Last week we reported that credit card debt is declining in America. The numbers for July have recently been released and show continued improvement in the number of unpaid accounts. The latest figures for net loss are as follows:

American Express: 10.18% down to 8.92%
Bank of America: 13.86% to 13.81%
Capital One: 8.82% to 8.78%
Chase: 8.04% to 7.92%
Citibank: 10.51% to 10.03%
Discover: 8.75% to 8.43%

However it’s important to note that while the above numbers reflect the net loss, the number of accounts which were 30-59 days late did go up slightly for some issuers. Also these were based off figures from a Credit Suisse report. There have been other reports (such as Capital One’s regulatory filing on the 17th) which differ.

What do you think… are things improving or is it just accounting tricks?

Well, now you can take comfort in knowing that you and I are not the only ones feeling the credit crunch.  The mega rich and billionaires are getting squeezed too.

For a long time, James Packer was the richest man in Australia.  His father, Kerry Packer, was a media mogul. They were so rich that every year, for 21 years straight, either James or Kerry were numero uno on the rich list in Australia.

Over the past year James Packer has seen his assets cut in half, from AUD $6 billion to $3 billion, and that number is still falling. His playboy lifestyle isn’t quite what it use to be. Up until recently he owned the world’s largest open yacht – complete with 9 bedrooms and even an onboard Aston Martin V12 Vanquish – but that’s now been sold. So has his $38 million luxury condo. As for his $60 million custom Boeing jet that he ordered? Well let’s just say delivery of that has been postponed. Not even his black Amex can bail him out of this one. Although he still has a lifestyle we can only imagine in our wildest dreams, at least you can take comfort in knowing you aren’t the only one who has been feeling the credit crunch.

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.

Just days ago we reported about a proposal by the financial institutions to set up a program which would forgive up to 40% of consumers credit card debt if they were underwater with payments.

The Office of the Comptroller of the Currency, which regulates banking, came back and said:

The agency does not consider any plan that defers the timely recognition of loss as prudent, and any such proposal cannot be viewed favorably by us.

So let’s get this right. Spending over $100 billion to bailout AIG whom spends it on luxurious spa retreats for executives… Good! Spending money on the people who actually pay these taxes, the consumers… Bad!

…So much for our government being by the people, for the people.

Banks advocating debt forgiveness? That’s a line you’d never expect to hear. But in an unusual move, banks have joined forces with consumer advocates to pitch a proposal to the government, where up to 40% of an individual’s credit card debt would be forgiven. The remainder could be repaid over several years at a favorable interest rate. Banks have came to the realization that it will be better to settle the debt for something, then get nothing.

Over 100 of the biggest financial institutions are behind the initiative. If approved, it would start as a pilot program involving as many as 50,000 Americans. The severity of an individual’s financial situation would determine the percentage of the debt to be forgiven.