A Credit Card for Consumers with Bad Credit

Capital One introduces the Progress Card for consumers with bad credit. It will be available in time for Christmas shopping but beware of the starting interest rate. In addition to no annual fee, cardholders are rewarded for paying on time and at or above minimum payment, by having their interest rate reduced by 5% every six months; but this rate starts out at 34.9%. This rate may seem astronomical but keep in mind, if after eighteen months you've been a smart Progress cardholder then your interest rate will be down to 19.9% which is just above average. By the fourth statement of responsible credit usage, some cardholders may be offered an increased line of credit.

To be eligible for a Progress card, you must be over the age of 18, with at least some credit history. If you've declared bankruptcy within the past year or have absolutely no credit ratings, then it's likely your application for a Progress card will be rejected. The Progress card can be compared to a progress report with incentives and rewards for good management efforts.

Although quite out of character for the credit card industry, the Progress card may prove to be a revolutionary concept. With the unemployment rate about to surpass a historically high 10%, there are thousands of individuals desperate to find ways to reestablish their credit. Even though the Progress cardholder's interest rate is reduced by 5% per month of smart usage, users should inquire of the lowest level the rate will reach. This card can be a wise and cost-effective tool for young adults trying to implement good credit or for those individuals in dire need of an opportunity to rebuild their credit score. The Progress card may be just that opportunity, not available elsewhere.

Is the Credit Freeze Starting to Thaw?

If you’ve tried to get a loan or even a credit card in the past year, you might have noticed how tough the lending standards have become. The Fed’s recent survey of loan officers brought tentatively good news. It looks like the credit freeze is getting ready for a long-awaited thaw.

The Fed polled US banks in July 2009. 35% of the banks reported that they’d tightened their standards for issuing a credit card. 60% of banks polled six months ago reported using stricter standards, and 65% said the same a year ago.

Experts say that banks must start lending again in order to bring about economic recovery for all. While that may be true, few of the banks that were hurt by the economic crisis seem prepared to loosen their purse strings.

In summary, the Fed’s report is cautiously optimistic. A dwindling number of banks are ratcheting down their lending, but celebration at this point would be premature. When the banks loosen up and start lending again, we’ll know the economic rebound is in motion.

The Mortgage Crisis Will Affect Holiday Shoppers Using Credit Cards

Think the mortgage crisis doesn’t affect you if you don’t have current problems with your home loan? Think again.

This year, you can expect the fallout from the mortgage crisis to affect your Christmas shopping if you typically use credit cards to handle those expenses.

Although credit card companies are closing accounts left and right, cutting credit lines and raising interest rates, it may not be enough. Even though credit card debt is only a fraction of the mortgage problem, major card issuers like J.P. Morgan, Chase & Co., Citigroup and others cannot afford more losses. With the unemployment rate heading towards 8%, lenders are fearful that they will not be repaid when extending credit.

According to the US Federal Reserve reports, 60% of American banks have tightened up their credit card standards since July. Even those continual credit card offers sent in the mail are falling to the lowest point in over three years. The Wall Street Journal reports that many credit card holders will see an interest increase by an average of three percentage points and the increase will affect millions of customers.

Lenders are also being extremely careful in opening new accounts to avoid the subprime crisis from beginning all over again. Thanks to tightening standards, especially in areas like California and Florida who were hardest hit by the housing crisis, residents in these states may feel the biggest fallout.