This is a guest post from Austin, who lives in Japan where he teaches English and blogs about personal finance. Follow his money journey at Foreigner’s Finances. I aked him to contribute a post here because it seems that not every country in the world has caught on to our debt addiction habit. Perhaps we can learn something from them. Remember that Japan has had literally 0% interest rate for years and yet did not catch on to our real estate boom or credit card boom! They had theirs 30 years ago!

When I moved to Japan in July, I was expecting to experience some differences in how America and Japan handled money.

For the most part, I got them.

Japan is mostly a cash society which meant goodbye efficient credit cards and hello piles of change that never seem to go away. There’s also the bank book – a check register that every person is issued with their bank account that is bloaty and reminiscent of banking in 1992.

On the other hand, there were some positive surprises that I didn’t expect to witness. As an American I’m used to people being bad with their money. We can just never learn how to handle our finances properly as a country.

In Japan, it seems the majority of the population has a little better handle on their money. The Japanese are notoriously more frugal and take on less debt per person compared to other large industrialized countries.

As I spend more time in Japan – up to 6 months now – I’ve noticed some personality traits of the Japanese that could be the reason for their improved money habits.

The more I thought about these 4 habits, I also realized that these traits could apply to someone who is attempting to defeat credit card debt. Let’s dive into these 4 cultural traits of the Japanese, and learn how they could help you better understand, and defeat credit card debt.

Patience

The Japanese take time to think and analyze situations instead of reacting immediately like most western countries. If you ask a Japanese person a difficult question, they will sit and silently think for up to ten seconds in order to provide the perfect response. They aren’t afraid of silence like other countries, and this creates analyzed plans of attack for difficult situations.

To defeat credit card debt, you also need a well thought out plan.

You can’t create outrageous and unrealistic plans like, “I’m spending $12 a month for 7 years so I can defeat my debt!” It won’t work because the enthusiasm will wear off and your morale will suffer. Instead, take some time and really analyze your debt situation.

Grab a pen and pencil and run the numbers. How much do you have? Where is it? How much can you afford to pay off every month? Give your debt situation the time it deserves and attack it appropriately so you can do away with it for good.

Hard work

Before arriving in Japan, I had heard that the Japanese workers had more days off than Americans. That may be true, but they work much harder and longer.

The word that describes their work ethic the best is resilient.

The Japanese can suffer poor conditions in work or life, and be fine with it. They can work 13 hours a day and be fine. They can fall asleep on a busy train and sleep soundly. It’s quite amazing. They power through, get the work done, and move on.

This may not fit your working philosophy, but it’s a lesson you can transfer as you try to defeat credit card debt.

Perhaps, a second job will provide you extra income to defeat your debt. Have you been procrastinating asking your boss for that much deserved raise? Are you wasting time by not getting your finances in order, even though you know you have a problem?

Work hard. Pay off debt. Live free. Enjoy life.

Pride

Losing face is a no-no in Japan. Often teachers won’t discipline students in front of their peers, instead opting to take them aside in private and scold them so they don’t embarrass the individual.

The Japanese have a respect and pride in the individual.

You also must have pride in yourself to defeat credit card debt. If you wear boots, pull up those boot straps and realize you can defeat debt. People overcome huge piles of debt every day, and they’re situations are no different than yours. Realize you deserve better, and your bank accounts deserve better.

A credit card debt free life is one that will provide pride and open up many parts of your life for the better.

Endure

One of my pet peeves is when people go on Facebook and complain about their money situations. No one wants to hear it, and you just look lazy that you’re too busy complaining about your money troubles online, instead of getting a second job or working your butt of to fix your problem.

The Japanese don’t complain – they endure. They cram 125 million people onto an island the size of California. They have horrible weather that is rainy, snowy, and windy for most of the year.

But they make do.

This is the cards they were dealt and they learn to love it.

Every one needs to let out some negative energy every once and a while, but repeated complaints get you no where and only prolong your poor situation.

Instead, do away with the complaints and get to creating a plan to overcome your credit card debt situation.

