These days, credit cards in the UK are competing with each other on two very attractive offers with a headline rate of 0%. These 0% credit cards will be either balance transfers; introductory purchases offers or a combination of the two. This article looks at how to get the best out these types of card and the things to that the credit card companies want you to do and therefore the things to avoid. There is a school of thought that believes that these types of card will soon be a thing of the past as they cost the credit card companies too much profit, as consumers get wiser to the pitfalls.A balance transfer credit card is basically an offer of either a zero interest rate or very low interest rate for a set period. The typical period is 6 months although there are variations on this and there have even been some low rates set for the lifetime of the balance. However, these are becoming rare. Once, the offer period expires then the outstanding balance reverts to the standard rate on purchases. This is very important, as at this point the credit card company will hope the consumer will not take any action and so the company can begin to earn money on the balance.A 0% purchase offer credit card has many similarities to the balance transfer offers. The introductory rate and period are usually 0% and 6 months in the same way as the balance transfer. Also, once the period expires the outstanding balance is subject to the standard rate on purchases. It is an important point to note that the introductory rate does not apply indefinitely on purchases made in the period, but only applies for the duration of the introductory period. It is often the case that credit card companies will offer both the balance transfer and 0% on purchases on the same card. When this is not the case it is wise to keep balance transfers and purchases separate. This is because the balance transfer portion of an outstanding balance will be paid off quicker than the standard rate purchases. Therefore an increasing portion of the balance will be subject to the standard rate and the balance transfer portion will decrease at a faster rate. There is nothing to stop a consumer obtaining a credit card with a balance transfer and a separate low interest credit card for any purchases to be made. That way the benefits of the offers are maximised.In summary the balance transfer and 0% purchase offers can be of great benefit to the consumer provided that the consumer understands how to use the offers to their advantage. A degree of discipline is required in managing repayments. Also, the cardholder should be aware of any penalties that may cause the offer to be cancelled. Armed with this knowledge then these cards can be made to work for the consumer, but remember that when comparing credit cards to pay close attention to the typical APR, which is, always stated where UK credit cards are promoted.
About the Author
Neil Brown has contributed to many financial sites including business banking and personal loans.
Fitch Places HSBC Private Label CCMNT (USA) I,
2002-1 & 2002-2 on Watch Positive
NEW YORK -- Fitch Ratings has placed four tranches of subordinate notes out of the HSBC Private Label Credit Card Master Note Trust I on Rating Watch Positive. The Rating Watch Positive designation affects approximately $983.95 million of credit card backed securities. The notes are backed by a pool of private label revolving credit card accounts originated by HSBC Bank Nevada, National Association, (formerly Household Bank (SB), N.A.).
The Rating Watch Positive designation results from the accumulation of cash in the principal funding account (PFA); as the PFA funds, a percentage of the bonds are backed by cash rather than receivables, which effectively reduces the exposure of the bonds to credit risk from charged-off receivables. The 2002-1 bonds were structured with a 12-month accumulation period and began funding the PFA in April 2006. As of Jan. 16, 2007, the PFA balance is $403.9 million. There is a reserve account of 0.5% set up to mitigate the risk of negative carry during the accumulation period. The expected maturity for the 2002-1 series is March 15, 2007.
The 2002-2 bonds were structured similarly to the 2002-1 bonds, with a 12-month accumulation period and a reserve account of 0.5% set up to mitigate the risk of negative carry during the accumulation period. Series 2002-2 began funding the PFA in April 2006. As of Jan. 16, 2007, the PFA balance is $416.1 million. The expected maturity for the 2002-2 series is March 15, 2007.
The 2002-2 bonds were structured similarly to the 2002-1 bonds, with a 12-month accumulation period and a reserve account of 0.5% set up to mitigate the risk of negative carry during the accumulation period. Series 2002-2 began funding the PFA in April 2006. As of Jan. 16, 2007, the PFA balance is $416.1 million. The expected maturity for the 2002-2 series is March 15, 2007.
Fitch will continue to closely monitor these transactions.
Credit enhancement for the 'AAA' rated class A notes is provided through subordination of classes B and C, and the excess collateral amount, totaling 22% for series 2002-1 and 24.5% for series 2002-2. The 'A' rated class B notes draw on the 11.5% subordination of class C and the excess collateral amount for series 2002-1, and the 13.5% subordination of class C and the excess collateral amount for series 2002-2. The 'BBB' rated class C notes receive credit enhancement from 5.5% of excess collateral for series 2002-1, and 5.75% of excess collateral for series 2002-1.
The ratings address the likelihood of investors receiving full and timely interest payments in accordance with the terms of the underlying documents and full repayment of principal by the legal final termination dates. They do not address the likelihood of principal repayment by the expected note payment dates.
Rating Actions:
HSBC Private Label Credit Card Master Note Trust I,
The ratings address the likelihood of investors receiving full and timely interest payments in accordance with the terms of the underlying documents and full repayment of principal by the legal final termination dates. They do not address the likelihood of principal repayment by the expected note payment dates.
Rating Actions:
HSBC Private Label Credit Card Master Note Trust I,
fixed-rate asset backed securities, series 2002-1:
--$400,000,000 class A notes affirmed at 'AAA';
--$53,850,000 class B notes 'A'; placed on Rating Watch Positive;
--$30,775,000 class C notes 'BBB'; placed on Rating Watch Positive.
HSBC Private Label Credit Card Master Note Trust I, floating-rate asset backed securities, series 2002-2:
--$400,000,000 class A notes affirmed at 'AAA';
--$58,275,000 class B notes 'A'; placed on Rating Watch Positive;
--$41,050,000 class C notes 'BBB'; placed on Rating Watch Positive.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
COPYRIGHT 2007 Business Wire
Copyright 2007, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.
--$53,850,000 class B notes 'A'; placed on Rating Watch Positive;
--$30,775,000 class C notes 'BBB'; placed on Rating Watch Positive.
HSBC Private Label Credit Card Master Note Trust I, floating-rate asset backed securities, series 2002-2:
--$400,000,000 class A notes affirmed at 'AAA';
--$58,275,000 class B notes 'A'; placed on Rating Watch Positive;
--$41,050,000 class C notes 'BBB'; placed on Rating Watch Positive.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
COPYRIGHT 2007 Business Wire
Copyright 2007, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.
