Americans have spent much of 2016 lamenting the addition of chips into their credit and debit cards. In exchange for the extra few moments consumers spend checking out, however, they are promised enhanced security to protect their accounts.
But a new discovery unveiled Wednesday by professional hackers at the Black Hat USA summit in Las Vegas called into question the supposed ironclad security of the new chips, which are referred to as EMV technology.
Retailers and banks began replacing regular magnetic stripe card readers with EMV last October after credit card companies like Visa and Mastercard threatened to hold them responsible for false charges made on cards during magnetic strip transactions. The mandate came amid high-profile breaches of retailers like Home Depot and Target. Continue reading »
For the first time ever, total credit card debt in the United States is approaching a trillion dollars. Instead of learning painful lessons from the last recession, Americans continue to make the same horrendous financial mistakes over and over again. In fact, U.S. consumers accumulated more new credit card debt during the 4th quarter of 2015 than they did during the years of 2009, 2010 and 2011 combined. That is absolutely insanity, because other than payday loans, credit card debt is just about the worst kind of debt that consumers could possibly go into. Extremely high rates of interest, combined with severe penalties and fees, can choke the financial life out of almost any family in no time at all.
These days, most Americans use credit cards for various purposes, and they can be very convenient. Continue reading »
Jun 29, 2014
UPDATED – Newer bank cards DO NOT have the divot in the plastic to easily locate the RFID chip embedded into them. You must use a high powered flashlight to “see through” the card to locate the chip. Once located, use a hole punch to break through the chip, disabling the RFID function.
The software I used on my Samsung SGS3 cellphone is called “Electronic Pickpocket RFID” and can be found in the Google Play Store for free. It will not give you all the credit card information, but enough to test if the card does or does not have a RFID chip embedded. You must have a cell phone that has NFC technology for the app to work. Continue reading »
– MasterCard to comply with new rules and remain in Russia – CEO (RT, Oct 13, 2014):
The MasterCard international payment system will continue operating in Russia and comply with the new rules set out by the Central Bank of Russia, CEO Ajay Banga has said.
“We have intentions to remain in Russia,” TASS quotes Ajay Banga the President and Chief Executive of MasterCard.
“My approach is that we will follow the new rules. The law requires a partnership with the Central Bank of Russia. We think, this is reasonable for Russia,” he said. Continue reading »
– Russia launches China UnionPay credit card (RT, Aug 15, Edited Aug 18, 2014):
Forget Visa and MasterCard. After the two American credit system payment companies froze accounts without notice in March, Russia has been looking for an alternative in China UnionPay.
China UnionPay plans to have 2 million cards in Russia in the next three years.
Instead of seeing the small Visa and MasterCard logo on credits cards, ATMs, and retail outlets, Russians will start to see the three words “China. Union. Pay.” Continue reading »
– Visa, Mastercard block US-sanctioned Russian banks (RT, March 21, 2014):
International payment system Mastercard has stopped serving clients of seven Russian lenders, after the US issued sanctions against it regarding Russia’s position over the Ukrainian turmoil.
Rossiya Bank was blocked by both – Master Card and Visa, and with the latter also cutting ties with Sobinbank, SMP Bank and Investcapitalbank.
Seven Russian banks are involved in the suspension, according to Timur Batyrev, the head of the national payment system department at the Central Bank of Russia.
The blockade came without warning, Rossiya bank said. Continue reading »
The credit card company’s recent contract update includes terms that sound menacing and creepy.
– Capital One Now Makes House-Calls Says It Can Show Up At Cardholders’ Homes, Workplaces (Los Angeles Times, Feb 17, 2014):
Ding-dong, Cap One calling.
Credit card issuer Capital One isn’t shy about getting into customers’ faces. The company recently sent a contract update to cardholders that makes clear it can drop by any time it pleases.
The update specifies that “we may contact you in any manner we choose” and that such contacts can include calls, emails, texts, faxes or a “personal visit.”
As if that weren’t creepy enough, Cap One says these visits can be “at your home and at your place of employment.”
The police need a court order to pull off something like that. But Cap One says it has the right to get up close and personal anytime, anywhere.
– MasterCard joining push for fingerprint ID standard (USA Today, Oct 2, 2013):
The addition of MasterCard will help FIDO expand its standard to more types of transactions. The company’s experience handling the multitude of existing payments industry standards will also be valuable.