Your friends will thank you and offer their support when they notice your attitude change.

I expected to learn a lot of things from my time spent in Japan. Analyzing the cultural personality traits of the Japanese and using the lessons to inform people stuck in credit card debt was not one I expected.

Regardless, inspiration is needed and hopefully these 4 characteristics will make you look at your situation in a new light.

Good luck and get to work!

It’s Sunday and so rather than talking about credit cards, here’s an update on our latest gadget purchase for www.askmrcreditcard.com.

We just got ourselves an Apply Macbook Pro today. My laptop blew out a couple of months ago and I really did not bother to change them. But since I’m taking a short vacation later this week (more on that later), I had to get a laptop to make sure I’m on top of the website and other stuff.

I’ve been getting increasingly frustrated with the usual Windows stuff and their programs for a while. My computer frequently hangs or my Firefox is not working! Recently, my Word Document refuses to shut down at first go and it says that there is problem and “cannot shut down”! Just two days ago, I “accidentally” installed Windows Vista Service Pack 2 and after installation, my audio was silent. I could not listen to my itunes or even Youtube!

Did the usual searches on the internet. Went to my control panel and went to the sound devices and fiddled with it. I downloaded the latest realtech drivers and all that. No help. It turns out that lots of folks face the same problem. So as a baby step, I’ve decided to get the Apply Macbook Pro first and check it out (rather than buy another HP laptop – my previous one). I’ve numerous friends who have converted from Windows to Apple and are singing praises about it.

The programs I would need on the Mac are Office (which Windows make for Mac), my Abode Suite stuff like Photoshop, Dreamweaver, Premier etc (they have a Mac version). I also use Camtasia Studio for some of my video reviews and they have a Mac Version as well so that is great! As for this wordpress blog, well, any platform would do. The only snag I can see potentially down the road is Quicken. I was told that Quicken files on Windows are not compatible on Mac! (Great job Intuit!).

I booked an appointment with the “personal shopper” on Thursday and spent two hours there. I found out that I could get a student discount if I brought along a student with a student ID. I also found out that if I purchased stuff above $5,000, I would qualify for a business discount. I think that would be of use when I switch my main computer over to a Mac Pro plus maybe a couple of iMacs. So I got a friends girlfriend who was a student and with her ID, I managed to get a couple of hundred dollars discount of my purchase (once someone has used their student ID, they cannot get any more discounts from Apple for one year). I’ve mentioned before that you could also use your Discover Card and get a 5% rebate when you shop online at the Apple store (I wrote a similar post in my Apple Credit Card review) but I was not too sure how it will work with the student discount thing with online shopping (this is due for some investigation). Unfortunately, I did not want to wait for it (since I’m leaving this Thursday) so off to the Apple store I went.

After the purchase, I was given the package and boy did I fall in love with it (it’s amazing what a nice packaging can do). But I was even more blown away when I opened it at home. (check out the pics below). I really look forward to exploring it and using new programs like the Garage Band to edit my blogtalkradio shows (I’ve been using Audacity and they occasionally gave me problems on Windows too). I probably would have saved more on a Windows laptop like a HP but I just do not want to deal with all the “pre-installed” software and all that nonsense again! Will keep you folks posted on my mini transition as I get to know more about Apple. My main desktop is still Windows based I’ll let you guys know the day I fully transition.

Oh and by the way, this was the model I bought.

15 inch model : 2.66 GHz
Intel Core 2 Duo
4GB Memory
320 GB harddrive
SD card slot
NVIDIA GeForce 9400M + 9600M GT with 256MB

And for those of you curious about the student discount, here is the breakdown:

Base Price : $1,999
Student Discount: ($150)
Apple Care Plan: $349
Student Discount on Apple Care Plan: ($110)
Apple One-to-One Membership: $99

Total cost was $2312.28 after a 6% sales tax. By the way, I charged this to my business credit card, which is the Plum Card and I will be getting an extra 1.5% cash rebate on this!

