January 1st is just a day away and one thing is for sure… 2009 will be a new year in so many ways. Will the economy turn around or will it stay flat? One thing is for sure, the old days of easy credit to anything with a pulse are long gone. As far as credit cards go, Credit Card Forum is making three predictions:

(1) Lending Standards Will Remain Tough – The economy could start turning around in the second and third quarters, but lending requirements will remain equally as strict.

(2) Balance Transfer Promos Will Continue To Be Reduced - The fabulous 0% on balance transfers credit cards we’ve seen over the years will not be seen again anytime soon. Long gone are the days of 0% until balance is paid in full, 0% for 12 or 15 months, and other similar interest rate deals. True, there will be the occasional balance transfer offer for 12 months interest free, but these will be rare and only available to customers with the best credit. Longer offers, such as 0% for 15 months, will unfortunately not be available. Of course, the creditors who continue to give the longest balance transfer offers during this time will have the opportunity to pull in more new customers than the other guys.

(3) The Fed’s New Credit Card Rules Will Be Adapted Early – As of now, creditors have all the way until July 2010 to implement the new credit card reform rules. Credit Card Forum predicts not every creditor will wait until last minute to adapt the new rules. In the 3rd and 4th quarters of 2009, we will see a number of credit card companies adapting the practices early. The main reason they will do this is it will be a good marketing PR move they can mention in commercials and advertisements.

Credit Card Forum wishes you and your family a merry Christmas, happy Chanukah, and a prosperous new year!

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For years congress has been trying to pass a Credit Card Bill of Rights but the Senate repeatedly shoots it down. The Federal Reserve knew something had to be done so they took matters into their own hands on Thursday and set guidelines for the most controversial practices creditors do today. Some of the highlights are:

• Unless a payment is more than 30 days late, creditors will no longer be able to change interest rates on existing balances.
• There must be at least a 21 day grace period to make a payment before the credit card company can slap you with a late fee.
• Currently when you make a payment, it is applied to the lower interest rate balances first (such as 0% balance transfer offers) before it is applied to your higher interest rate balances such as normal purchases. Once the rules are in effect, it will be the opposite, and all payments (beyond the minimum payment) will be applied to the higher interest rate balances first.
• Customers must be notified 45 days before any changes to terms, such as fees and APR. Currently credit card companies are only required to give a 15 day notice.
• Double Cycle billing is prohibited. This is a practice where some creditors calculate interest based on the balance of the previous two months. So you may pay off your balance one month, but the next month if you carry a balance, you would be charged interest for both months.

Unfortunately, these rules won’t go into effect until July 2010. If you agree with us that there needs to be reform before then, contact your congressman and senator to tell them how you feel.

A member on Credit Card forum pointed out the news that there is a new Visa black credit card which has just been released, but is this really nothing more than an imitation of the American Express Centurion card?

The Black Card (yes, that is the official trademarked name of the card) carries a $495 fee. That’s $45 more than the American Express Platinum card.

This black Visa card is made out of carbon graphite. It offers 24-hour concierge (like Visa Signature cards do). It also offers rewards and perks like airport lounge access.

So is it a knockoff? Well, it’s too early to tell, but it appears to be more similar to AmEx Platinum or Bank of America Accolades, rather than the Centurion. The Amex Centurion has a much higher annual fee ($5,000 initiation fee + $2,500 annual fee), tougher requirements for membership. The Visa Black card appears to be a card that more people will have access too.

It is expected that this Thursday the Federal Reserve will be voting on a number of controversial matters practiced by credit card issues. These include things such as:

• Credit Card Grace Periods – Some credit card issuers have been shrinking their grace periods of the years, from 25 days, down to 15, and some down to 0 (meaning interest begins to accrue as soon as your billing cycle closes). It is expected (hopefully) that the Federal Reserve will require a minimum credit card payment grace period of 20 or 25 days from statement closing.
• Credit Card Double-Cycle Billing – A practice where issuers base interest on the balance of the past two cycles. This means you could have paid your bill on time in full last month, but this month you carry a balance, the credit card company will use both month’s balances in calculating the current months interest. Not many issuers practice this today and this is expected to be banned, thankfully.
• Credit Card Universal Default Policy – Perhaps the most controversial practice, where a lender will raise interest if the borrower defaults on another bill. It is expected that this will either be banned or strongly regulated; interest rate hikes will be limited and some bills would not qualify as a default.

Unfortunately, there are a few drawbacks here. Since fees are major source of income in the financial and banking industry, it is expected that creditors may raise interest rates in the future to make up for the decrease in fee income. Therefore, if you are a borrower with excellent credit who always pays your bills on time, this could hurt you if you carry a balance. For most other borrowers, it would be beneficial.

Whatever happens, Credit Card Forum will keep you updated on the developments as the unfold.

Ever wonder what the very first credit card looked like?

This card was issued in 1958 by American Express and under the current definition of a credit card, most would consider this the first credit card ever issued. Diners Club did have a card prior to this, but it could only be used at restaurants.

Anyway, this paper credit card is a far cry from today’s titanium American Express Centurion card!

There sure is a lot of doom and gloom in the news about credit card debt. Much of the media would like us to think that everyone carries a balance (likely maxed out) and the credit cards will be the next bubble to burst. But take a look at this chart from Gallop…

According to this chart, it’s the exact opposite of what the media is telling us! Instead of charging more, people are feeling more inclined to pay down their credit cards due to the economic turmoil. So this whole folly about credit cards being the next bubble I simply don’t buy. Don’t believe me? Well wait a year or two before you say I’m wrong.

Are you tired of lousy returns on your savings account? Excessive overdraft fees on your checking account? Overall poor customer service at your bank? Or just worried about the financial stability of your bank? Well the solution is not to bury cash in your backyard! Instead you should look into the best-kept secret in banking; the credit union.

Unlike banks, credit unions are not-for-profit. Credit unions are also owned by the members (account holders) themselves. The members, regardless of how much money they have, each have one vote to elect the credit union’s board of directors. Interest rates and other policies are decided by these directors.

How many credit unions are there in the world? There was 46,377 credit unions in 97 countries at the end of ’06, and today there are even more. With so many credit unions in existence, it’s almost guaranteed there is at least one in your area you qualify to be a member of. In today’s mortgage meltdown, credit unions are a particularly useful place to find a mortgage with favorable terms if you are currently stuck in a high rate or adjustable-rate mortgage.

To learn more about credit unions we recommend you check out our friends over at the Bruen/Bensley Credit Union Blog. They’ve been blogging daily for 6 years now about credit unions and their blog is loaded with great advice.