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UncleKev

Problems With Credit Card Defaults In Us

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This anecdotal bit of info is from a paid site that I am a member of. This is just the experience of one businesman, but multiply this out over the whole economy and what are the ripple effects going to be like. As the poster points out it undermines the whole business model of recurring monthly billing.

(Posting the text here because only subscribers will eb able to read the link)

Message Posted By Posted Aug 27,2009 1:31 PM posticon.gifCoffee A higher-than-normal percentage of the recurrent billing aspect of our business model/clients' credit cards-- are coming back "declined" from being maxed out. The rate is alarming me, as it is undermining the business model.

Any idea when we'll start to see this issue, lessen? Thoughts?

Thanks,

Adam

Message Posted By Posted Aug 27,2009 2:30 PM posticon.gifbmyers Adam,

There are at least four issues involved here.

First is the general state of the economy, and how it affects how people are using their credit cards.

More are more people are using credit cards to fund their daily lives, and in doing so, they can max out their cards.

Second, the credit card companies have reduced the limits for many card holders, sometime without even notifying the card holders. When a card holder doesn't know their cards limit has been reduced, they can easily go over the limit.

Third, at least 150 million credit cards were cancelled and had to be replaced earlier this year due to the theft of credit card numbers by hackers. Anyone using those credit cards in recurring billing accounts will see the card fail.

Fourth, credit card issuers are going belly up - and terminating customer cards without reason.

All these lead to increase declines in credit card processing.

When will it end or get better?

As soon as the trillion dollar bailout money reaches consumers.

Oh wait, none of that money is going to consumers . . .

How to reduce declines on subscription sites:

1. encourage customers to sign up for a longer subscription term

2. eliminate subscription plans that bill each month. As chances are the more billings, the more failures.

3. offer paypal payments (not recurring billings) as an option

Write your senator and congressperson and suggest they focus on fixing the economy before they do anything else.

Bill

http://www.bmyers.com/members/forum/openthread.cfm?forum=1&ThreadID=24000#88021' rel="external nofollow">http://www.bmyers.com/members/forum/openth...dID=24000#88021

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Not a very good business model is it?

It would be interesting to see the stats on how many credit cards are not being paid off each month along with how many fail to get the minimum payments made.

Are these figures published anywhere?

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Not a very good business model is it?

It would be interesting to see the stats on how many credit cards are not being paid off each month along with how many fail to get the minimum payments made.

Are these figures published anywhere?

Would be even more interesting to see that lot and what failure rate had been factored in...

I'm betting one number is much, much bigger than the other.

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