Consumer Credit

For years, credit card companies have been raising fees on their worst customers, the ones who make tardy payments. But now, customers of GE Capital Services' Rewards MasterCard who faithfully pay off their balances every month will face a new fee--a $25 annual charge on customers who don't carry a balance from month to month or who incur less than $25 in annual finance charges.

Consumer debt grew at an 8% annualized rate in July, the biggest increase in three months as credit card usage offset slower demand for automobiles, the Federal Reserve Board reported Monday. The Fed said the advance, which matched that of April, followed gains of 6.3% in May and 7% in June. However, the latest increase was considerably smaller than the double-digit gains of the last two years. Consumer credit includes all household debt not secured by real estate.

By most lending standards, a 27-year-old mortgage broker earning nearly $100,000 annually who has modest monthly expenses and no blotches on his credit report would be a good credit risk. And he was, until his company shut down. Then, less than four months after losing his job, the same broker, who had amassed more than $30,000 in debt on almost a dozen credit cards, filed for bankruptcy. He gave up his 1995 Acura Integra because he could not afford the $420 monthly payment.

Consumers sharply trimmed their buying on credit during March, the Federal Reserve Board said Tuesday, as installment debts grew at the slowest rate in six months. Total consumer installment credit rose by $6.4 billion at a 7.3% annual rate, little more than half the February jump of $12.2 billion at a 14.1% rate. It was the smallest monthly increase in installment debt since September last year, when it was up $4.1 billion at a 5% annual rate.

Banks Tightening Standards for Consumer Loans: A survey by the Federal Reserve Board of 56 domestic banks and 22 U.S. branches of foreign banks shows that 20% of them had tightened policies for approving new credit card applications and 10% had tightened standards for non-credit card installment loans. The Fed also found that willingness to make consumer installment loans declined for the first time since 1991.

A coalition of 14 financial institutions, including MasterCard International and Bank of America, announced Wednesday that it will form a company to develop the first debit card for use nationwide to make purchases as small as a cup of coffee.

Pick your dream: a five-bedroom lakeside vacation home in fashionable Valle de Bravo? Your own business--say, a factory, complete with machinery, north of Mexico City? A pig farm in rural Tepotzotlan? The catalogue of Mexican properties from La Salle Partners offers each of these, and more. All are broken dreams: 434 foreclosed properties set for auction at the end of this month.

Bankruptcies, foreclosures, short sales. Traditionally, would-be home buyers with one of these pockmarks on their credit wouldn't even think about applying for a new home loan until at least several years had passed since their financial misfortune. These financial setbacks remain on credit reports for seven years and can do a lot of harm.