Revolving Credit Posts Strong Growth

The pace of growth in revolving credit remains robust as Americans added $5.4 billion in revolving credit during January, compared to $3.1 billion for January 2002. Bank credit card debt (excluding store and gas credit cards) at the end of the fourth quarter was $672.3 billion, or roughly 90% of total revolving credit. At the end of January, consumers racked up $750.0 billion in revolving credit according to figures released Friday by the Federal Reserve. Revised figures showed that December was not as strong as previously reported. December’s revised annual growth rate is +1.4%, compared to +2.6% reported last month. However, November was significantly better than previously reported. November’s revised annual growth rate is 4.9%, compared to the revised 0.6%% reported one month ago. At the end of January, Americans were $2016.1 billion in debt, excluding home mortgages.

REVOLVING CREDIT HISTORICAL ($billions)
Jan04 Dec03 Nov03 Oct03 Sep03 Aug03 Jul03
GRWTH: 8.6% 1.4 4.9 5.2 6.8 3.4 1.4
$OWED: $750.0 744.6 743.8 740.5 737.3 729.1 726.8

Jun03 May03 Apr03 Mar03 Feb03 Jan03 Dec02
GRWTH: -2.4% 7.7 3.4 4.1 5.9 5.2 -6.7
$OWED: $725.9 727.9 722.8 720.7 718.6 715.5 712.4

Source: Federal Reserve; revised figures as of 3/05/04;
For complete historical data visit CardData (www.carddata.com)

Consumer Credit Tops $2 Trillion, Up 4%

Americans added $30 billion in revolving credit during 2003, ending the year at $742.5 billion. For the first time, overall consumer credit topped $2 trillion. Bank credit card debt (excluding store and gas credit cards) at the end of the third quarter was $645.7 billion, or roughly 88% of total revolving credit. It is expected that card loans, at year-end 2003, will come in around $660 billion. During December, consumers added $1.6 billion in revolving credit according to figures released Friday by the Federal Reserve. Revised figures also show that the November and October figures were better than previously reported. November’s revised annual growth rate is +0.6% compared to -0.9% reported last month. October’s revised annual growth rate is 5.2% compared to 4.3% previously reported. At the end of December, Americans were $2001.7 billion in debt, excluding home mortgages.

REVOLVING CREDIT HISTORICAL ($billions)
Dec03 Nov03 Oct03 Sep03 Aug03 Jul03 Jun03
GRWTH: 2.6% 0.6 5.2 6.8 3.4 1.4 -2.4
$OWED: $742.5 740.9 740.5 737.3 729.1 726.8 725.9

May03 Apr03 Mar03 Feb03 Jan03 Dec02 Nov02
GRWTH: 7.7% 3.4 4.1 5.9 5.2 -6.7 -1.4
$OWED: $727.9 722.8 720.7 718.6 715.5 712.4 716.8

Source: Federal Reserve; revised figures as of 2/06/04;
For complete historical data visit CardData (www.carddata.com)

Capital One Ratings Affirmed with a Stable Outlook

Fitch Ratings this week affirmed all outstanding ratings of Capital One and revised its “Rating Outlook” to “Stable” from “Negative” due to improved funding and liquidity. Approximately $22.4 billion of deposits and $7.0 billion of unsecured debt is affected by this action. A complete list of ratings is detailed at the end of this release. Rating concerns reflect the continued existence of the Memorandum of Understanding, competitive pressures in the U.S. consumer credit card market that has negatively affected margins, and ability to maintain credit quality within acceptable ranges. Capital One Financial Corp., based in McLean, VA, is a leading consumer financial services company and one of the largest issuers of general purpose credit cards in the U.S. COF is also active in auto finance and consumer installment lending.

