No, it's not a scam letter you received in the mail! Millions of Visa and Mastercard users are eligible for a cash refund of illegal transaction fees that they paid during overseas transaction. The original lawsuit was filed because these fees were largely seen as hidden from consumers and therefore illegally imposed. So, how much do you get? Consumers who spent a short time overseas are eligible to receive $25 with minimal paperwork. Those that spent longer than a week or spent more than $2,500 are eligible for a larger refund if they fill out the paperwork for it. You can find more information and a link to the forms here.

From USNews:
Tens of millions of credit card users received letters in the mail over the past couple of months informing them that they may be eligible for a refund of the currency conversion fees paid during overseas transactions. The settlement was the result of a lawsuit alleging that Visa, MasterCard, and Diners Club did not disclose the 1 to 3 percent fees they charged on foreign transactions.

Many consumers who overextended themselves during Christmas may unload their debts onto the public by declaring bankruptcy. Sadly, many people continue to ignore the warning signs of debt and push their bills off during the holiday season. These bills will begin to surface again during the first three months of the year when many of them will become due. Unfortunately, many of these people will face insolvency as their only way out of debt. This is particlarly true given the issues faced in the credit and housing markets, which has substantially limited consumers' ability to repay their debts.

From Reuters:
Excessive spending over Christmas will fuel personal bankruptcies in the first three months of the year, a report says. Chartered accountant Grant Thornton predicts that 28,000 people will become insolvent in the first quarter of 2008, a third of whom are expected to file for bankruptcy as a direct result of debt racked up over the festive period.

Most Americans count their house as their single largest asset as it is used to back loans and build equity. However, a new trend in so-called "reverse mortgages" may be changing that fact. Now, mortgage companies are targeting seniors who are willing to part with their house in exchange for a monthly stipend (reverse mortgage). Under this arrangement, a senior is able to slowly sell their house over time until they die, at which time the house becomes property of the bank. The problem with this is that these mortgage companies are not only taking away a large asset (that is usually passed down to future generations) but also charge high fees for the loan that can result in homeowners receiving substantially less than they deserve.

From Kansas.com:
As living expenses--particularly health care costs -- rise while incomes remain stagnant, seniors are increasingly finding reverse mortgages a way to remain in their homes and make ends meet. There are downsides, including the costs--which can be as high as $8,000 to $9,000 for a $150,000 loan, for example--and the fact that consumers essentially give up what for most people is their biggest asset.

It appears that the consumer credit crisis that we have been predicting for some time is now finally beginning to hit the market. The housing boom has seen many consumers utilize their home equity lines of credit in order to pay off unsecured credit card debts. Now that that resource has dried up, many Americans are beginning to default on their credit cards. This has caused strain on banks that are now raising their interest rates in order to try and offset the higher defaults. Unfortunately, this will only compound the problem by making it even more difficult for Americans to get out of debt which will force more into default. In the end, someone's going to take the hit - whether it be consumer's with debt or U.S. banks (which are already beaten down) with debt when consumers declare bankruptcy.

From MarketWatch:
Faced with mounting account delinquencies, major U.S. banks are penalizing credit-card customers late on payments by hiking their accounts to maximum default interest rates of 30% and more -- even those with good credit records ... The decline in Americans' home equity due to slumping real-estate values is limiting cardholders' ability to pay off higher-interest credit-card debt with home-equity loans. As that resource becomes unavailable to more borrowers, experts say, lenders are taking aggressive measures to limit their exposure on unsecured credit-card debt.

Winona Daily News had an interesting article today on merchant credit card practices. Many people have seen the signs stating that credit card purchases under a certain dollar amount (or all credit card purchases in some places!) in order to cover their costs. However, all merchants are required to sign the same agreement with credit cards which specifically makes this practice illegal and subject to fines of up to $100,000. For example, on page 2-19 of Mastercard's agreement, it says that: "A merchant must not directly or indirectly require any MasterCard cardholder to pay a surcharge … in connection with a MasterCard card." So, next time you are charged, maybe you should try and argue it!