All Major Credit Cards Accepted! Intuit's New Simplified Credit Card Processing Software Lets Millions of Businesses say ''Yes'' to Plastic
MOUNTAIN VIEW, Calif. -- Now small businesses can say "yes" to their customers more often. E[acute accent]Intuit Inc. (Nasdaq:INTU) today announced a new simplified credit card processing solution designed for the millions of small businesses that don't need a full accounting package or a high end merchant account service. The new QuickBooks(R) Credit Card Processing Kit, priced at $39.95, delivers breakthrough ease-of-use for small businesses that handle less than $5,000 in credit card transactions each month. E[acute accent]Previously, these small businesses had the difficult choice of buying a solution that over-served their simple needs, resulting in high set-up costs, monthly minimum fees and required credit card transactions, or the unpleasant option of saying "no" to customers wanting to pay with credit.
E[acute accent]Making Business Simple
E[acute accent]The Credit Card Processing Kit is another example of Intuit's effort to add simplicity to the company's entire product line. The product focuses exclusively on the essential credit card processing requirements these customers need -- ease-of-use, affordability and quick setup. E[acute accent]The kit helps small business owners turn their PCs into credit card terminals through a short and simple process. The kit includes everything a small business needs to accept Visa, MasterCard, American Express, Discover and Diner's Club credit cards, and signing up takes less than 10 minutes. There are no manuals to read, no long term contracts to sign, and small business owners are not stuck paying expensive monthly minimums. E[acute accent]With only a few weeks in the market, the QuickBooks Credit Card Processing Kit is a hit with small businesses. E[acute accent]"The QuickBooks Credit Card Processing Kit is exactly what I've been looking for!" said Beverly Stout, owner Stout Appraisal Services in Dayton, Ohio. "In the past, I had to say 'no' to clients who wanted to pay by credit card and in some cases, I lost the job. Now, I can give my clients the option to pay with a credit card at a price that fits my budget. And I've already been able to bring in new customers -- and income -- as a result."
E[acute accent]QuickBooks Right for Me Solutions
E[acute accent]The QuickBooks Credit Card Processing Kit is part of QuickBooks' complete array of Right for Me products and services. It works with or without QuickBooks financial software, giving small business owners the flexibility of a stand-alone credit card processing product and the ability to grow into QuickBooks as their business expands. E[acute accent]QuickBooks is the only product family that grows with small businesses from startup to mid-market, using the same platform and therefore eliminating the need for any data migration, changes to business workflows or new product training.
E[acute accent]Availability
E[acute accent]The QuickBooks Credit Card Processing Kit is available at retail stores including Office Depot, OfficeMax, CompUSA, Staples, Fry's, Best Buy for Business, Amazon.com and Samsclub.com. For more information visit www.creditcardprocessingkit.com.
E[acute accent]About Intuit Inc.
E[acute accent]Intuit Inc. is a leading provider of business and financial management solutions for small and mid-sized businesses, consumers and accounting professionals. Its flagship products and services, including QuickBooks(R), Quicken(R) and TurboTax(R) software, simplify small business management and payroll processing, personal finance, and tax preparation and filing. ProSeries(R) and Lacerte(R) are Intuit's leading tax preparation software suites for professional accountants. E[acute accent]Founded in 1983, Intuit had annual revenue of more than $2 billion in its fiscal year 2005. The company has nearly 7,000 employees with major offices in 13 states across the U.S. and offices in Canada and the United Kingdom. More information can be found at www.Intuit.com.
E[acute accent]Intuit, the Intuit logo, and QuickBooks, among others, are registered trademarks and/or registered service marks of Intuit Inc. in the United States and other countries.
COPYRIGHT 2006 Business Wire
Copyright 2006, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.
MOUNTAIN VIEW, Calif. -- Now small businesses can say "yes" to their customers more often. E[acute accent]Intuit Inc. (Nasdaq:INTU) today announced a new simplified credit card processing solution designed for the millions of small businesses that don't need a full accounting package or a high end merchant account service. The new QuickBooks(R) Credit Card Processing Kit, priced at $39.95, delivers breakthrough ease-of-use for small businesses that handle less than $5,000 in credit card transactions each month. E[acute accent]Previously, these small businesses had the difficult choice of buying a solution that over-served their simple needs, resulting in high set-up costs, monthly minimum fees and required credit card transactions, or the unpleasant option of saying "no" to customers wanting to pay with credit.
E[acute accent]Making Business Simple
E[acute accent]The Credit Card Processing Kit is another example of Intuit's effort to add simplicity to the company's entire product line. The product focuses exclusively on the essential credit card processing requirements these customers need -- ease-of-use, affordability and quick setup. E[acute accent]The kit helps small business owners turn their PCs into credit card terminals through a short and simple process. The kit includes everything a small business needs to accept Visa, MasterCard, American Express, Discover and Diner's Club credit cards, and signing up takes less than 10 minutes. There are no manuals to read, no long term contracts to sign, and small business owners are not stuck paying expensive monthly minimums. E[acute accent]With only a few weeks in the market, the QuickBooks Credit Card Processing Kit is a hit with small businesses. E[acute accent]"The QuickBooks Credit Card Processing Kit is exactly what I've been looking for!" said Beverly Stout, owner Stout Appraisal Services in Dayton, Ohio. "In the past, I had to say 'no' to clients who wanted to pay by credit card and in some cases, I lost the job. Now, I can give my clients the option to pay with a credit card at a price that fits my budget. And I've already been able to bring in new customers -- and income -- as a result."
E[acute accent]QuickBooks Right for Me Solutions
E[acute accent]The QuickBooks Credit Card Processing Kit is part of QuickBooks' complete array of Right for Me products and services. It works with or without QuickBooks financial software, giving small business owners the flexibility of a stand-alone credit card processing product and the ability to grow into QuickBooks as their business expands. E[acute accent]QuickBooks is the only product family that grows with small businesses from startup to mid-market, using the same platform and therefore eliminating the need for any data migration, changes to business workflows or new product training.
