It looks like the financial strain between cardholders and card issuers is ending. Losses are slowing and profits are growing. Over the past four years card issuers have struggled with persistent high charge-off levels, high delinquencies and increased consumer bankruptcy filings. Coupled with other changes in consumer card behavior, card issuers have watched profits slowly sink. However, this year appears to be a turning point. Personal bankruptcies are dropping for the first time since 1995 and are projected to continue their slide. Meanwhile, consumers are piling debt on again, but a slower pace than four years ago.

According to statistics released this month by the Administrative Office of the U.S. Courts, new bankruptcy filings during the second quarter declined from 373,460 last year to 345,956 this year. Over the past twelve months, personal bankruptcies have declined 2%. Between July 1, 1998 and June 30, 1999, a total of 1,352,030 consumer bankruptcies were filed. During the same period 38,934 business bankruptcies were logged. Industry analysts project that consumer bankruptcies should decline by 8-12% this year and be flat or decline 4% in the year 2000, as a result of the strong job market and slower than anticipated credit growth. Piper Jaffray predicts the decline in personal bankruptcies will add from 3% to 37% more earnings power to major publicly-traded card issuers such as Capital One, American Express, Metris, MBNA, Providian, and the Associates.

More music to the ears of card issuers: American consumers piled on $5 billion to revolving debt during June. The news comes from figures released this month by the Federal Reserve. Since last June, American consumers have added more than $31 billion to revolving debt, according to the FRB. Revolving credit is about 80% credit card debt. Total bank credit card debt stands at $460 billion while store/retail credit card debt stands at $93 billion according to CardData (www.carddata.com). Therefore the FRB's $576 billion in revolving debt for June includes $553 billion in credit card debt and $23 billion in revolving lines of credit attached to checking accounts.

HOT  REWARD  CARDS

While many card issuers extracted themselves from credit card programs offering rewards, there has been a resurgence of rewards cards this summer. Reward cards tend to attract consumers who like to charge but who dislike to pay interest charges. Nevertheless, the programs are back and some are pretty good deals. Some of the new programs include Marcus MasterCards; US West Platinum VISA;  and Bass Hotels Business VISA. A Canadian issuer has also launched a rewards debit MasterCard.

The Marcus Corporation, a mid-west hotel operator, unveiled a suite of new reward MasterCards. Wells Fargo/Norwest Bank and The Marcus Corp teamed up this month to offer four new reward MasterCards. Marcus operates or franchises 165 Baymont Inns and Baymont Inns & Suites in 30 states and six Woodfield Suites in Wisconsin, Colorado, Ohio and Illinois; 442 movie screens in Wisconsin, Illinois, Ohio and Minnesota; one family entertainment center in Wisconsin; other hotels and resorts scattered across the U.S. and 27 KFC and 3 KFC/Taco Bell 2-in-1 restaurants in Wisconsin. The four new credit cards include the 'Marcus Rewards MasterCard', a 'Marcus Rewards Platinum MasterCard', a 'Baymont Rewards MasterCard' and the 'Baymont Rewards MasterCard BusinessCard'. All of the credit cards will be offered without an annual fee except the 'Marcus Rewards Platinum MasterCard' which will charge a $40 annual fee. Under the program cardholders earn one 'Reward Point' for every dollar charged and two points for every dollar spent at Marcus locations and Sun Country Airlines. In addition, cardholders will be able to earn up to 3,500 Bonus Points for opening deposit, credit and investment accounts at Norwest Banks.  All cardholders will earn 500 'Bonus Points' when the card is used at a Marcus location within three months of receiving the card. Platinum cardholders earn a total of 1,000 'Bonus Points' when the card is used at a Marcus location within three months. The points are redeemable for free companion movie tickets, free room nights and free dining at Marcus locations; and discount travel on Midwest Express Airlines, American Airlines and Sun Country Airlines. Redemption levels start at 2,500 points. CardTrak (cardtrak.com) estimates the value of each point to be one cent each. For more information visit any Marcus location such as Baymont Inns in the states listed above.

Telecommunications giant U S West and First USA rolled-out the 'U S WEST e.card Platinum VISA' card this month. The program offers  cardholders a 5% cash-back reward for online purchases made at more than 20 Internet merchants including Amazon.com, Audiobookclub.com, CDnow.com, EToys.com, FlowersUSA.com, Garden.com, Outpost.com, SharperImage.com, ValueAmerica.com, Virtual Vineyards and more. The 'U S West e.card' also offers a local, long-distance and international calling card feature with step-by-step dialing instructions printed right on the back of the card. First USA also offers cardholders online access to account information. The no-annual-fee card offers a 3.9% fixed APR for the first five months on purchases and balance transfers, followed by a 9.99% fixed annual percentage rate. The card is available online at www.uswestecard.com or by calling 1-800-942-7201.

The 'Priority Club Worldwide Business VISA' was also rolled out this month by Bass Hotels & Resorts and First USA. The program allows each company employee cardholder to earn points for free hotel nights, frequent flyer miles, merchandise and shopping rewards. The new card program also offers small business owners the opportunity to harness the financial leverage of quarterly management reports, consolidated billing statements to track company cardholders' spending, and discounts on business products and services. Bass owns Inter-Continental, Crowne Plaza, Holiday Inn, Holiday Inn Express and Staybridge Suites by Holiday Inn.  Cardholders receive one 'Priority Club' point for every U.S. dollar spent on purchases and an additional 5,000 bonus points with their first purchase or balance transfer. The no-annual-fee card carries a 3.9% fixed APR on purchases and balance transfers for the first five months, followed by a fixed 9.99% annual percentage rate. The card also features a credit line up to $35,000. The new Priority Club Worldwide Business VISA is available by calling toll-free 1-800-234-9063. Enrollment in Priority Club is free and guests may enroll at any Bass Hotels & Resorts property, on the Internet at www.priorityclub.com or by calling 1-800-272-9273 in the United States or Canada.