ID WatchDog another Identity Theft Prevention service that is available to consumers. However, unlike most other services, it operates slightly differently. So how does this stack up versus the likes of Lifelock, ID Guard etc? Let’s find out.

How does ID WatchDog work? – ID WatchDog works the following way. Once your ID has been verified by them, they will “unleash their proprietary search engines to search thousands of databases, and compile your personal data in your “Baseline Identity Profile.” This is the report against which they will compare results from our future searches.

Every month, they will complete a new search of thousands of databases looking for your personal information. If there are new data points, you will be asked to approve them for addition to your Baseline Profile. If you don’t recognize this data, then ID WatchDog may escalate with research. If there’s reason to believe that your identity has been compromised, ID WatchDog will put together a report (called the ID Snapshot) that includes police records, driving records, medical history, loan information, and more. They will then look try to trace the person who stole your ID.

ID WatchDog will negotiate with institutions with whom your money or reputation has been affected. These include your credit card issuers, or anyone whom the thief has tried to open an account with. ID Watchdog says they will file necessary paperwork, and follow up to see that your good name is restored. In order for ID WatchDog to perform this function, you will have to sign a revocable Limited Power of Attorney to enable them to work on your behalf. (This is the ID Rehab Service).

Even though ID WatchDog will work on your behalf, you will still have to file a police report yourself and an affidavit. ID WatchDog will assist you in these.

How much doe it cost? – When you sign up and get a baseline report, you will be charged $1.95. You will be given a free 30 trial and if you wish to continue with the monthly service, you will be billed $19.95. You can also choose to pay an annual fee which works out to $179.95 (25% discount from the monthly rate). You could also choose a 3-year plan at $359.95 (which is a 50% discount from the monthly plan).

What if your baseline report indicates that you have an identity threat? – If that happens, you will be charged a ID Snapshot report for $99.95 and if you decide to ask ID WatchDog to pursue and resolve matters for you, the cost will be $79.95 per damaged line-item (or reported inaccuracy), per individual consumer report.

Opinion – ID WatchDog is clearly different from other ID theft protection service. Firstly, they are not like the usual “credit monitoring service” that simply “notifies” you if any changes appears on your credit report. Instead, they emphasize checking public records for any use of your identity and monitoring. I guess the reason they emphasize on this aspect is that if your ID is stolen, the person who is using your stolen identity may not want to open a credit card or new cell phone line under your name. It could be used for other purposes where your credit report is not checked.

This service is certainly better than the run of the mill credit monitoring service. However, I still prefer a service like LifeLock®, who would actually inform you when a creditor tries to check your credit reports. I consider this a very important line of defense (though not 100% foolproof since some folks just do not check your credit reports!).

Identity Truth is a identity theft and credit monitoring service that was started in 2006. In this review, we are going to look at its features and compare it with other similar services.

How does Identity Truth Protect Against Identity Theft – Obviously, this is the most important question that we have to ask. The least effective way of preventing ID theft is simply “credit monitoring”, which many firms do. That is a very reactive way. Identity Truth takes the more proactive way by helping you to put fraud alerts on your three credit bureaus. By putting fraud alerts on them, lenders and creditors cannot access your files unless you given them permission. This is the best way to nip things in the bud.

However, the way Identity Truth does it has some downsides. As a brief history and background, Lifelock used to provide this same service, by automatically putting fraud alerts for their customers on the credit bureaus after every three months. You see, fraud alerts are only valid for three months. Experian took Lifelock to court and claimed that it was against the law to put fraud alert on someone else’s behalf. Lifelock settled the suit with them and have a new system and a new way of proactively alerting their customers when someone wants to check their credit report.

Identity Truth will send you a package and aid you in putting fraud alerts on your credit reports. The downside to this is that it has to be done every three months. Nevertheless, it is still safer than plain “credit monitoring” but not as convenient as the type of service Lifelock provides.

