All American Check Cashing announced several checks it cashed for customers of Instant Tax of Hattiesburg have been returned. The checks were issued to Instant Tax customers as part of a rapid advance tax refund. The checks were issued by Tax Tree of Miami, Florida and written on Bank of America.
A new Javelin Strategy & Research report, â2010 Mobile Banking Scorecard â Shift in Smartphone Ownership Calls for a Shift in Focus: How 19 Top Financial Institutions Compare on Mobile Channel Retail Delivery,â has rated USAA Federal Savings Bank âBest in Classâ in m-banking for the second year in a row. Javelin determined that 19 of the top 30 largest financial institutions (FIs) offer mobile banking. They judged and scored those 19 in five categories of criteria: marketing and security messaging, mobile access, general mobile banking features, short message service (SMS) features and security.
A new survey has found that 65% of Americans are at least very
concerned about identity theft and 64% feel the same way about credit
and debit card fraud. However, 58% are willing to provide biometric data to
merchants and financial institutions to verify and authenticate their
identity. About 93% said they would be willing to use fingerprint scans,
while 79% are willing to use iris recognition. The Unisys “Security
Index” says that is an increase of 20% and 17%, respectively, since
consumers were surveyed in November of last year. Americans who are
seriously concerned about the security of their online transactions rose
to 42%, the highest level since the “Index” began two years ago. Only
22% of Americans fully trust government agencies to keep personal
information secure and private and the proportion is only slightly
better (29%) with regard to trust in data protection by financial
After posting the largest one month drop on record in November, average monthly payment rates for credit cards rebounded in December to
17.27%. Portfolio yields normalized to 17.21% after last month’s drop caused by day count issues in November. FitchRatings says that although yield is 245 basis points lower than last year, this is attributable to the drop in prime rate, which is down by over 300 basis points year-over-year. Fitch anticipates charge-offs will breach 8% in the coming months and approach 9% during second half-2009. Deterministic stress testing on Fitch rated trusts indicate existing ratings can withstand such scenarios with potential negative rating actions limited to subordinate classes. Retail Card charge-offs were flat to month earlier and retail card delinquencies rose further. At 10.51%, Fitch’s “Retail Card Charge-off Index” remains 44% above year earlier levels. Despite climbing 12 basis points to 5.20%, the rate of increase in Fitch’s “Retail Card Delinquency Index” slowed for the second straight month. Retail card excess spread (three-month average) dropped to 8.49% from 9.34% largely due to a decline in portfolio yields. MPRs remain low but seasonal trends show an average increase in the January collection period of 80-120 bps in prior years.
U.S. credit card-based ABS will be facing a major test over the several
months. Fitch Ratings says the jump in one-month LIBOR rates, combined
with increasing charge-offs and lower yields, are creating a volatile
mix for securitizations. Earlier this month, LIBOR increased 200 basis
points from September to a high of 4.50%, while the prime rate is down
375 basis points from last September. The higher LIBOR rates come at a
time when excess spread is already being eroded by increasing chargeoff
rates and lower portfolio yield. Excess spread as measured by the “Fitch
Prime Credit Card Index,” was at 6.43% for data through August, down 122
basis points from one year ago, a trend that will continue to decline as
LIBOR remains high and charge-offs trend higher.
Fitch says it is concerned that certain trusts may hit triggers that
will trap excess spread starting as soon as next month.
The sub-prime mortgage fallout appears to have had little impact so far on sub-prime credit card delinquencies as the latest metrics show a steady decline in 60-day delinquency rates, well below year-ago levels. However, there is concern that sub-prime borrowers remain more sensitive to disruptions in the mortgage sector and there could be a spillover into the sub-prime credit card segment later this year. According to the latest sub-prime credit card metrics from FitchRatings, 60-day+ delinquency dropped to 5.35% in February compared to 5.60% in January and 5.88% one-year ago. The rate has declined for three consecutive months. According to Fitch charge-offs also decreased in February to 9.53% from 9.90% in January, as the delinquency bubble from the minimum payment implementation normalized in February. Monthly payment rates ticked up 112 bps to 10.58%. Gross yield increased 151 bps to 26.54% in February.
Sep 06: 5.32%
Oct 06: 5.54%
Nov 06: 5.66%
Dec 06: 5.68%
Jan 07: 5.60%
Feb 07: 5.35%
After a one-month decline in personal bankruptcy filings during July, momentum is building again ahead of the October 17th full implementation of the “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.” Fitch Ratings says it sees a second wave of increased personal bankruptcy filings. The Katrina disaster may contribute to the surge. Some lawmakers are seeking a postponement of the new bankruptcy laws. Nevertheless, Fitch now expects full year filings to outpace 2004 totals by more than 6% and for credit card charge-offs to increase measurably in the coming months and into 2006. Through February, personal bankruptcy filings were running 9.6% below 2004’s pace. Since that time, filings increased 12% year-over-year and are now 7% ahead of 2004’s year-to-date pace through the first week in September.