SAN FRANCISCO — MasterCard is joining the FIDO Alliance, signaling that the payment network is getting interested in using fingerprints and other biometric data to identify people for online payments.
MasterCard will be the first major payment network to join FIDO. The Alliance is developing an open industry standard for biometric data such as fingerprints to be used for identification online. The goal is to replace clunky passwords and take friction out of logging on and purchasing using mobile devices.
Apple’s new iPhone 5s smartphone has a fingerprint sensor, but the tech giant is not part of FIDO. However, Google is part of the Alliance, and devices running Google’s Android operating system will have fingerprint sensors by next year.
– Multiple Government Agencies Are Keeping Records Of Your Credit Card Transactions (Economic Collapse, June 28, 2013):
Were you under the impression that your credit card transactions are private? If so, I am sorry to burst your bubble. As you will see below, there are actually multiple government agencies that are gathering and storing records of your credit card transactions. And in turn, those government agencies share that information with other government agencies that want it. So if you are making a purchase that you don’t want anyone to know about, don’t use a credit card. This is one of the reasons why the government hates cash so much. It is just so hard to track. In this day and age, the federal government seems to be absolutely obsessed with gathering as much information about all of us as it possibly can. But there is one big problem. What they are doing directly violates the U.S. Constitution. For those that are not familiar with it, the following is what the Fourth Amendment actually says: “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” Unfortunately, the Fourth Amendment is essentially dead at this point. The federal government is investigating all of us and gathering information on all of us all day, every day without end.
Many Americans have never even heard of the Consumer Financial Protection Bureau, but Judicial Watch has discovered that they are spending millions of dollars to collect and analyze our financial transactions… Continue reading »
– Android app steals contactless credit card data (SC Magazine, June 21, 2012):
A German penetration tester has posted to the Google store an Android application capable of siphoning credit card data from contactless bank cards.
The app, dubbed paycardreader, will skim card numbers and expiry dates, along with transactions and merchant IDs, and was successfully tested against a German PayPass Mastercard.
Starting June 25 of this year, Bank of America will start charging more and more of their credit card customers an APR of almost 30%. According to a letter that came in the mail today, that new rate would apply “indefinitely.” If you make a single late payment, B of A may raise your interest rate to as much as 29.99%. The new rate would only apply to new purchases, not existing balances (that’s one of the few good things about the CARD act), but according to recent surveys over 15% of customers have made at least one late payment in the last 12 months. (I know we’ve done it once or twice.)
From a free market perspective, the new late payment policy isn’t terrible, but in practice it still stinks. That’s because, like most fees and penalties charged by banks and credit card companies, it will be more onerous for the poorest and most vulnerable. Think about it, if you have good credit and a good job, who cares if you make a late payment? If your credit card company assesses a penalty rate of 30% on new purchases, you can just switch to a different card. But if your Bank of America card is your only source of revolving credit, then you’re pretty much stuck with the new interest rate. And over time, more and more customers will end up with the new penalty rate because of a late payment. Moreover, it will end up being those customers who can least afford it who end up paying the new rate because B of A will most likely refrain from instituting high penalty rates on customers they know can simply walk away.
The MBNA bank has been accused by a High Court judge of “torturing” a customer with repeated phone calls demanding he repay his credit card.
Keith Harrison had his debt of £20,270 written off by the judge, Nicholas Chambers QC, at Mold in North Wales.
The judge said MBNA had failed to give Mr Harrison the terms and conditions for the card, when he took it out.
MBNA said it was reviewing the comments and said it had been unable to have “meaningful dialogue” with Mr Harrison.
“[We] were unable to ascertain the reason for non-payment,” the bank added.
The judge denounced the tactics that MBNA and its debt collection firm had used to force him to pay up.
“In my view, the claimant rightly complains that, mainly by MBNA but also by the defendant [debt collectors Link Financial], he was hounded by telephone calls seeking payment of what was said to be due,” said Mr Justice Chambers.
“The calls were a form of torture oppressively frequent in amount and often without attribution to an identifiable number.”
59.9 Percent? Americans Are Racking Up Huge Credit Card Balances Once Again And Some Of The Interest Rates Are Absolutely Outrageous!