24/7 Internet Monitoring – This is another feature that the really good ID theft protection service provides. Scanning public registries, and black market ID sites for signs that your address is being used is the other

Identity Truth also provides a range of other what I would call “convenience services” (which you can easily do yourself). They include:

$25,000 ID theft protection and help – Should your ID ever get stolen when you are enrolled with them, they will assist you in the steps that you need to take. And you have a $25,000 insurance to cover any expenses.

Verdict – The Identity Truth, in my opinion, is a pretty good ID theft protection service in that they “help” you place fraud alerts on your credit reports. The downside is that you have to do this every three months and frankly speaking, you could do this on your own (although you still may have to pay a fee depending on which state you are from). Hence there is the inconvenience factor. Their competitor Lifelock has gotten away from placing your reports on fraud alerts and instead, they have made arrangements with the credit bureaus so that they can now call you if anyone is trying to access your files. This is much more convenient that the Identity Truth solution. Hence, you should also check out LifeLock®. Having said all that, their $9.99 a month fee is definitely cheaper than Lifelock or most other competitors.

We are only 18 days away from the major provisions of the CARD act becoming effective.    Regular readers know that I love this law, but realize that banks can and will do everything in their power to evade it’s provisions.   At this point, it is all speculation as to what tactics they will find effective to increase their profits at the expense of the spirit of the law, but you can bet they will.   Two of the more respected sources for consume information have taken a close look at the CARD act to try to find likely loopholes, let’s see what they found:

Consumer Report’s Defend Your Dollars!

Consumer Reports looks into what’s not covered by the CARD act.    A lot of it is well known to people who were following the debate over the CARD act last spring.     The biggest disappointment for many die-hard consumer advocates is that there will not be any caps on interest rates.      While there is a 45 day waiting period before banks can raise rates on cards marketed as “fixed rate”, any card with a so-called “variable rate” will not be subject to those restrictions.    Realistically, I view this as a language restriction rather than an effective form of regulation.    Simply put, expect all of your cards to give you notice that they are no “variable rate” cards and can change your rates, even on existing balances, at any time.   While this is less deceptive than calling such cards “fixed rate” when they are not, the end result to the cardholder will be the same.

They point out that banks will now have to give you 45 days notice before any changes to your account, but as always, they can curtail your credit or close your account with no notice.

BankRate’s Take

The popular website BankRate exposes several CARD act loopholes in their list of 5 tips for the new credit card era.  They cover the 45 day advance notice issue, but also talk about a retroactive rate hike loophole.    The gist of it is that if you are late with your payments by over two months, they can still hit you with a penalty rate hike.   Over the limit charges are no prohibited, unless the bank can get you to opt in for it.    I suspect that people will get all sorts of mailings and/or be asked to opt in when they call customer service on unrelated matters.    I would be disappointed, but not surprised, if there were some sort of opt in clause buried in a contest submission form or some other correspondence.

Finally, BankRate suggests that we may see increased annual fees.   I suspect banks will go slow with this, in order to see what the market will bear.    Banks spend all sorts of time, effort and money to acquire new customers, and they don’t want to the drive them away by increasing annual fees too quickly.    If you are paying an annual fee, my advice remains to take a sober look at whether the fee is paying for itself before renewing.    Many high annual fees are worth the extra perks you get, while some very low annual fees are a complete waste of money.     I tolerate a $45 annual fee from my Starwood Preferred Guest card because it’s award points are so valuable.    I would cancel any of my other cards if they decided to charge  an annual fee.

Conclusions

The next few months are going to be a time of unprecedented change in the credit card industry.   Stay tuned to this blog and others in order to learn the new landscape and how to use credit cards for your maximum advantage.

Identity Guard is a credit monitoring service that provides insurance against identity theft as well. We’ll this service and how it stacks up versus the competition.

As a Credit Monitoring Service – As a credit monitoring service, Identity Guard provides the following features.

As an Identity Protection Service – The “identity protection service” that Identity Guard offers is actually simply the credit monitoring service. Customers are provided with a one million dollar insurance in the event of an identity theft. Should your ID be stolen, Identity Guard has a team to help you resolve it. They also monitor the internet for clues and signs that your ID or address is being used by others. They also have a lost wallet service where they will actually call your credit card companies and banks on your behalf if you lose your wallet.

