loan.

The federal judge issued a temporary restraining order barring unauthorized debiting and freezing the assets of EdebitPay, LLC, EDP Reporting, LLC, EDP Technologies Corporation, Secure Deposit Card Inc.

The Citi CashReturns Card provides today’s busy consumers with the most ways to earn cash back and automatic redemption. The card literally does all the work. Citi automatically sends you a check every time a cardmember earns $50 in cash back.

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With the Citi CashReturns Card, cardmembers earn a full 1% cash back from their first purchase. There are no tiered spending requirements, no limit to the amount of cash back they can earn, and they earn cash back every time they use their card:

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1% cash back on cash advances taken at the standard cash advance rate
$5 cash back on individual balance transfer transactions of $1,500 or more

Furthermore, cardmembers earn an average of 5% extra cash back on every purchase when shopping at more than 400 leading online and in-store retailers through the Citi Bonus Cash Center. For a full list of participating merchants, visit http://www.bonuscashcenter.citicards.com.

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