Citi Card Profits Rise 25% Driven by Sears Cards

Citigroup reported this morning that profits for its credit card business in North America increased 25% in the fourth quarter to slightly more than $1 billion, driven by its recent acquisition of the Sears store and bank card portfolio. Credit card outstandings for North America increased 24% over 4Q/02 to $148.8 billion, which includes $29.0 billion in private label card outstandings. However, charge volume only increased 10%, from $65.7 billion to $72.4 billion. Citi’s account base at the end of fourth quarter was 129.2 million accounts, a 46% gain over 4Q/02. Citi’s charge-offs increased from 5.77% in the third quarter to 6.25% for 4Q/03. Charge-offs for bank credit cards was 6.17% compared to 5.39% one-year ago. Delinquency (90+ days) also increased from 1.82% for 3Q/03 to 2.18% for the fourth quarter 2003. Delinquency for bank credit cards was 1.88% compared to 1.84% for the previous quarter, and 1.77% one-year ago. For complete details on Citigroup’s 4Q/03 performance visit CardData ([www.carddata.com][1]).

[1]: http://www.carddata.com

The November Revolving Credit Dip Returns

After two months of strong growth, consumer revolving credit for November dipped by $600 million. However, the one-month contraction was significantly better than November 2002, when revolving credit dropped by $900 million, or at a -1.40% annual pace. Revised figures, released Thursday by the Federal Reserve, also show that the October and September figures were better than previously reported. October’s revised annual growth rate is 4.3% compared to 3.6% reported last month. September’s revised annual growth rate is 6.8% compared to 6.5% previously reported. For November, consumers owed $739.4 billion in revolving credit, mostly credit card debt. Bank credit card debt (excluding store and gas credit cards) at the end of the third quarter was $645.7 billion, or roughly 88% of total revolving credit, according to CardData ([www.carddata.com][1]). At the end of November, Americans were $1994.6 billion in debt, excluding home mortgages.

REVOLVING CREDIT HISTORICAL ($billions)
Nov03 Oct03 Sep03 Aug03 Jul03 Jun03 May03
GRWTH: -0.9% 4.3 6.8 3.4 1.4 -2.4 7.7
$OWED: $739.4 740.0 737.3 729.1 726.8 725.9 727.9

Apr03 Mar03 Feb03 Jan03 Dec02 Nov02 Oct02
GRWTH: 3.4% 4.1 5.9 5.2 -6.7 -1.4 1.6
$OWED: $722.8 720.7 718.6 715.5 712.4 716.8 717.9

Source: Federal Reserve; revised figures as of 1/08/04;

For complete historical data visit CardData ([www.carddata.com][2])

[1]: http://www.carddata.com
[2]: http://www.carddata.com

FTC Shuts Down Major Card Scam

A federal district court has frozen the assets of a nationwide telemarketing operation who operated under the names “Royal Credit Solutions,” “Imperial Consumer Services,” and “Beneficial Client Care.” The FTC says the operation misrepresented to consumers that they were likely to receive an unsecured major credit card in exchange for an advance-fee payment. FTC alleges that since January 2002, the defendants have telemarketed advance-fee credit cards to U.S. consumers with poor credit histories, offering them a credit card with a $2,500 limit for a one-time “processing” fee of $197 to $300. The FTC alleges that the defendants never delivered the promised credit cards to consumers who paid the fee. At best, some consumers allegedly received a package containing a credit repair book with coupons, a list of banks that issue credit cards, and other materials with little or no value. The defendants ran their operation from Palm Beach, Florida, and Montreal, Canada.

Business APRs Decline and Student Rates Climb in 2003

Offered interest rates on classic, platinum, business and reward credit cards fell during 2003. However, APRs on gold, student, co-branded, and sub-prime cards increased last year. Initial rates on business credit card showed the biggest change, from 9.72% in 2002 to 8.29% during 2003. By contrast, student card rates increased from an average of 11.29% in 2002, to 12.46% last year.