Cost – The cost for this service is $14.95 a month with a 30-day free trial.

Verdict and Opinion – After looking at the features of Identity Guard, I find that its credit monitoring service and ability to let you have all three credit scores from the major credit bureaus makes this a really good credit monitoring service. There are many such services around (including those by the credit bureaus themselves). While all three provide you with credit reports in a format which allows you to compare them side by side with each other (you can get one credit report for free each year by the way), most do not give you all three credit scores. So if you get a credit monitoring service from TransUnion for example, you only get TransUnion scores, but not Equifax or Experian’s.

As a identity theft protection, it falls short of the service provided by folks like Lifelock, who will actually call you when a lender or creditor request to check your credit bureaus (this is real on time protection). Identity Guard merely monitors your credit bureaus though it also scans the internet for possible use of your ID and address. The only issue I have with this feature is that they do not state clearly where they are doing the monitoring.

Hence, I think that if you are looking just for a credit monitoring service and want access to your three credit scores all the time, then the Identity Guard® Total Protection is one of the best credit monitoring service out there. If you are really concerned about ID theft, Lifelock would be the better alternative (the only problem with Lifelock is that though you also get credit monitoring services, you cannot see your three credit scores).

This is a guest post from Little House on the Valley. It is a story about her credit card debt and how she eventually rebuilt her credit. Please check out her blog and consider subscribing to her blog.

Out of work in early 2001, I was unable to pay off my credit card debt that I had accumulated on some wild business ideas. By the time I was employed again, my salary had been reduced by a third leaving me unable to resume paying off my debt.

At the time, I felt my only option was to allow my credit cards to go into default. I didn’t know enough about bankruptcy to safely file without horrible repercussions, and thought that default was the lesser of two evils.

A few years later, I realized I needed to start rebuilding my credit so that I would have some positive history on my credit report that would counter balance all of the negative items. To do this involved acquiring some new credit.

First, I worked out a collection deal with two of my defaulted credit cards. The agreement involved transferring the debt to two new credit cards. This would help me pay off the old debt and build a solid payment history. Looking back, I’m not so sure this was the best option, but it did help to establish my credit, so it wasn’t the worst choice I could have made.

Next, I became a cosigner on my husband’s credit card. His credit card had a higher credit limit than my repayment cards, so my overall available credit increased, and my debt to credit ratio looked healthier. I also started a repayment plan on my student loans to dig them out of default. After nine on-time payments, the loan was in good standing. It was also helpful that I now had an installment account in good shape as well as my revolving accounts. Since 10% of a credit score is based on the types of loans available to the credit holder, this mixture of loans helped boost my overall score.

During this period, I was building a positive payment history, which accounts for 35% of a credit score. I began receiving credit card offers. I was very selective in applying for these as 10% of a credit score is based on new credit. Meaning, the more accounts you acquire in a short period of time, the more points are deducted off your credit score. I opted for a Capital One credit card. This card was my first “real” credit card in a long time. It boosted my overall available credit, had a lower APR than my repayment cards that had been paid in full, and listed me as the primary cardholder.

Finally, as the 7-year mark was approaching on the old debt, I began disputing the negative items. Each time I received an updated credit report, there were fewer accounts hanging around in the negative list and more accounts in the positive items list. My last negative item was removed off my report in late 2009, increasing my credit score by almost 200 points in a year. I started out the year with a pitiful score of 542 and ended the year at a blissful 703. I’m still working towards increasing my score to over 740, but with a solid payment history and no new debt, this goal will be accomplished.

I just read a thought provoking post by Mark Ashley over at the Upgrade Travel Better blog.    In it, he explores his thinking behind choosing which card to use in which situation.   He does some basic consideration of award points, foreign transaction fees, and even purchase protection benefits.