From Winona Daily News:
In response to letters regarding some merchants adding surcharges over the amount of purchase, I believe this practice is improper. Merchants enter into a contract with Master Card, Visa or Discover in order to accept these cards. In this contract, it shows that surcharges are against policy.

The holiday season has left many consumers with gift cards that they do not care to use, and this has created an entire secondary market around such gift cards. Along with a new market comes a new breed of criminals that are trying to scam consumers. Many small-time consumers are stealing gift cards and sell them on websites such as Storefrontbacktalk.com, which enables people to trade and sell gift cards. Others steal the numbers off of gift cards and then call in later on to see how much is left on the card - they then create counterfeit cards and sell them online. It's a growing problem that stores are just now trying to address...

From TheState.com:
The guy trying to unload his Cold Stone Creamery gift card on eBay because he says he's lactose intolerant might be a scam artist. Gift cards are more popular than ever, and this time of year Web sites are flooded with sellers hoping to unload unwanted cards, often at significant discounts. Some experts recommend that shoppers avoid such sites entirely.

Credit card pricing schemes can prove to be extremely complicated and they may be partly to blame for the problems that consumers are facing. The Chicago Tribune provides a great example: It's entirely possible that under a common cardholder agreement provision called a universal cross-default clause that your dispute with the cable company over lousy service constitutes an event of default on your credit card. The default bumps your interest rate up to 32 percent, which is applied retroactively to your existing balance and (under another common practice called "two-cycle billing") to the balance you paid off last month. Clearly, changes are needed!

From the Chicago Tribune:
Pop quiz: what's the interest rate on the credit cards you're carrying? How about the default rate? Do you know what constitutes an event of default? What will trigger a penalty fee or surcharge? How much are those fees? If you're like most Americans, you probably cannot answer many or all of these questions. Credit cards have a complicated price structure. Cards have multiple price points -- annual fees, merchant fees, interest (at several different rates), and assorted back-end fees, such as late fees, over-limit fees and currency conversion fees. This pricing structure makes it virtually impossible to determine the potential costs of carrying a balance.

The IRS announced today that repairing a glitch in the alternative minimum tax may delay tax refunds for more than three million U.S. citizens, according to the Internal Revenue Service. Lawmakers moved to shield millions of upper and middle class taxpayers from falling under the minimum tax. The move was designed to ensure that very wealthy citizens did not claim so many tax breaks that they avoided paying taxes entirely.
 
The move forced the IRS to re-program its computer systems, however, which means that the IRS won’t be able to process AMT-related returns until February 11th for the three million plus taxpayers who typically file early in the year.

Brick-and-mortar retailers have been hit hard this holiday season by both online retailers and a poor credit environment that has tightened consumer spending. Many are now hoping that consumers will head back to the stores after Christmas in order to utilize gift cards and make additional purchases at new lower prices. Online retailers like Amazon.com are also making a quick move to try and bolster sales one last time before consumers fall into more normal spending trends.

From the Associated Press:
The nation's retailers slashed prices further Wednesday in hopes that a post-Christmas shopping rush will salvage holiday sales that, so far, have fallen below even modest expectations. They're waiting in particular for legions of shoppers armed with gift cards to snap up bargains and buy new merchandise that has just hit store shelves. Merchants in past years have received a late bounce during big clearance markdowns, and they find themselves again in the position of hoping that bargain-hunting consumers will come through in the end. Gift card sales are not recorded until shoppers redeem them.

Debt is on the rise in the UK and many banks around the world are preparing for a similar decline in other Western markets like the United States. Mortgage problems that began in the United States have quickly extended into the UK and other markets, which has switched much of the spending from home equity to credit cards. The result has been a huge increase in the amount of credit card debt outstanding and (thanks to the mortgage crisis) a rising number of defaults. This is a trend that is only continuing to get worse both domestically and around the world.

From TimesOnline:
Debt charities are gearing up for the busiest January on record as the financial hangover from an expensive Christmas kicks in. The Consumer Credit Counselling Service and Credit Action, two leading debt charities, predicted that they would receive more calls from borrowers worried about their finances this January than in previous years. The credit crunch, coupled with five interest-rate rises, has left tens of thousands of borrowers struggling. It was hoped that the 0.25 per cent cut in the interest rate at the beginning of the month would ease the burden on homeowners, but many mortgage lenders have yet to pass it on. In addition, shoppers have spent an estimated £34 billion on their credit cards this month, up from £31 billion last December, according to the Association of Payment Clearing Services, the credit card industry body.