Well, it was nice while it lasted. One of the really good things that came out of the recent economic downturn was that millions of American families decided to get out of debt. In particular, we had seen a sustained trend of reduced credit card usage in the United States. It looked like Americans had finally wised up. But we should have known that Americans would not be willing to tighten their belts forever.
Unfortunately, it appears that getting out of debt is no longer so “trendy”. In fact, the month of December was the third month in a row in which consumer credit grew in the United States. Prior to that, consumer credit in the United States had declined for 20 months in a row. The American people were doing so, so good. Why did they have to stop? It appears that the American people have fallen off the wagon and have gotten a taste for credit card debt once again.
This time, however, the credit card companies are back with interest rates that are higher than ever. In fact, one national credit card company has hundreds of thousands of customers signed up for a card that charges interest rates of up to 59.9%.
You mean there are people that are stupid enough to actually sign up for a credit card that will charge them 59.9% interest?
Unfortunately the answer is yes.
In fact, the top rate was 79.9% before First Premier Bank lowered it.
These cards are targeted at Americans that have a poor credit history, and these days there are a whole lot of those.
A recent story on the website of CNN described how large numbers of U.S. consumers with poor credit are gobbling up credit cards like these. Unfortunately, many of these consumers are also not smart enough to realize what they are getting into. The CNN story contained a quote from a woman who was in complete shock when she discovered that her interest rate was going to go up by 50 percentage points….
“I about had a heart attack when I got a disclosure notice saying that my starting rate of 29.9% was going up to 79.9%.”
First Premier Bank has since lowered the top rate on those cards to 59.9%, but that it still completely outrageous.
Not only are the interest rates on those cards super high, but they also charge a whole bunch of fees on those cards as well. The following are some of the fees that First Premier Bank charges….
*$45 processing fee to open the account
*Annual fee of $30 for the first year
*$45 fee for every subsequent year
*A monthly servicing fee of $6.25
So you would think that nobody in their right mind would ever sign up for such a card, right?
CNN is reporting that almost 700,000 Americans have signed up for the card.
In fact, CNN says that First Premier Bank gets between 200,000 to 300,000 new applications a month for the card, but that they only open about 50,000 new accounts each month.
Are there really this many Americans that are this gullible?
If Americans would just remember the “DBS” rule they would be so much better off.
DBS = Don’t Be Stupid
Do you know how long it would take to pay off a credit card with a 59.9 percent interest rate?
Federal law enforcement agencies have been tracking Americans in real-time using credit cards, loyalty cards and travel reservations without getting a court order, a new document released under a government sunshine request shows.
The document, obtained by security researcher Christopher Soghoian, explains how so-called “Hotwatch” orders allow for real-time tracking of individuals in a criminal investigation via credit card companies, rental car agencies, calling cards, and even grocery store loyalty programs. The revelation sheds a little more light on the Justice Department’s increasing power and willingness to surveil Americans with little to no judicial or Congressional oversight.
For credit cards, agents can get real-time information on a person’s purchases by writing their own subpoena, followed up by a order from a judge that the surveillance not be disclosed. Agents can also go the traditional route — going to a judge, proving probable cause and getting a search warrant — which means the target will eventually be notified they were spied on.
The document suggests that the normal practice is to ask for all historical records on an account or individual from a credit card company, since getting stored records is generally legally easy. Then the agent sends a request for “Any and all records and information relating directly or indirectly to any and all ongoing and future transactions or events relating to any and all of the following person(s), entitities, account numbers, addresses and other matters…” That gets them a live feed of transaction data.
It’s not clear what standards an agent would have to follow to get a “Hotwatch” order. The Justice Department told Sogohian the document is the only one it could find relating to “hotwatches” — which means there is either no policy or the department is witholding relevant documents.
The Justice Department did not return a call for comment.
Every year, the Justice Department does have to report to Congress the numbers of criminal and national security wiretaps undertaken, as well as the number of National Security Letters issued. Tens of thousands of NSLs are issued yearly — most with gag orders that forbid ISPs or librarians from ever saying they have ever been served with such a subpoena.
But the Justice Department does not report or make public the number of times it got real time or historic cell phone location information, nor how often it is using these so-called “hotwatch” orders.
Photo courtesy of TheTruthAbout
By Ryan Singel
December 2, 2010
Millions of credit card holders are being squeezed by the highest interest rates in more than a decade, according to new research.