Since it is very likely that new bankruptcy laws will go into effect by the end of the year, there is a consensus that a short-term spike in personal filings will occur over the next six months. However, the long-term impact on credit card-backed bonds will be “moderately positive.” Fitch Ratings says the results will be lower chargeoffs and higher recoveries, but there is also a possibility of lower payment rates. Fitch notes that the bill materially reduces the limitations for the non-dischargeability of charges and cash advances for luxury goods. This provision helps prevent consumers from ‘loading up’ on luxury items or cash advances prior to declaring bankruptcy. Fitch says that since charge-offs have improved approximately 13% from recessionary peaks and excess spread remains healthy, no rating actions are anticipated, though it will monitor this area closely.
Credit card charge-offs, among “prime” asset-backed securities, continued a seesaw pattern, dropping 39 basis points in July after climbing 27 basis points in June. However, “sub-prime” ABS charge-offs continued to march south during July, declining 34 bps, marking the seventh consecutive month they have registered below year-ago levels. “Prime” charge-offs decreased to 6.45%, compared to 6.84% in June, and 6.60% one-year ago. The 60+ day delinquency index for “Prime” portfolios fell 58 bps below the year-ago level, its lowest point since August 2000. According to Fitch’s latest issue of “Credit Card Movers & Shakers,” “sub-prime” charge-offs also decreased, to 16.68%, compared to 17.02% in the prior month, and 18.01% one-year ago. Late-stage delinquencies for “sub-prime” card bonds (60+days) fell for the fifth straight month to 8.55%, the lowest level since July 2002. Fitch’s yield and payment rate indexes moved in opposite directions during July. Fitch’s yield index dropped 5 bps sequentially to 16.72%, 36 bps below the year-ago level. The monthly payment rate rebounded by 60 bps to 17.28%, 139 bps above the year-ago level.
ABS CHARGE-OFFS HISTORICAL
Jul 04: 6.45% 16.68%
Jun 04: 6.84% 17.02%
Jul 03: 6.60% 18.01%
While it is very likely the Feds will raise rates by 50 basis points in the next two weeks, the impact will largely affect refinancing activity, home prices, and collateral performance in the mortgage sector. Credit card issuers, blessed with lower funding costs over the past three years, will largely have to absorb the first wave of increases, but will recoup the impact by passing the rate increases to consumers over the summer. Some issuers recently switched from fixed rates to variable rates in anticipation of the increases. Discover switched its standard purchase rate from a fixed 16.99% to prime +12.99%, effective April 1st. Effective June 1st, American Express changed its default interest rate from a fixed 23.99% to prime +21.99%. A handful of VISA and MasterCard issuers have rejiggered punitive interest rates from fixed to variable, and have adjusted the effective dates of the prime rate. MBNA recently noted in its SEC filings that a 100 basis point increase in interest rates could reduce net income by $67 million for the year. MBNA said it could offset its costs by raising interest rates for cardholders but the company noted there is a lag of about 45 days before rate hikes takes effect upon cardholders. Fitch said yesterday it remains cautious in its near-term outlook for subprime credit card ABS. Higher rates may put pressure on subprime borrowers to reload available credit lines undermining stable to improving collateral performance. Notwithstanding, Fitch believes excess spread levels in the credit card sector, can absorb higher rates, though a rate increase may cause some spread compression for some issuers in the subprime segment.
[Click Here To View The Notice of Amendment to the Discover Cardmemeber Agreement In PDF Format]
Further evidence of the current recession was produced Friday with the release of the American Bankers Association’s ‘Consumer Credit Delinquency Bulletin’. Based on the number of credit card accounts, 3.93% were overdue during the second quarter, the highest level tabulated since 1980. In the previous quarter and in the same quarter one year ago, overdue credit card accounts were 2.99%. Based on total dollars outstanding, second quarter credit card delinquencies were 4.13%, the same as the previous quarter but significantly higher than the 3.54% figure for 2Q/00. The ABA says the stagnant economy and increased layoffs are impacting consumer finances. The ABA also says banks will continue to review their lending standards in light of the economic slowdown.
2Q CREDIT CARD DELINQUENCY HISTORY
(based on total dollars outstanding)
1999: 4.10% 1995: 3.58% 1991: 4.48% 1987: 3.28% 1983: 2.81%
1998: 4.57% 1994: 3.06% 1990: 3.46% 1986: 3.83% 1982: 3.03%
1997: 5.24% 1993: 3.86% 1989: 3.06% 1985: 2.88% 1981: 2.86%
1996: 4.61% 1992: 4.19% 1988: 3.44% 1984: 2.80% 1980: 3.25%
Source: American Bankers Association Delinquency Bulletin
Ft. Lauderdale, FL-based SHC Venture LLC, marketer of ‘Momentum Mileage Programs’, has introduced an airline mileage shopping program with United Airlines ‘Mileage Plus’ Marketing and the First Card ‘Mileage Plus VISA/MasterCard’. It is the first mileage program to feature a broad nationwide base of retailers. Participating retailers include: Spiegel, The Sharper Image, Lillian Vernon, Jos. A. Bank, Hammacher Schlemmer and seven others. The United Airlines ‘Mileage Plus Shopping’ program offers cardholders up to 10 miles per dollar spent.