CARD PRODUCT 2002 2003 CHNG
Classic or Standard: 9.47% 9.00% -47 bps
Gold 9.60% 10.53% +93 bps
Platinum 8.37% 8.44% -7 bps
Business 9.72% 8.29% -143 bps
Rewards 9.68% 9.48% -20 bps
Co-Branded 10.62% 11.07% +45 bps
Student 11.29% 12.46% +117 bps
Unsecured Sub-Prime 19.74% 19.79% +5 bps
Secured Sub-Prime 14.65% 15.52% +87 bps
Source: RAM Research’s Bankcard Barometer (www.ramresearch.com)

OSI Emerges Bankruptcy with New Credit Line

St. Louis-based Outsourcing Solutions has emerged from Chapter 11 with long-term debt of approximately $175 million, compared with $600 million in debt at the time of the Chapter 11 filing in May, and has landed a new multi-year, $90 million credit facility from Merrill Lynch for the purchase of portfolios of charged-off receivables. OSI’s secured creditors now will receive approximately 69 percent of the reorganized company’s fully diluted common stock. The company’s former Senior Subordinated Noteholders and certain other unsecured creditors will receive approximately 5 percent of the reorganized company’s common stock, and 7.5 percent of the common stock of the reorganized company will be held by the company’s management. OSI is a leading business process outsourcing firm providing receivables management services, which link a company’s cash flow objectives with credit management policies from beginning to end of the credit-to-cash cycle.

Kmart Sues Capital One Over its Co-Branded MasterCard

Kmart disclosed this week that it filed suit against Capital One last month in regard to its co-branded “Kmart MasterCard.” The complaint, filed in the U.S. District Court for the Eastern District of Michigan alleges breach of contract. Kmart also says Capital One failed to market and support a co-branded credit card. The “Kmart MasterCard” was launched in September 2000. The suit was filed against Capital One Bank, Capital One, F.S.B., and Capital One Services, Inc. The complaint alleges “breach of the covenant of good faith and fair dealing, unjust enrichment, promissory estoppel and tortious interference with business relationships and prospective economic advantage arising out of Capital One’s alleged failure to market and support the co-branded credit card.” Kmart says its seeking monetary damages.

Consumers Shift to Second Gear as Economy Rebounds

Further evidence of the recent economic recovery is the uptick in consumer revolving credit for September and October. During October, Americans added $2.2 billion to revolving credit at an annual growth rate of 3.6%, more than twice the rate of growth one-year ago. Revised figures, released Friday by the Federal Reserve, also show that September’s figures were better than previously reported. September’s revised growth rate is 6.5% compared to 3.0% for September 2002. For October, consumers owed $735.3 billion in revolving credit, mostly credit card debt. Bank credit card debt (excluding store and gas credit cards) at the end of the third quarter was $645.7 billion, or roughly 88% of total revolving credit, according to CardData ([www.carddata.com][1]). At the end of October, Americans were $1977.3 billion in debt, excluding home mortgages.

REVOLVING CREDIT HISTORICAL ($billions)
Oct03 Sept03 Aug03 Jul 03 Jun03 May03 Apr03
GRWTH: 3.6% 6.5 3.4 1.4 -2.4 7.7 3.4
$OWED: $735.3 733.1 729.1 726.8 725.9 727.9 722.8

Mar 03 Feb03 Jan03 Dec02 Nov02 Oct02 Sep02
GRWTH: 4.1% 5.9 5.2 -6.7 -1.4 1.6 3.0
$OWED: $720.7 718.6 715.5 712.4 716.8 717.9 721.3
Source: Federal Reserve; revised figures as of 12/05/03;
For complete historical data visit CardData (www.carddata.com).

[1]: http://www.carddata.com

Tidel Technologies Raises Cash, But Losses Mount

Houston-based ATM manufacturer Tidel Technologies has closed a $7 million financing deal with NY-based Laurus Funds and reports that continues to sustain substantial losses since the second quarter. The notes may be converted, at Laurus Funds’ option, into Tidel common stock at a conversion price of $0.40 per share. Tidel also issued seven-year warrants to Laurus Funds to purchase 4.25 million shares of Tidel common stock at an exercise price of $0.40 per share. Tidel Technologies, Inc. is a manufacturer of automated teller machines and cash security equipment designed for specialty retail marketers.