Despite the Bank of England’s base rate being at 0.5 per cent, average credit card interest rates have risen to 18.8 per cent.
Experts said that card providers were passing on the cost of an increase in defaults caused by rising unemployment and bad debts. The charges were also a consequence of tighter Government regulation.
Any credit card holders with a £5,000 debt, and who pay off the minimum 2.5 per cent each month, will repay on average £2,289 more than three years ago.
The last time interest rates hit today’s levels was in 1999, when the base rate was 6 per cent.
Borrowers who became used to switching their debts between cards promising 0 per cent introductory offers have been affected by a sharp tightening of lending critera. Figures from the UK Payment Association found that around half of all applications for credit cards were rejected last year. Continue reading »
Citigroup is in serious trouble. It’s easy to tell by what they are doing.
Inquiring minds note that Citi Abruptly Shutting Down Gas-Linked Credit Cards.
Citi (C) is abruptly shutting down credit cards linked to gas station partners.
The bank is offering few details:
The bank said in a statement it “decided to close a limited number of oil partner co-branded MasterCard accounts.” That includes not only Shell, but Citgo, ExxonMobil and Phillips 66-Conoco cards.
The close date was Wednesday, and letters were sent out Monday to customers informing them of the change, a Citi spokesman said. The bank would not say how many cards were shut down or how much available credit they represented.
In a followup article the Business Insider notes ….
Yesterday, we reported on how scores of people across the country had found their gas station-linked credit cards from Citibank had been canceled.
One reader, Rachel, emailed us and explained her frustration.
I received two letters by mail from Citibank yesterday. One said that because I always paid my account on time and that I was such a great customer they were increasing my credit limit. The next letter I opened stated that Citibank was raising my interest rate from the current 18.99% to 29.99%.
My husband and I have good credit and are making a genuine effort to get out of debt by purchasing next to nothing on credit.
While I am ashamed to admit this to you we owe $25,000 to Citibank, our choices at this time are very limited. I have made some calculations and in order to pay the balance before they forcibly close my account, my husband and I must make payments of $1400 per month, this is a substantial increase from the minimum balances they require of $665 per month. I have not opted to pay Citibank the 29.99% interest. …
Now admittedly having a $25,000 balance is a sign of a problem. On the other hand, the account seems to be in good standing, so let’s dig further.
Citigroup Pressure Builds Continue reading »
Citi closes gas-linked MasterCards without warning
NEW YORK (AP) – Shannon Burdette tried to pay with her Shell Mastercard after filling up her gas tank this weekend but found the card rejected.
Confused, she called the customer service line on the back of the card, issued by Citibank, and was told the account was closed because of something that appeared on her credit report. But when the Sykesville, Md., resident got a copy of her credit report online, the only negative thing she saw was “closed at credit grantor’s request” on the Shell MasterCard account.
“They said there was a routine review,” said Burdette, who maintained that she and her husband, Brian, used the card regularly and always paid the bill on time.
Burdette isn’t alone. People across the country have been reporting similar experiences in postings on various consumer Web sites.
Citi confirmed the basics. The bank said in a statement it “decided to close a limited number of oil partner co-branded MasterCard accounts.” That includes not only Shell, but Citgo, ExxonMobil and Phillips 66-Conoco cards.
The close date was Wednesday, and letters were sent out Monday to customers informing them of the change, a Citi spokesman said. The bank would not say how many cards were shut down or how much available credit they represented.
And now the credit card crisis. Who will bailout the US consumers?
“The defaults are a wake-up call for those expecting a V-shaped recovery.”
V-shape recovery? There is no recovery:
NEW YORK (Reuters) – Bank of America Corp and Citigroup Inc customers defaulted on their credit card debts in August at the highest rates since the onset of the recession, a sign that the banks’ consumer lending woes are far from over.
The trend was echoed among most other major credit card issuers, dashing optimism sparked when many banks and specialty finance companies reported lower default rates for July.
A hacker who had once worked with the US secret service has been charged with the biggest credit card identity theft ever recorded in the US.
Albert Gonzales, 28, of Miami, and his accomplices, allegedly stole at least 130 million accounts from big retail companies.
Gonzales is accused of working with two unidentified Russian conspirators to hack into the databases of retail chains, and then selling the information around the world.
More green shoots!
