Is next big credit crunch in the cards?

Now that the easy money in home mortgages is all but over, consumers may soon be caught in a financial squeeze with their credit cards.

That’s the worry among some economists and credit counselors as home lending has shifted abruptly into low gear this summer. That leaves homeowners owing big sums to Visa or MasterCard without an important escape hatch — the ability to pay down the plastic by dashing off a check from their home equity line of credit or rolling the debt into a new, bigger mortgage.

“You’re not going to be able to get that mortgage loan. You’ll be stuck with the higher-interest credit card debt,’’ warns Carl Steidtmann, chief economist with Deloitte Research. “We will have to live within our means. I know it’s a troubling phenomenon. But we’re not going to be able to spend at levels well above our income levels.’’

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Warning for credit card customers

A little known practice by card companies has been exposed, which can eat into your credit limit.

When your card is swiped on checking into a hotel, what's actually happening is that a sum is reserved from your account to cover the full cost of the stay, including an estimate to cover all extras.

That "earmarked" sum is unavailable for your use until it is cancelled at the end of the stay, when the hotel processes your final bill.

The problem came to light when Peter Ellis contacted BBC Radio 4's Moneybox when he got back from a trip abroad.

He had checked-in to one hotel - where his credit card was swiped.

But then - without running up any charges - he decided to stay somewhere else.

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U.S. consumer credit increases 4.6 percent in 2006

U.S. consumer credit increased by 4.6 percent in 2006, up from a 4.2 percent gain in 2005 but down from a 5.5 percent rise in 2004, the Federal Reserve reported Wednesday.

In the final three months of 2006, consumer credit rose at an annual rate of 3.7 percent, down from a 5.5 percent pace in the third quarter.

For December, consumer credit increased at a 3 percent annual rate, the smallest gain since October last year and far below the 6.9 percent surge in November.

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Missed credit card repayments 'have a high cost'

Missing just one credit card repayment can have a high cost, according to new data from moneysupermarket.com

Penalties resulting from just one missed repayment could cost up to £278, the financial advice website said, as well as a damaged credit rating and the loss of all introductory card benefits.

Moneysupermarket.com's observed that credit card holders taking advantage of a nought per cent balance transfer can have the benefit stripped if they miss one repayment – and find themselves repaying the debt at typical APR.

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Understanding The Credit Score And Mortgage Relationship

If you are considering buying a home or refinancing, the subject of credit scores has undoubtedly come up. So, what is a credit score and how does it impact you?

Understanding the Credit Score and Mortgage Relationship

In the 1960s, the concept of credit scores came to fruition. A company by the name of Fair Isaac Corp developed a system whereby credit reports could be summarized as a score. This score, known as a FICO score, could be used by lenders to determine the credit worthiness of a potential borrower.

The highest FICO score you can have is 850 while the lowest is 350. Where you fall on the scale determines the type of loan you will get.

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EU finds bank card issuers break antitrust law

BRUSSELS -- Banks issuing credit and debit cards are colluding to keep prices artificially high and restrict competitors, the European Commission charged Wednesday.

The commission report, while naming no specific offenders, vowed to open antitrust cases in coming months. In the meantime, it urged credit-card companies such as Visa International and MasterCard Inc. (MA) and the retail banks that issue these cards to take voluntary measures to bring down fees. But it does not demand specific reductions.

The commission already has long-running antitrust cases open against both Visa and MasterCard.

"Something is rotten in the state" of bank cards, said E.U. Competition Commissioner Neelie Kroes, promising action against offending banks "as soon as possible." She could not "wait too long" because retailers and consumers "are being ripped off."

The commission's efforts to lower credit and bank-card fees are aimed at integrating the E.U.'s banking sector, which remains fragmented despite the advent of the euro. By 2010, the commission wants to have a framework to allow businesses and customers to make cross-border electronic payments as easily, and at the same cost as within their own country.

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Koreans Most Active Card Users in Asia

South Koreans spent $181.2 billion using credit cards in 2005, becoming the most active users of plastic for payment in the Asia-Pacific region, according to Nielson Media Research, a global research firm.

In its latest report on credit card spending patterns around the world, the firm said South Korea ranked first in transaction volume using cards in the Asia-Pacific region in 2005. Japan came next with $151.3 billion, followed by Australia with $131.5 billion.

The Credit Finance Association (CFA), which represents the interests of Korean card issuers, said the country emerged as the largest credit card market in the region in 2005 on the government’s strong encouragement of their use as a payment method.

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