While most banks shun rewards for debit card usage, Bank of Montreal launched the 'Double Dip with Debit' Air Miles program this month in Winnipeg. BOM becomes the first bank in Canada to offer rewards for debit card purchases. Every purchase made at an Air Miles sponsor will be rewarded with one extra Air Miles reward mile from Bank of Montreal, in addition to any Air Miles reward miles offered by the sponsor. Winnipeg customers will also earn 50 bonus reward miles on the first purchase made with the double dipping MasterCard debit card. Fifty reward miles can be redeemed for two 2-for-1 movie certificates, two tickets for a Winnipeg Goldeyes baseball game or two admissions to the Winnipeg Art Gallery. The Air Miles Reward Program was launched in 1992. The program has more than 150 sponsor locations in the Winnipeg area. Over half of Manitoba households collect Air Miles reward miles. Bank of Montreal  also offers Air Miles reward miles on its MasterCards.

 

BEST  REWARD  CARDS

One of best deals among VISA, MasterCard and American Express reward cards just got better.  As of this month all major U.S. air carriers have dropped the mileage expiration requirement from their  frequent flyer programs. The lone holdout, United Airlines, announced the change early this month. American Airlines made a similar announcement last month. The recent changes should attract more applications for the bank credit card versions of United and American's frequent flyer programs. Under the former program rules, consumers with annual charge volumes under $10,000 could not cost-justify the higher annual fees associated with United and American's co-branded bank credit card program. The only requirement in the United and American programs is that you must earn or redeem miles at least once every 36 months to enjoy no expiration date.  A qualifying activity, to keep miles active includes taking a paid flight on the carrier or its affiliates; or making a purchase with the carrier's co-branded VISA or MasterCard; or staying at a partner hotel; or renting from a rental partner; or accepting a special mileage offer from the carrier. United also announced it will  reinstate 1998 expired miles to members who register and take either two paid domestic roundtrips or one paid international roundtrip on flights operated by United, United Shuttle or United Express.  Under the new guidelines, all miles in a Mileage Plus member's account through 1999 will be valid until Dec. 31, 2002 and will expire on that date only if a member has no qualifying activity between Jan. 1, 2000 and Dec. 31, 2002.  As of Jan. 1, 2000, a new 36-month non-expiration period will begin each time a member has qualifying account activity by earning or redeeming miles. Information on mileage reinstatement and registration is available at www.offers.mileageplus.com/mpw049 or by calling 1-800-645-4502 (enter promotion code 49). For more details on the American Airlines AAdvantage program changes visit www.aa.com or call 1-800-882-8880.

MAGIC  MOMENTS

VISA's popular Magic Moments program is back. For consumers the contest will basically be the same as last year's, each day from November 1 through December 31, VISA will randomly select a one-second moment when U.S. issued VISA card purchases are free, regardless of the amount. Cardholders win if their VISA purchase's processing time stamp matches that day's 'VISA Magic Moment'. A credit will appear on their next possible statement. Consumers can once again win free purchases on everything from college tuition to jewelry and vacations to trips home for the holidays. Last year, nearly 17,000 VISA cardholders won over $1.2 million. No purchase or obligation is necessary. For more details, including consumer sweepstakes official rules, call (800) 266-6712 or visit www.visa.com.

NEW  BUSINESS  CARDS

Business owners can now have their cake and eat it too. Citibank/Travelers Bank and Salomon Smith Barney joined up this month to roll out a 'Financial Management Account' for businesses. The 'Business FMA' account enables small and medium-sized businesses to consolidate cash flow management, investments, and borrowing through a single account. A key feature of the 'Business FMA' is a 'Platinum MasterCard' credit card issued through Travelers Bank. The MasterCard program enables the business owner to arrange for credit cards for principals in the business, as well as for key employees with segregated lines and reporting of purchases. Reporting and payments are automated through the 'Business FMA' statement and Internet access. The business owner may also choose a 'Gold MasterCard' debit card instead of, or in addition to, the credit card option, with an optional 'Travel & Rewards' program which offers travel, merchant, and special event rewards earned through debit card purchases. Citi is also offering credit/debit card merchant services for 'Business FMA' account holders through Citicorp Payment Services, Inc. Proceeds are credited directly to the 'Business FMA' account. Clients also receive discounts on their setup process when linked to the 'Business FMA'.  The program also offers payroll services through ADP and an financial reporting software interface with Intuit. For more information contact the local office of Salomon Smith Barney.

GET  MUGGED

Bank of America introduced the 'Photo Security VISA Check Card' this month in California featuring a customer's photograph and signature on the front of the debit card. Bank of America also offers a 'Photo Security VISA Credit Card' in California. BofA says the new photo debit card combined with its liability waiver for unauthorized transactions offers a new level of protection for its customers. The 'Photo Security Cards' are available free of charge to new and existing Bank of America checking account customers and credit card customers. Customers are required to sign up at BofA's California banking centers. Bank of America is the largest check card issuer with more than 22 million cards issued. Additionally, Bank of America has more than 13,000 ATMs nationwide. For more information visit a Bank of America branch in California.