Aug. 10 (Bloomberg) — Consumer bankruptcies show no sign of abating after rising more than a third this year and may hit 1.4 million by Dec. 31 as jobs are lost and loans are harder to get, according to the American Bankruptcy Institute.
More than 126,000 consumers filed for bankruptcy in the U.S. last month, 34 percent more than in July 2008, the ABI said in its latest report on Aug. 4. The increase came after a 36.5 percent rise in personal bankruptcies nationwide in the first six months, to 675,351, according to the ABI research group, which interprets data collected by the National Bankruptcy Research Center.
“Rising unemployment on top of high pre-existing debt burdens is a formula for higher bankruptcies through the end of this year,” ABI Executive Director Samuel Gerdano said in a statement. The group, composed of lawyers, accountants, bankers and judges, is based in Alexandria, Virginia.
Debt problems don’t stop with sub-prime borrowers. Celebrities who filed for bankruptcy in July included movie actor Stephen Baldwin, who sought protection from creditors after lenders began foreclosure procedures against his home. Lenny Dykstra filed for Chapter 11 bankruptcy in a petition that says the former Major League Baseball All-Star owes between $10 million and $50 million.
The economic crisis has only just begun.
Meredith Whitney, one of Wall Street’s best known and most bearish bank analysts, estimates that Americans’ credit card lines will be cut by $2.7 trillion, or 50 percent, by the end of 2010 — and fewer Americans will be offered new cards.
Related article: Meredith Whitney: Credit cards are the next credit crunch (Reuters)
* AmEx and Citi perform worse-than-expected – analysts
* JPMorgan and Capital One outperform expectations
* Default rates seen over 10 percent by year-end
NEW YORK, March 16 (Reuters) – U.S. credit card defaults rose in February to their highest level in at least 20 years, with losses particularly severe at American Express Co (AXP.N) and Citigroup (C.N) amid a deepening recession .
AmEx, the largest U.S. charge card operator by sales volume, said its net charge-off rate — debts companies believe they will never be able to collect — rose to 8.70 percent in February from 8.30 percent in January.
The credit card company’s shares wiped out early gains and ended down 3.3 percent as loan losses exceeded expectations. Moshe Orenbuch, an analyst at Credit Suisse, said American Express credit card losses were 10 basis points larger than forecast.
In addition, Citigroup Inc (C.N) — one of the largest issuers of MasterCard cards — disappointed analysts as its default rate soared to 9.33 percent in February, from 6.95 percent a month earlier, according to a report based on trusts representing a portion of securitized credit card debt.
(Reuters) – Prominent banking analyst Meredith Whitney warned that “credit cards are the next credit crunch,” as contracting credit lines will lower consumer spending and hurt the U.S. economy.
“Few doubt the importance of consumer spending to the U.S. economy and its multiplier effect on the global economy, but what is underappreciated is the role of credit-card availability in that spending,” Whitney wrote in the Wall Street Journal.
She said though credit was extended “too freely over the past 15 years” and rationalization of lending is unavoidable, what needs to be avoided was “taking credit away from people who have the ability to pay their bills.”
Whitney said available lines were reduced by nearly $500 billion in the fourth quarter of 2008 alone, and she estimates over $2 trillion of credit-card lines will be cut within 2009, and $2.7 trillion by the end of 2010.
“Inevitably, credit lines will continue to be reduced across the system, but the velocity at which it is already occurring and will continue to occur will result in unintended consequences for consumer confidence, spending and the overall economy,” Whitney said.
Currently, there is roughly $5 trillion in credit-card lines outstanding in the U.S., and a little more than $800 billion is currently drawn upon, she said.
“Lenders, regulators and politicians need to show thoughtful leadership now on this issue in order to derail what I believe will be at least a 57 percent contraction in credit-card lines,” she said.
Don’t forget another crisis, that will be much bigger than the subprime mortgage crisis:
– Mass Retail Closings: About 220,000 stores may close this year
– Interview with Gerald Celente: 2009 – The Worst Economic Collapse Ever (02/10/09)
– Retailers may close 73,000 stores; Wave of store closings, bankruptcies and takeovers
Hot on the heels of the banking crisis, the employment crisis, and the mortgage/foreclosure crisis, the country is on the verge of experiencing a credit card crisis.
According to the Federal Reserve, the total outstanding credit card debt carried by Americans reached a record $951 billion in 2008 — a number that will only climb higher as more and more people reach for the plastic to make ends meet. What’s more, roughly a third of that is debt held by risky borrowers with low credit ratings.