My Take

This is a great subject to explore, so as both the world’s foremost expert on credit cards, as well as the most modest person in the world, I thought that I might give you my two cents.    First, Mark touches upon the subject of foreign transaction fees.   I have discussed this in the past, but the fact is that FTFs are a pure scam.    They are 100% profit and I refuse to pay them on principle.   Principles aside, I have yet to find a reward card that consistently offers a return that would justify the FTF anyways.    Take my Amex Starwood card.    This is a fantastic card with one egregious exception, a 2.7% FTF (it was raised from 2% last year).    When I am out of the country, I use my Capitol One Visa card with 1% cash back and no FTF.    If I traveled more often, I would probably get the Schwab bank card with 2% cash back.    Starpoints are great, but they are not consistently worth more than 4.7 cents each, the difference between 2% cash back and the Amex 2.7% FTF scam.    I can sometimes get 3.7 cents in value per Starpoint, but even if I could, I have principles to uphold, which is why my Starwood Amex stays burried deep in my wallet when I am overseas, only to be used in an emergency.

What About Big Ticket Items?

It generally doesn’t matter much to me if I am buying something for a dollar or a thousand dollars, I will just use the best card for the situation.    Mark goes into some good details about purchase protection policies, but I have never had occasion to use one.    As my readers know ad nauseum, I always pay off all my statements in full every month.   Because I do this, I will sometimes put an expensive purchase on a particular card when I have just past the statement closing date, in order to gain another 30 days to come up with the cash.    More often, I will just postpone my large purchases until after my Starwood Amex closes.

Exceptions

If I have a new card, with a minimum  spending threshold, I will try to hit that as soon as possible.    That meant putting some purchases on my Frontier card when they were offering a total of 40,000 miles after $750 spent.    On Frontier, that is two round trip tickets, irresistible for a Denver based traveler.

Obviously, with an Amex as my primary card, there are plenty of times I have to switch to my Capitol One Visa when Amex is not accepted.    Then there are the times that certain cards have extra bonuses attached to them.     I still get 5% back on my cell phones when I charge my monthly bill to my Amex Open card.    For a time, I got 5% back on Delta as well.

Conclusions

Beyond the specifics of different cards, the larger point that both Mark and I are making is that there are a lot of factors.    Sometimes, like in rental car protection and purchase protection, the differences can be far more than pennies on the dollar.    Take a moment to think about which card you are going to pull out of your wallet when the time comes, there is a lot of money at stake.

This is a guest post by Bucksome, a baby boomer trying to make the most of her money while saving for retirement. Read more about her at Buck$ome Boomer’s Journey to Retirement. Subscribe to her RSS feed to follow new posts.

My work requires occasional business travel throughout the year to client sites and conferences. When I started traveling for business it was a much more enjoyable experience as airplanes were less crowded, served free meals (with silverware) and security screening was a breeze. We all know that’s not the case today.

I can’t really blame the airlines for packed flights and nickel and diming us when you look at the price of flights. Ticket prices were regularly 2-3 times higher 15 years ago than they are today (without adjusting for inflation).

Even so there are benefits to business travel as well as hidden costs. With planning and a few easy steps you can make business travel a better experience.

Loyalty Programs

Join all the membership travel programs you can whether its for airlines, hotels or rental car agencies. Not just for the miles or points which can result in free travel (like credit cards reviewed at Ask Mr. Credit Card). The other reason you want to sign up for these programs is the perks received during travel.

Hotels may offer free drinks, upgraded rooms or breakfast to award program members. Being driven straight to the rental car and avoiding the check-in line removes stress after traveling all day. All you have to do is sign up for the agency loyalty program.

Unless you accrue a lot of miles on a single airline being a frequent flyer is not likely to get you upgraded. But if they have to bump someone and if everything else is equal being a frequent flyer member may tip the scale so you make the flight.

Travel Timing

If at all possible avoid business trips during high-volume travel times. Spring breaks and two weeks before Christmas are awful. Not only are the planes full but the travelers are not experienced. Lack of experience results in these travelers’ transactions taking more time meaning longer waits at check-in, security and even food kiosks.