E[acute accent]Availability
E[acute accent]The QuickBooks Credit Card Processing Kit is available at retail stores including Office Depot, OfficeMax, CompUSA, Staples, Fry's, Best Buy for Business, Amazon.com and Samsclub.com. For more information visit www.creditcardprocessingkit.com.
E[acute accent]About Intuit Inc.
E[acute accent]Intuit Inc. is a leading provider of business and financial management solutions for small and mid-sized businesses, consumers and accounting professionals. Its flagship products and services, including QuickBooks(R), Quicken(R) and TurboTax(R) software, simplify small business management and payroll processing, personal finance, and tax preparation and filing. ProSeries(R) and Lacerte(R) are Intuit's leading tax preparation software suites for professional accountants. E[acute accent]Founded in 1983, Intuit had annual revenue of more than $2 billion in its fiscal year 2005. The company has nearly 7,000 employees with major offices in 13 states across the U.S. and offices in Canada and the United Kingdom. More information can be found at www.Intuit.com.
E[acute accent]Intuit, the Intuit logo, and QuickBooks, among others, are registered trademarks and/or registered service marks of Intuit Inc. in the United States and other countries.
COPYRIGHT 2006 Business Wire
Copyright 2006, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.
Survey of Best Credit Cards for Holiday Shopping is Released by Credit-Land.com
Gift shopping for holidays can be a rewarding experience with wise use of credit cards. Credit-Land.com ranked top credit cards for holiday shopping.
BROOKLYN, N.Y. -- More consumers than ever are planning to use credit cards as the preferred payment method for holiday gift purchases this year according to a survey by Credit-Land.com.
Credit-Land.com, the consumer's watchdog for credit card deals, analyzed and ranked credit cards to identify credit cards that offer the best consumer value for holiday shopping. Ranking formula is based on the combination of credit card benefits, cost of credit card use and consumer protection features offered by credit cards for holiday shopping season.
Based on the objective criteria outlined above, Credit-Land.com is pleased to announce the top 5 credit cards for holiday shopping are as follows:
Discover[R] Card Platinum - is a 2006 Holiday Shopping Credit Card of the Year winner for gift givers nationwide. With generous cash back of up to 5%, $0 fraud liability guarantee, generous 25-day grace period, and no annual fee, it's a great choice for holiday shopping bonanza. Low interest rate, including 0% introductory rate and reasonable late fees of $15 for balances under $500 make it this year's winner.
Chase Bank Platinum Visa[R] - took a respectable second place in 2006 Credit Cards for Holiday Shopping ranking. Chase Platinum Visa offers no annual fee, generous Flexible Rewards Program that offers points for every dollar spent that are redeemable for merchandise and cold hard cash. Auto rental collision insurance is a great money saver for holiday travel.
Blue from American Express - is a great choice for holiday shopping. It offers no annual fee and low APR. Give gifts and earn some for yourself with generous rewards program offered by Blue Card from American Express. Points are redeemable for travel, widest selection of merchandise from major retailers and gift cards.
Capital One No Hassle Cash Rewards Visa - is a great choice for holiday travel and shopping. It offers 1% cash back on all purchases and 2% on gas purchases. It offers generous travel insurance, no annual fee and a reasonable interest rate.
First PREMIER Bank MasterCard[R] - is a great choice for Americans with poor credit history who are trying to rebuild their credit history. It offers the lowest total cost of ownership among the credit card offerings for individuals with less than stellar credit. Generous 25-day grace period on purchases with low 9.99% APR and one of the most reasonable late fees on the market ($25) make it a card of choice for those who do not qualify for a credit card otherwise.
Additional details are available at:
http://www.credit-land.com/holidays/
Credit-Land.com encourages wise use of credit cards during holiday shopping. Credit cards offer numerous benefits including credit card rewards programs, convenience and consumer protection.
Credit-Land.com is committed to consumer education. Holiday shoppers are advised to make their credit card payments on-time to avoid late fees and finance charges.
You can learn more about wise use of credit cards by visiting Credit-Land.com Personal Finance Library: http://www.credit-land.com/education/
About Credit-Land.com
Credit-Land.com is consumer credit education provider offering a best-in-kind credit card watch service with ranking of credit cards based on consumer needs.
For more information, visit: http://www.credit-land.com.
Gift shopping for holidays can be a rewarding experience with wise use of credit cards. Credit-Land.com ranked top credit cards for holiday shopping.
BROOKLYN, N.Y. -- More consumers than ever are planning to use credit cards as the preferred payment method for holiday gift purchases this year according to a survey by Credit-Land.com.
Credit-Land.com, the consumer's watchdog for credit card deals, analyzed and ranked credit cards to identify credit cards that offer the best consumer value for holiday shopping. Ranking formula is based on the combination of credit card benefits, cost of credit card use and consumer protection features offered by credit cards for holiday shopping season.
Based on the objective criteria outlined above, Credit-Land.com is pleased to announce the top 5 credit cards for holiday shopping are as follows:
Discover[R] Card Platinum - is a 2006 Holiday Shopping Credit Card of the Year winner for gift givers nationwide. With generous cash back of up to 5%, $0 fraud liability guarantee, generous 25-day grace period, and no annual fee, it's a great choice for holiday shopping bonanza. Low interest rate, including 0% introductory rate and reasonable late fees of $15 for balances under $500 make it this year's winner.
Chase Bank Platinum Visa[R] - took a respectable second place in 2006 Credit Cards for Holiday Shopping ranking. Chase Platinum Visa offers no annual fee, generous Flexible Rewards Program that offers points for every dollar spent that are redeemable for merchandise and cold hard cash. Auto rental collision insurance is a great money saver for holiday travel.
Blue from American Express - is a great choice for holiday shopping. It offers no annual fee and low APR. Give gifts and earn some for yourself with generous rewards program offered by Blue Card from American Express. Points are redeemable for travel, widest selection of merchandise from major retailers and gift cards.
Capital One No Hassle Cash Rewards Visa - is a great choice for holiday travel and shopping. It offers 1% cash back on all purchases and 2% on gas purchases. It offers generous travel insurance, no annual fee and a reasonable interest rate.