Holiday spending may be great for online retailers, but it disappointed many brick and mortar retailers. These stores not only lost sales to the internet, but also had to combat lower consumer spending amid a tough credit and housing market. Many customers that tapped home equity lines are switching to credit cards and reducing their spending. It will be interesting to see whether the default rates on any of the store-based credit cards increase along with the default rates associated with the larger credit card banks...

From the New York Times:
American consumers, uneasy about the economy and unimpressed by the merchandise in stores, delivered the bleak holiday shopping season retailers had expected, if not feared, according to one early but influential projection. Spending from Thanksgiving to Christmas rose just 3.6 percent over last year, the weakest performance in at least four years, according to MasterCard Advisors, a division of the credit card company. By comparison, sales grew 6.6 percent in 2006 and 8.7 percent in 2005.

Did you spend hours in line at retailers this Christmas? It turns out tha many people simply turned to websites like Amazon.com in order to get their holiday shopping done from the comfort of their own home. Amazon called this season its best ever and released some interesting statistics:

Amazon Worldwide 2007 Holiday Facts (Includes www.amazon.com, www.amazon.co.uk, www.amazon.de, www.amazon.fr, www.amazon.co.jp, and www.amazon.ca)

• Amazon shipped more than 99 percent of orders in time to meet holiday deadlines worldwide.
• On the peak day this season, Amazon's worldwide fulfillment network shipped over 3.9 million units.
• Amazon shipped to over 200 countries.
• One of our most remote shipments was “Full Metal Panic Fumoffu - Full Metal Pandemonium” (Vol. 1) DVD and “Full Metal Panic Fumoffu - Full Metal Fracas” (Vol. 2) DVD delivered to Barrow, Alaska.
• Amazon shipped over 160,000 shipments to APO/FPO addresses.
  

Amazon.com 2007 Holiday Facts (www.amazon.com Only)

• Amazon.com sold Nintendo Wii systems at approximately 17 per second when they were in stock.
• Amazon.com sold enough high-def DVD players to cover seven football fields.
• If you lined up all of the GPS units Amazon.com sold this holiday, they would make a trail from New York to Philadelphia; however, a new trail wouldn’t be necessary with the use of a GPS.
• Amazon.com sold enough auto wrenches to stretch all the way around the Daytona 500 track.
• Amazon.com sold enough Hannah Montana wigs to outfit the entire audience at her December 20th show in Providence, RI.
• Amazon.com's One-Day Shipping was extended an extra day through Sunday, December 23rd for Prime members this holiday season.
• The last Prime order placed on December 23 in time for Christmas delivery contained "Futurama, Vol. 1" DVD, "Lost in Translation" DVD, "A Charlie Brown Christmas" CD, "The Fountainhead" by Ayn Rand paperback, "Bridge Over Troubled Water" CD, and "Pulp Fiction” (Two-Disc Collector's Edition) DVD delivered to Herndon, VA on December 24th.
  

Amazon.com's Hot Holiday Best Sellers (Nov. 15 through Dec. 19 Based on Units Ordered)