Another timing tip is being selective about which days of the week to travel. I loathe traveling on weekends and especially Friday nights because again this is a busy time for leisure travelers.

Choosing a Hotel

At first, it’s fun to stay in “fancy” hotels and order room service. That wears off fast and the priorities when selecting a hotel change. My priorities are breakfast, workout room, Internet access and a restaurant onsite or within walking distance. I don’t want to have to pay for the Internet access or breakfast either.

This means my hotel of choice is a Courtyard or Hampton Inn instead of the Four Seasons or Westin.

Advance Check-in

Part of the flight experience has to do with where you’re sitting. Business travel is often not planned far enough in advance to either be assigned a seat or avoid the dreaded middle seat.

Always check-in online as soon as offered by the airline and select a better seat. I do this even when I have my preferred aisle trying to score the exit row or at least be closer to the front of the plane for faster exit.

If you are checking baggage some airlines charge a lesser fee if done in advance online so you can save your company some money as well.

Be Prepared

When flying dress for a quick trip through security. It’s not the day to wear that studded belt. This means slip-on shoes and light jewelry for me. I also organize my carry on items in advance to ease the screening process.

If the travel day will last more than a couple of hours bring or buy food before boarding. Many flights I’ve been on sell out of the onboard food items leaving passengers further back with hunger pangs.

Summary

Business travel doesn’t have to be a bad experience. Use these tips and have an impact on your next trip.

The Washington Post has a thought provoking article by Robert D. Manning on the “Five Myths About America’s Credit Card Debt”. Let’s take a look:

1. Middle-class American families have long depended on bank credit cards to manage their budgets. Here Manning recounts the history of credit cards and shows us how Americans have only recently started relying on them to finance their lifestyles.     I am reminded about how, like credit cards,  commercial aviation was once seen as a tool for the elite, yet is now more popular than buses.

2. More people have credit cards because companies got better at managing risk and began marketing to lower-income customers. No, they just got better at charging higher interest rates and fees.    Here is a great quote: “A carefully guarded secret of the industry is that about a quarter of cardholders have accounted for almost two-thirds of interest and penalty-fee revenues. Nearly half of all credit card accounts do not generate finance and fee revenues.”    This is a subject that I have touched on before.    Either you are “deadbeat” who pays no interest or fees, or you are a revolver, who finances the industry.     Either way, the banks make a profit as deadbeats are low risk, but rack up merchant fees through transactions.    On the other hand, while revolvers are high risk, their interest and fees paid make them also high reward customers.

3.  Responsible cardholders will have to pay more to make up for the defaults of irresponsible consumers. No, the deadbeats do not subsidize the revolvers.    If they did, banks wouldn’t be so eager to offer credit cards to the deadbeats.  Manning deserves credit for getting this right, as so many other pundits have gotten this wrong lately.

4. The credit card industry is so competitive that regulation is unnecessary. Bing, this is another falsehood that the industry would like you to believe.      Yes, it is competitive, but they are competing on rates and rewards.   When it comes to unfair practices, they have been getting away with murder for decades, until the CARD act.    Money quote: “Consumer choice has declined over the past 20 years as economies of scale for marketing, administration and customer service have led thousands of card issuers to cash out to the largest banks. And self-regulation has failed when it comes to weeding out the worst card issuers; Visa and MasterCard have dismal track records in disciplining their members.”

5. The CARD Act finally protects consumers against the credit card industry’s most abusive practices. Here, Manning plays the role of pro-consumer CARD act pessimist.   He seems to like it, but is upset that the industry was given nine months to implement it.      Yes, nine months was a long head start to come up with new tricks and traps, yet now that we are just three weeks away from the CARD act becoming effective, I am one to let bygones be bygones and celebrate the achievement that the CARD act represents.

Conclusions

All and all, Manning shows that he understands the business and can see through industry propaganda and the the claims of less knowledgeable “experts”.    I am glad he is there to set the record straight.