First PREMIER Bank MasterCard[R] - is a great choice for Americans with poor credit history who are trying to rebuild their credit history. It offers the lowest total cost of ownership among the credit card offerings for individuals with less than stellar credit. Generous 25-day grace period on purchases with low 9.99% APR and one of the most reasonable late fees on the market ($25) make it a card of choice for those who do not qualify for a credit card otherwise.
Additional details are available at:
http://www.credit-land.com/holidays/
Credit-Land.com encourages wise use of credit cards during holiday shopping. Credit cards offer numerous benefits including credit card rewards programs, convenience and consumer protection.
Credit-Land.com is committed to consumer education. Holiday shoppers are advised to make their credit card payments on-time to avoid late fees and finance charges.
You can learn more about wise use of credit cards by visiting Credit-Land.com Personal Finance Library: http://www.credit-land.com/education/
About Credit-Land.com
Credit-Land.com is consumer credit education provider offering a best-in-kind credit card watch service with ranking of credit cards based on consumer needs.
For more information, visit: http://www.credit-land.com.
You own you: when identity thieves open an account in your name, it should be the bank's problem, not yours
In 1995, a freelance editor in Washington, D.C., named Anne Meadows began a five-year nightmare when she got a call from an alert employee of BellSouth, who warned her that she had become a victim of identity theft. A year earlier, she learned, thieves had stolen her name, address, and Social-Security number from a government office, and that was all they needed to go on a binge. They had created fake IDs, cashed a government check made out to her, and applied for credit at several establishments in Atlanta.
That's bad enough. But the story gets even scarier because at this point, Meadows did everything she should have done. She called every business the ID thieves had tried to scam and told them not to extend credit to the impostors. She called First Union National Bank and told them not to let the thieves open a checking account. Then she contacted all three of the national credit reporting agencies and had a fraud alert put on her record to prevent the thieves from obtaining credit elsewhere.
None of it did any good. First Union opened a checking account for the thieves anyway, and they then went on a check-writing spree through Atlanta. An oil company gave them a credit card. TeleCheck, a check verification agency, tagged Meadows as a deadbeat when checks in her name started bouncing--they refused to clear her name unless First Union called them, but First Union refused to help. This lack of cooperation from the credit industry meant the problem took years to resolve: In January 2000, almost five years after Meadows had first found out about the ID theft, a bank employee loudly turned down her application to open an account "because of all those bad debts you left behind in Georgia."
Today, Meadows's problems are mostly over, but she still shudders when she remembers the experience. "I've had my house broken into and my car broken into," she says, "but nothing compared to this. Nobody did anything about it but me, so I kept on being repeatedly victimized. I was guilty until proven innocent."
It's common knowledge that the problem of identity theft is growing out of control. Two years ago, the Federal Trade Commission estimated that one in every 25 Americans is a victim of identity theft each year, netting a cool $50 billion for the thieves.
The dynamics of the process are all too simple. First, the thieves steal enough personal information--usually just a name and Social-Security number will do--to apply for a credit card in someone else's name. They can get this information from any of the countless institutions, large and small, that have access to personal data: banks, credit reporting agencies, credit card issuers, government agencies, universities, even doctors' offices. They might use an insider who works there--sometimes they pose as temps--or hack into the office database. Alternatively, the thieves set up scams that ask people to sign a phony petition or provide their information to a telephone pollster "for our records" Sometimes they just steal information from people's wallets or trash cans. Then, the thieves wield this information to apply for credit cards or other forms of commercial credit, which they use for buying sprees on someone else's tab. Since the subsequent bills are sent to a phony address, the victims are unlikely to discover what's happened until the day they're denied a loan because of all those unpaid credit card bills. By then, their credit report looks like Anne Meadows's, or worse.
Identity theft would be much harder--and the costs to victims much lower--were it not for the carelessness of the credit industry and of other institutions that handle personal data. Many institutions that handle sensitive personal data don't do enough to keep it safe. This year alone, there have been widely-reported security breaches at Time Warner, Bank of America, and data-brokers ChoicePoint and LexisNexis, involving the loss of personal information about millions of people. There's probably little that can be done to prevent thieves from getting information from doctors' offices, or from people's wallets, but it's currently far too easy for them to get it from large corporations or from institutions such as government agencies and universities.
In addition, credit-card companies and other credit lenders--banks, oil companies, and department stores, among others--rarely exercise significant oversight before signing up new customers. So, when thieves apply for a new credit card using pilfered information, they are rarely turned down.
Finally, and most devastatingly, credit-reporting agencies routinely add negative information to credit scores without checking whether all those unpaid bills might have been the result of identity theft. And they're slow and uncooperative when it comes to correcting their mistakes.
The credit industry and other data-handlers behave as they do bemuse in many cases, no one but the victim cares about identity theft. Despite the passage of ID theft legislation last year, institutions that handle personal data pay a very small price when that data is stolen. And when credit card companies and others offering credit fail to look adequately into applicants and end up extending credit to thieves, they also go largely unpunished
For their part, the major credit-reporting bureaus--Experian, Equifax, and TransUnion--don't seem to cam much about the accuracy of their credit reports. In fact, they actually have a positive incentive to let ID theft flourish. Like mobsters offering "protection" to frightened store owners, credit-reporting agencies have recently begun taking advantage of the identity-theft boom to offer information age protection to frightened consumers. For $995 a month, Equifax offers "Credit Watch Gold," a service that alerts you whenever changes am made to your credit report. Experian and TransUnion offer similar services. In effect, customers am being asked to pay credit agencies to protect them from the negligence of those same agencies.
One way to cut down on identity theft would be to require commercial credit-reporting bureaus to offer services like this to all their consumers for free. After all, the credit-reporting agencies am the ones who am failing to ensure that their reports don't unfairly penalize victims of ID theft. Roughly speaking, this is the European approach: Although implementations vary from country to country, all members of the European Union heavily regulate the credit-reporting industry using guidelines that, ironically, are based on principles drafted largely by the United States in the late '70s but never adopted here.
But while a certain amount of regulation is sensible--requiring credit-reporting companies to send credit reports to all their customers every year would be a good start--it might not be the best way to fix the problem. As the last free years have shown, on issues ranging from the environment to pharmaceuticals, regulations am only as strong as the regulatory impulses of the administration charged with enforcing them. The institutions to blame for identity theft aren't currently the ones who pay the bulk of the price. To fix that inequity, we need to shift the cost from the victim to those who can actually do something about it.