American Express paying card holders to close their accounts (Reuters)
Credit card defaults are on the rise and are expected to hit 10 percent this year. This will obviously drive many banks closer to failing their stress tests — but it will have an even greater impact on the lives of people who find themselves sinking deeper and deeper into debt.
NEW YORK (Reuters) – American Express Co, battered by mounting credit card losses, is offering $300 to a limited number of U.S. card holders who pay off their balances and close their accounts, the company said on Monday.
“We sent the offer out to a select number of card members,” said Molly Faust, a company spokeswoman. “We are looking at different ways that we can manage credit risk based on the costumers overall credit profile.”
The company did not say how many card holders would receive the offer and did not disclose the total of their card balances.
Banks and other lenders nationwide, seeking to reduce their debt exposure, are shutting off and limiting consumer credit card lines, even for many customers who carry low balances and pay on time.
As much as $2 trillion in consumer credit – nearly half of what is available – could be rescinded, according to an estimate by a prominent banking analyst. Just two years ago, institutions were handing out liberal borrowing lines to almost anyone. But now, drowning in debt and soured investments, lenders are seeking to stop consumers from running up big balances in hard times, bills they might not be able to pay.
The credit squeeze doesn’t just limit spending potential; it can also damage cardholders’ credit ratings by making them appear to be riskier borrowers. And in many cases, the institutions pulling back on credit took government bailout funds that were supposed to encourage them to lend more freely.
(Reuters) – The U.S. credit-card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said.
The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer & Co analyst noted.
“In other words, we expect available consumer liquidity in the form of credit-card lines to decline by 45 percent.”
Bank of America Corp, Citigroup Inc and JPMorgan Chase & Co represent over half of the estimated U.S. card outstandings as of September 30, and each company has discussed reducing card exposure or slowing growth, Whitney said.
Closing millions of accounts, cutting credit lines and raising interest rates are just some of the moves credit card issuers are using to try to inoculate themselves from a tsunami of expected consumer defaults.
Complete identities are being sold online for just £80, internet experts have discovered.
The stolen personal data include credit card details, plus the cardholder’s name, address, passport and driving licence numbers.
Once stolen, the average identity yields online fraudsters around £15,000, researchers found.
Individual pieces of stolen data are available for as little as £5.
A study for Get Safe Online Week found one in five people use the same password for all their internet logins, leaving them wide open to hacking.
Half those surveyed did not update their anti-virus software often enough.
And nearly a quarter did not have any protection against spyware.
J.L. Fish thought she was a fine credit card customer, and that Wells Fargo shared that high opinion. That’s why the Mankato retiree was stunned to see the bank raise the interest rate on her Platinum VISA from 5.2 percent on her June bill to 17.69 percent come July.
Companies cracking down, even on those with good credit, leaving customers to face interest rate leaps, lower credit limits and even canceled cards.
“I nearly fainted,” said Fish, 61, who lives on about $1,400 a month from Social Security and a small disability pension. She has made the minimum payment each month without fail on about an $8,000 balance, she said. But the interest rate jump nearly doubled her monthly minimum from $115 to $198 –more than she can cover. So, she took the bank’s offer for an “opt out” — which involved canceling the card and then setting up a new billing schedule until she pays off her entire debt.
“I have never been late in my payments,” said Fish, noting payments are automatically deducted from her bank account. “Why did Wells Fargo do this to me?”
The answer is bigger than Fish. Banks nationwide are sweeping across their credit card accounts and tightening lending standards — leaving customers to face interest rate leaps, lower credit limits, and even canceled cards. A Federal Reserve Bank survey showed 83 percent of major card issuers tightening their lending standards in the third quarter of this year, up from 45 percent in the second quarter.
Economists partly blame the credit markets — where banks buy money to lend — which came to a virtual standstill as the world’s stock markets crumbled. But others hear an ominous echo of the subprime mortgage meltdown — with banks now backpedaling from similarly lax lending with credit cards that have left them with exploding losses.
“There is a credit card equivalent of a toxic subprime mortgage,” concluded a report earlier this month by Gregory Larkin, senior analyst at Innovest Strategic Value Advisors, an investment advisory firm in New York. “This is precisely what we need to be looking at right now.”