• In Toys, top sellers included Jakks EyeClops Bionic Eye, IlluStory Make Your Own Story Kit and Spinmaster Air Hogs Havoc Heli.
• Top sellers in video games and hardware included Nintendo Wii, “Super Mario Galaxy” and “Call of Duty 4.”
• In DVDs, top sellers included “Harry Potter and the Order of the Phoenix,” “Planet Earth: The Complete BBC Series” and “Pirates of the Caribbean: At World's End.”
• Top sellers in books included “Eat, Pray, Love” by Elizabeth Gilbert, “The Dangerous Book for Boys” by Conn Iggulden and Hal Iggulden and “I Am America (And So Can You)” by Stephen Colbert.
• In music, top sellers included “Noel” by Josh Groban, “Raising Sand” by Robert Plant and Alison Krauss and “As I Am” by Alicia Keys.
• Top sellers in consumer electronics included the Garmin GPS, Canon PowerShot digital Elph cameras and Samsung LCD HDTVs.
• Top sellers in the Beauty Store included Burt's Bees Head to Toe Starter Kit, Imju Fiberwig mascara and Bare Escentuals Get Started Kit.
• In PCs, the top sellers included Apple MacBook, Nokia Internet Tablet PC and HP Pavilion Entertainment Notebook PC.
• Popular shoes and handbags at Amazon.com and Endless.com included the FEED bag, FRYE women's Campus tall boot and FRYE women's Adrienne Button tall boot.
• Top sellers in apparel and accessories included Kenneth Cole Reaction men's Eden wool pea coat, Gruppo Italiano women's cashmere-lined leather glove and Red Moon women's long sleeve cashmere turtleneck.
• The top-selling products in Amazon's Automotive Parts & Accessories Store included Black & Decker Simple Start battery booster, Actron diagnostic code scanner and Highland waterproof car top carrier.
• Top sellers in home improvement included Black & Decker auto wrench, Black & Decker Gecko grip level and Leatherman Micra multitool.
• The top-selling items in the Sports and Outdoors Store included the Ripstik caster board, Perfect Pushup and Bowflex Series 7 treadmill.
• Jewelry top sellers included sterling silver open double flower pendant, sterling silver Filigree circle pendant and 14k yellow gold four prong oval peridot stud earrings.
• Top-selling watches included the Timex heart rate monitor watch, LEGO Kids' Star Wars Darth Vader watch and Skagen women's Silver Dial mesh bracelet watch.
• The top-selling home and garden items included KitchenAid stand mixers (various colors), Pinzon Microtech throw (various colors) and Foreman removable-plate grills.
• Top-selling items in the Baby Store included Munchkin Mozart Magic Cube, Lamaze Spin & Explore Garden Gym and Lamaze Musical Inchworm.
• Top-selling items in Amazon's Grocery Store included Numi's Bouquet bamboo gift set, Lavazza Crema e Aroma coffee beans and Senseo Douwe Egberts dark roast coffee pods.
• Top-selling items in Amazon’s Gourmet Food Store included Soup's On gift basket by Wine Country Gift Baskets, Starbucks assortment gift basket by Wine Country Gift Baskets, and Fireworks popcorn and seasoning set.
• Top-sellers in health and personal care included the Braun Pulsonic system with LCD screen, Farouk CHI ceramic flat hairstyling iron and Homedics Therapist Select quad-roller massaging cushion with heat.
  

The consumer credit markets may be the final nail in the coffin for the US economy, sending it into the recession that so many economies were predicting. Problems began in 2005 when the US reformed its bankruptcy laws and made it more difficult to file. This resulted in fewer defaults, which meant that lenders could afford to send more money to questionable borrowers. Unfortunately, this caused a bubble in both the mortgage and consumer credit markets and only one has exploded so far... Rising defaults in the consumer credit markets may be a signal that we are at the crest of a new wave of problems for financial institutions in the US.

From the AP:
Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come. An Associated Press analysis of financial data from the country's largest card issuers also found that the greatest rise was among accounts more than 90 days in arrears.

President Bush signed a new bill today that will give tax relief to families facing foreclosures. The driving force behind this plan is a strategy designed to incentive lenders to refinance bad loans instead of simply "call" them. That is, those with subprime adjustable rate mortgages will be eligible for a refinancing at a lower rate rather than simply put into foreclosure. It's a good move that could help curb the problems we are seeing today with foreclosures, but many more near-prime and prime mortgages may still see problems.

From AHN:
President George Bush on Thursday signed a bill allowing families facing foreclosure from paying higher taxes, months after the U.S. housing market began its steep decline. The Mortgage Forgiveness Debt Relief Act of 2007 gives homeowners a 3-three-year window to refinance their mortgage while enjoying a tax break. The current tax code recognizes debt relief obtained from refinanced mortgages as taxable income. The new law, which was sponsored by Sen. Max Baucus (D-MT), chairman of the Senate Finance Committee, increases incentives for lenders and homeowners to refinance bad loans.