There is a successful precedent for this type of approach. In 1968, Congress passed the Truth in Lending Act, which imposed a variety of regulations on the lending industry. One notably simple provision was that consumers could be held liable for no more than $50 if their credit cards were stolen and used without their authorization. For anything above that, it was the credit-card issuer who had to pay. The result was predictable: Credit-card companies have since taken it upon themselves to develop a wide range of effective anti-fraud programs. Congress didn't tell them to do it, or even how. It just made them responsible for the losses, and the card issuers did the rest themselves.
The same method should be used for identity theft. There's no need to create mountains of regulations, which am uniformly despised by the credit industry. Instead, simply make the industry itself--and any institution that handles personal data--liable for the losses in both time and money currently borne by consumers. The responsible parties will do the rest themselves.
How would this work? Congress could assign specific minimum values--statutory damages--for each of the acts associated with identity theft. Extending credit without conducting adequate background checks, or issuing a faulty credit report thanks to undiscovered theft of identity, might be worth $10,000 per incident. Losing someone's personal information in the first place might be worth less--perhaps around $1,000--since only a small percentage of cases of information loss ultimately lead to a full-fledged theft of identity.
The establishment of statutory damages would allow consumers to bring personal or class-action lawsuits for any of these transgressions. (Currently, such suits am difficult to win bemuse breaches of privacy am extremely hard to value--some courts even flirt with the notion that privacy has no value at all.) And consumers would not need to show that those responsible for the theft acted negligently. When your money is stolen from a bank, the bank is liable no matter how diligently it tried to protect it. That's why banks take cam of your deposits. If the credit industry and other data-handlers knew that the legal system would hold them responsible for extending credit to impostors, issuing inaccurate credit reports, or losing data, you can bet they'd figure out better ways to stop those things from happening.
The beauty of this solution is that by giving the credit industry a financial stake in solving the problem, it uses market-based self-interest rather than top-down federal mandates. Instead of relying on a regulatory agency to levy fines--or not levy them, depending on the administration--it gives companies an incentive to change their behavior. Under this plan, credit agencies would no longer charge consumers for "credit protection" services. Rather, they would beg consumers to make use of them, free of charge and with maximum ease of access. Credit issuers and other businesses that offer credit would quickly stop opening up new accounts without adequate background checks. And companies that handle personal data would finally get serious about implementing effective safeguards.
On a more basic level, the plan relocates the burden of responsibility for identity theft in a way that makes intuitive sense. If a company makes a mistake--by neglecting to conduct adequate background checks before extending credit, by issuing inaccurate credit reports or by failing to safeguard sensitive information--that company pays the price. It shifts power from corporations to individuals, based on a simple principle: Regular people should not have to go out of their way to protect themselves and their financial identifies.
Identity crisis
Perhaps the chief objection to this approach comes from those who believe that Americans are already too quick to turn to tort-based remedies. We're all familiar with the crude caricature--painted by the business community and their allies in the Republican Party--of class-action lawyers as greedy and unscrupulous shakedown artists. But there are also serious economists who argue against torts on the grounds that they are intrinsically less predictable than regulatory solutions, since businesses can never be entirely sure what the law allows and what it doesn't until a jury decides a case. As Waiter Olson of the Manhattan Institute puts it, "It's like saying, instead of writing a regulation, we'll tuck it away in an envelope and open it five years from now."
But in the case of ID theft, this might actually be a virtue. Michael Froomkin, a law professor at the University of Miami, points out that technology regulation is inherently problematic because innovations develop too quickly for Congress and the regulatory bureaucracies to keep up with. Identity theft is a new and rapidly-changing problem, one in which the details of responsibility vary greatly from case to case. There are benefits, therefore, to an approach that allows us to leave the specifics to be weighed separately in each instance, rather than relying on a one-size-fits-all regulatory solution.
Another objection to the tort approach is that many ID-theft victims don't know where the theft occurred, or have had their information stolen from their own wallets or trash cans--making it impossible to bring a lawsuit against the institution responsible for losing it. These victims, however, would still have entities to hold responsible: The banks or credit-card issuers that improperly offered credit to the thieves, and the reporting agencies that unfairly downgraded their credit. And victims who do know where their ID was stolen from would have an even wider range of targets. Indeed, consider what would have happened if this solution had been in place earlier this year when ChoicePoint was forced to admit that it had lost records containing personal information on 145,000 people. Under current rules, they have paid little price outside of some public embarrassment. But at $1,000 a pop, they would have been liable for $145 million--and a business-friendly attorney general wouldn't be able to help them out by lowering the fine or deciding not to pursue the case. It's a good bet that the episode would have motivated ChoicePoint--and just about every other company that handles large amounts of personal data--to keep that information safe next time.
Class-action suits are an inherently democratic remedy, putting enforcement power in the hands of consumers and their advocates instead of the government. They also put money in victims' pockets. In a recent study, law professors Theodore Eisenberg of Cornell and Geoffrey Miller of NYU found that, contrary to conventional wisdom, attorney's fees in dass action suits average only about 20 percent--even less in large cases. Fully 80 percent of the damages go directly to consumers.
Indeed, the plan's ability to put consumers in control is one of its chief benefits. Framed as a way of increasing the power of ordinary Americans at the expense of large corporations and the federal government, it could be a political winner. And since Republican fealty--both ideological and financial--to the business lobby will likely prevent the party from uniting behind the idea, it could even help Democrats with one of their most urgent tasks: addressing the financial concerns of ordinary Americans.
Kevin Drum is a Washington Monthly contributing writer.
That's bad enough. But the story gets even scarier because at this point, Meadows did everything she should have done. She called every business the ID thieves had tried to scam and told them not to extend credit to the impostors. She called First Union National Bank and told them not to let the thieves open a checking account. Then she contacted all three of the national credit reporting agencies and had a fraud alert put on her record to prevent the thieves from obtaining credit elsewhere.
None of it did any good. First Union opened a checking account for the thieves anyway, and they then went on a check-writing spree through Atlanta. An oil company gave them a credit card. TeleCheck, a check verification agency, tagged Meadows as a deadbeat when checks in her name started bouncing--they refused to clear her name unless First Union called them, but First Union refused to help. This lack of cooperation from the credit industry meant the problem took years to resolve: In January 2000, almost five years after Meadows had first found out about the ID theft, a bank employee loudly turned down her application to open an account "because of all those bad debts you left behind in Georgia."
Today, Meadows's problems are mostly over, but she still shudders when she remembers the experience. "I've had my house broken into and my car broken into," she says, "but nothing compared to this. Nobody did anything about it but me, so I kept on being repeatedly victimized. I was guilty until proven innocent."
It's common knowledge that the problem of identity theft is growing out of control. Two years ago, the Federal Trade Commission estimated that one in every 25 Americans is a victim of identity theft each year, netting a cool $50 billion for the thieves.
The dynamics of the process are all too simple. First, the thieves steal enough personal information--usually just a name and Social-Security number will do--to apply for a credit card in someone else's name. They can get this information from any of the countless institutions, large and small, that have access to personal data: banks, credit reporting agencies, credit card issuers, government agencies, universities, even doctors' offices. They might use an insider who works there--sometimes they pose as temps--or hack into the office database. Alternatively, the thieves set up scams that ask people to sign a phony petition or provide their information to a telephone pollster "for our records" Sometimes they just steal information from people's wallets or trash cans. Then, the thieves wield this information to apply for credit cards or other forms of commercial credit, which they use for buying sprees on someone else's tab. Since the subsequent bills are sent to a phony address, the victims are unlikely to discover what's happened until the day they're denied a loan because of all those unpaid credit card bills. By then, their credit report looks like Anne Meadows's, or worse.
Identity theft would be much harder--and the costs to victims much lower--were it not for the carelessness of the credit industry and of other institutions that handle personal data. Many institutions that handle sensitive personal data don't do enough to keep it safe. This year alone, there have been widely-reported security breaches at Time Warner, Bank of America, and data-brokers ChoicePoint and LexisNexis, involving the loss of personal information about millions of people. There's probably little that can be done to prevent thieves from getting information from doctors' offices, or from people's wallets, but it's currently far too easy for them to get it from large corporations or from institutions such as government agencies and universities.
In addition, credit-card companies and other credit lenders--banks, oil companies, and department stores, among others--rarely exercise significant oversight before signing up new customers. So, when thieves apply for a new credit card using pilfered information, they are rarely turned down.
Finally, and most devastatingly, credit-reporting agencies routinely add negative information to credit scores without checking whether all those unpaid bills might have been the result of identity theft. And they're slow and uncooperative when it comes to correcting their mistakes.
The credit industry and other data-handlers behave as they do bemuse in many cases, no one but the victim cares about identity theft. Despite the passage of ID theft legislation last year, institutions that handle personal data pay a very small price when that data is stolen. And when credit card companies and others offering credit fail to look adequately into applicants and end up extending credit to thieves, they also go largely unpunished
For their part, the major credit-reporting bureaus--Experian, Equifax, and TransUnion--don't seem to cam much about the accuracy of their credit reports. In fact, they actually have a positive incentive to let ID theft flourish. Like mobsters offering "protection" to frightened store owners, credit-reporting agencies have recently begun taking advantage of the identity-theft boom to offer information age protection to frightened consumers. For $995 a month, Equifax offers "Credit Watch Gold," a service that alerts you whenever changes am made to your credit report. Experian and TransUnion offer similar services. In effect, customers am being asked to pay credit agencies to protect them from the negligence of those same agencies.
One way to cut down on identity theft would be to require commercial credit-reporting bureaus to offer services like this to all their consumers for free. After all, the credit-reporting agencies am the ones who am failing to ensure that their reports don't unfairly penalize victims of ID theft. Roughly speaking, this is the European approach: Although implementations vary from country to country, all members of the European Union heavily regulate the credit-reporting industry using guidelines that, ironically, are based on principles drafted largely by the United States in the late '70s but never adopted here.
But while a certain amount of regulation is sensible--requiring credit-reporting companies to send credit reports to all their customers every year would be a good start--it might not be the best way to fix the problem. As the last free years have shown, on issues ranging from the environment to pharmaceuticals, regulations am only as strong as the regulatory impulses of the administration charged with enforcing them. The institutions to blame for identity theft aren't currently the ones who pay the bulk of the price. To fix that inequity, we need to shift the cost from the victim to those who can actually do something about it.
There is a successful precedent for this type of approach. In 1968, Congress passed the Truth in Lending Act, which imposed a variety of regulations on the lending industry. One notably simple provision was that consumers could be held liable for no more than $50 if their credit cards were stolen and used without their authorization. For anything above that, it was the credit-card issuer who had to pay. The result was predictable: Credit-card companies have since taken it upon themselves to develop a wide range of effective anti-fraud programs. Congress didn't tell them to do it, or even how. It just made them responsible for the losses, and the card issuers did the rest themselves.
The same method should be used for identity theft. There's no need to create mountains of regulations, which am uniformly despised by the credit industry. Instead, simply make the industry itself--and any institution that handles personal data--liable for the losses in both time and money currently borne by consumers. The responsible parties will do the rest themselves.
How would this work? Congress could assign specific minimum values--statutory damages--for each of the acts associated with identity theft. Extending credit without conducting adequate background checks, or issuing a faulty credit report thanks to undiscovered theft of identity, might be worth $10,000 per incident. Losing someone's personal information in the first place might be worth less--perhaps around $1,000--since only a small percentage of cases of information loss ultimately lead to a full-fledged theft of identity.
The establishment of statutory damages would allow consumers to bring personal or class-action lawsuits for any of these transgressions. (Currently, such suits am difficult to win bemuse breaches of privacy am extremely hard to value--some courts even flirt with the notion that privacy has no value at all.) And consumers would not need to show that those responsible for the theft acted negligently. When your money is stolen from a bank, the bank is liable no matter how diligently it tried to protect it. That's why banks take cam of your deposits. If the credit industry and other data-handlers knew that the legal system would hold them responsible for extending credit to impostors, issuing inaccurate credit reports, or losing data, you can bet they'd figure out better ways to stop those things from happening.
The beauty of this solution is that by giving the credit industry a financial stake in solving the problem, it uses market-based self-interest rather than top-down federal mandates. Instead of relying on a regulatory agency to levy fines--or not levy them, depending on the administration--it gives companies an incentive to change their behavior. Under this plan, credit agencies would no longer charge consumers for "credit protection" services. Rather, they would beg consumers to make use of them, free of charge and with maximum ease of access. Credit issuers and other businesses that offer credit would quickly stop opening up new accounts without adequate background checks. And companies that handle personal data would finally get serious about implementing effective safeguards.
On a more basic level, the plan relocates the burden of responsibility for identity theft in a way that makes intuitive sense. If a company makes a mistake--by neglecting to conduct adequate background checks before extending credit, by issuing inaccurate credit reports or by failing to safeguard sensitive information--that company pays the price. It shifts power from corporations to individuals, based on a simple principle: Regular people should not have to go out of their way to protect themselves and their financial identifies.
Identity crisis
Perhaps the chief objection to this approach comes from those who believe that Americans are already too quick to turn to tort-based remedies. We're all familiar with the crude caricature--painted by the business community and their allies in the Republican Party--of class-action lawyers as greedy and unscrupulous shakedown artists. But there are also serious economists who argue against torts on the grounds that they are intrinsically less predictable than regulatory solutions, since businesses can never be entirely sure what the law allows and what it doesn't until a jury decides a case. As Waiter Olson of the Manhattan Institute puts it, "It's like saying, instead of writing a regulation, we'll tuck it away in an envelope and open it five years from now."
But in the case of ID theft, this might actually be a virtue. Michael Froomkin, a law professor at the University of Miami, points out that technology regulation is inherently problematic because innovations develop too quickly for Congress and the regulatory bureaucracies to keep up with. Identity theft is a new and rapidly-changing problem, one in which the details of responsibility vary greatly from case to case. There are benefits, therefore, to an approach that allows us to leave the specifics to be weighed separately in each instance, rather than relying on a one-size-fits-all regulatory solution.
Another objection to the tort approach is that many ID-theft victims don't know where the theft occurred, or have had their information stolen from their own wallets or trash cans--making it impossible to bring a lawsuit against the institution responsible for losing it. These victims, however, would still have entities to hold responsible: The banks or credit-card issuers that improperly offered credit to the thieves, and the reporting agencies that unfairly downgraded their credit. And victims who do know where their ID was stolen from would have an even wider range of targets. Indeed, consider what would have happened if this solution had been in place earlier this year when ChoicePoint was forced to admit that it had lost records containing personal information on 145,000 people. Under current rules, they have paid little price outside of some public embarrassment. But at $1,000 a pop, they would have been liable for $145 million--and a business-friendly attorney general wouldn't be able to help them out by lowering the fine or deciding not to pursue the case. It's a good bet that the episode would have motivated ChoicePoint--and just about every other company that handles large amounts of personal data--to keep that information safe next time.
Class-action suits are an inherently democratic remedy, putting enforcement power in the hands of consumers and their advocates instead of the government. They also put money in victims' pockets. In a recent study, law professors Theodore Eisenberg of Cornell and Geoffrey Miller of NYU found that, contrary to conventional wisdom, attorney's fees in dass action suits average only about 20 percent--even less in large cases. Fully 80 percent of the damages go directly to consumers.
Indeed, the plan's ability to put consumers in control is one of its chief benefits. Framed as a way of increasing the power of ordinary Americans at the expense of large corporations and the federal government, it could be a political winner. And since Republican fealty--both ideological and financial--to the business lobby will likely prevent the party from uniting behind the idea, it could even help Democrats with one of their most urgent tasks: addressing the financial concerns of ordinary Americans.
Kevin Drum is a Washington Monthly contributing writer.
Credit is Now the World's Largest Market, with Its Size Estimated in Trillions of Dollars - Get Key Insights into the Key Risk Management Issue in Recent Years
DUBLIN, Ireland -- Research and Markets (http://www.researchandmarkets.com/reports/c28962) has announced the addition of E-Learning Course: Credit Risk to their offering.
This course examines in detail the concept of credit risk, the most significant risk faced by banks and the one against which they hold the most regulatory capital. Topics covered in the course include the sources of credit risk in the banking and trading books of financial institutions, the factors behind it, the analysis of credit risk, mitigation techniques for this form of risk and credit risk modelling.
In this course, you will explore:
--The sources of credit risk
--Credit risk ratings
--The concepts of probability of default (PD), loss given default (LGD) and exposure at default (EAD)
--Ratio analysis, credit scoring and other techniques used to assess credit risk
--Credit risk modeling, including the leading methodologies available in the market (CreditMetrics, CreditRisk+ and Moodys KMV)
--Mitigation techniques such as netting, collateral and guarantees
The following tutorials are included in this E-Learning course:
1. Credit Risk - An Introduction
The risk of a counterparty not fulfilling their obligations on the due date is a risk that affects any business enterprise. Credit risk is also the risk to which financial regulators pay closest attention as it is the most significant risk faced by banks.
This tutorial introduces the concept of credit risk, its sources in the banking and trading books of financial institutions, the factors behind it, and how it is rated.
2. Credit Analysis
Credit analysis is a critical activity for any lender. After all, would you really want to extend a large loan to someone if you thought they were unlikely to pay you back? Before extending credit to any borrower, you would assess their credit risk to determine the borrower's likelihood of default on the loan.
Credit analysis is performed on both personal and corporate loan/debt applications. In this tutorial, we will mainly concentrate on corporate credit analysis.
3. Credit Risk Modelling - An Introduction
In recent years, credit losses due to the bankruptcy of corporate giants and the Argentine default have been regularly featured in the news. These events, along with other factors such as Basel II, have resulted in financial institutions increasing their focus on credit risk management. Much of the spotlight has been on the use of models to measure credit risk.
This tutorial introduces the concept of credit risk modelling and provides the necessary background for the subsequent tutorials on the different credit risk models used by banks.
4. Credit Risk Modelling - CreditMetrics
The rapid expansion of the credit market has created a need for credit risk management. Financial institutions are continually looking for better tools to evaluate and manage credit risk.
CreditMetrics, first launched by JP Morgan Investment Bank in 1997, adopts a portfolio-based approach to credit risk management. It evaluates credit risk by predicting movements in the credit ratings of the individual investments in a portfolio. This tutorial outlines the functions and features of the CreditMetrics credit risk management model.
5. Credit Risk Modeling - CreditRisk+
CreditRisk+ is a statistical credit risk model that estimates the distributed risk of default across all the items in a credit portfolio. It was launched by Credit Suisse First Boston (CSFB) in 1997 to provide a forward-looking approach to credit risk management. This tutorial outlines the CreditRisk+ methodology and its applications.
6. Credit Risk Modeling - KMV & Comparison of Models
Moody's credit risk methodology, MKMV, is based on the Merton asset value model for assessing the credit risk of a corporation. MKMV produces default probabilities known as Expected Default Frequencies (EDF) for each obligor it evaluates. The EDF figure can then be used to estimate the standalone credit risk of an obligor or the value at risk (VAR) in a portfolio.
This tutorial introduces the EDF methodology and shows how EDF figures translate to actual credit risk values. In addition, the three main credit risk models are compared.
7. Credit Risk - Mitigation
Credit is now the world's largest market, with its size estimated in trillions of dollars. As a result, credit risk and its management have become perhaps the key risk management issue in recent years. Credit risk mitigation can be described as a set of techniques whose goal is to reduce the probability of default, reduce the exposure to risk, and increase the recovery rate. This tutorial looks at a number of different ways in which institutions can mitigate their credit risk.
For more information visit http://www.researchandmarkets.com/reports/c28962
DUBLIN, Ireland -- Research and Markets (http://www.researchandmarkets.com/reports/c28962) has announced the addition of E-Learning Course: Credit Risk to their offering.
This course examines in detail the concept of credit risk, the most significant risk faced by banks and the one against which they hold the most regulatory capital. Topics covered in the course include the sources of credit risk in the banking and trading books of financial institutions, the factors behind it, the analysis of credit risk, mitigation techniques for this form of risk and credit risk modelling.
In this course, you will explore:
--The sources of credit risk
--Credit risk ratings
--The concepts of probability of default (PD), loss given default (LGD) and exposure at default (EAD)
--Ratio analysis, credit scoring and other techniques used to assess credit risk
--Credit risk modeling, including the leading methodologies available in the market (CreditMetrics, CreditRisk+ and Moodys KMV)
--Mitigation techniques such as netting, collateral and guarantees
The following tutorials are included in this E-Learning course:
1. Credit Risk - An Introduction
The risk of a counterparty not fulfilling their obligations on the due date is a risk that affects any business enterprise. Credit risk is also the risk to which financial regulators pay closest attention as it is the most significant risk faced by banks.
This tutorial introduces the concept of credit risk, its sources in the banking and trading books of financial institutions, the factors behind it, and how it is rated.
2. Credit Analysis
Credit analysis is a critical activity for any lender. After all, would you really want to extend a large loan to someone if you thought they were unlikely to pay you back? Before extending credit to any borrower, you would assess their credit risk to determine the borrower's likelihood of default on the loan.
Credit analysis is performed on both personal and corporate loan/debt applications. In this tutorial, we will mainly concentrate on corporate credit analysis.
3. Credit Risk Modelling - An Introduction
In recent years, credit losses due to the bankruptcy of corporate giants and the Argentine default have been regularly featured in the news. These events, along with other factors such as Basel II, have resulted in financial institutions increasing their focus on credit risk management. Much of the spotlight has been on the use of models to measure credit risk.
This tutorial introduces the concept of credit risk modelling and provides the necessary background for the subsequent tutorials on the different credit risk models used by banks.
4. Credit Risk Modelling - CreditMetrics
The rapid expansion of the credit market has created a need for credit risk management. Financial institutions are continually looking for better tools to evaluate and manage credit risk.
CreditMetrics, first launched by JP Morgan Investment Bank in 1997, adopts a portfolio-based approach to credit risk management. It evaluates credit risk by predicting movements in the credit ratings of the individual investments in a portfolio. This tutorial outlines the functions and features of the CreditMetrics credit risk management model.
5. Credit Risk Modeling - CreditRisk+
CreditRisk+ is a statistical credit risk model that estimates the distributed risk of default across all the items in a credit portfolio. It was launched by Credit Suisse First Boston (CSFB) in 1997 to provide a forward-looking approach to credit risk management. This tutorial outlines the CreditRisk+ methodology and its applications.
6. Credit Risk Modeling - KMV & Comparison of Models
Moody's credit risk methodology, MKMV, is based on the Merton asset value model for assessing the credit risk of a corporation. MKMV produces default probabilities known as Expected Default Frequencies (EDF) for each obligor it evaluates. The EDF figure can then be used to estimate the standalone credit risk of an obligor or the value at risk (VAR) in a portfolio.
This tutorial introduces the EDF methodology and shows how EDF figures translate to actual credit risk values. In addition, the three main credit risk models are compared.
7. Credit Risk - Mitigation
Credit is now the world's largest market, with its size estimated in trillions of dollars. As a result, credit risk and its management have become perhaps the key risk management issue in recent years. Credit risk mitigation can be described as a set of techniques whose goal is to reduce the probability of default, reduce the exposure to risk, and increase the recovery rate. This tutorial looks at a number of different ways in which institutions can mitigate their credit risk.
For more information visit http://www.researchandmarkets.com/reports/c28962
HOW TO RAISE UP TO $50,000 WITH YOUR CREDIT CARDS
Millions of people have an assortment of credit cards in today’s almost 'cashless' society. With many bank credit cards, and even department store cards, it is possible to apply under the 'same name' and obtain TWO OR MORE identical cards bearing only different account numbers. Given the high limits on cards such as American Express ($20,000) and others, it is a simple procedure to raise up to $50,000 by utilizing 30 to 40 credit cards, or less if you use American Express. With the bank cards, you simply obtain a 'cash advance' up to your credit limit. With the American Express and Carte Blanche cards, you can charge some merchandise such as gold coins and turn around and sell them at a discount to your friends, neighbors, etc. With enough cards, you can quickly turn any amount of discounted 'merchandise' into cash.
From: www.contentmart.com
From: www.contentmart.com
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