In their 18th semi-annual national survey published by Piper Jaffray called, “Taking Stock with Teens,” they reported that total teen spending on fashion related items increased by two percent on a year-over-year basis and six percent sequentially, a notable improvement from the mid-teens percentage decline measured in the prior survey.
Surely the recession must be over now!
This spring, a collaborative team of research analysts the team visited 12 cities across the United States, surveying approximately 1,200 students with an average age of 16.3 years. In partnership with DECA (an international association of high school students), Piper Jaffray captured online survey responses from an additional 10,000 students with an average age of 16.2 years.
"We believe the fashion industry is in the early stages of a new cycle with traffic and conversion gradually improving as teenage consumers look to replenish key items in their wardrobes after under-spending on the category over the past three years," said Jeff Klinefelter, senior research analyst. In addition to year-over-year and sequential increases in fashion budgets, the survey found other spending trends such as shopping frequency improved versus spring and fall of 2008.
Do you still think that children are not a target for retailers? Arguable, the group with the least amount of financial education makes the best segment to work on that old impulse-buying, “gotta-have-it-now” mentality.
But wait, it gets better.
Piper Jaffray also surveyed parents, and the results indicate that spending on themselves and their teen increased sequentially and year-over-year. Apparel spending by parents for their teens was $1,141 compared to spring 2009 at $915 and fall 2008 at $1,085. Parents alluded to the fact that they felt they had to spend more on their teenagers because jobs for teenagers were more difficult to find and therefore, they can’t earn enough to support their lifestyle.
And the lawmakers think that the problem is credit cards ….
Sunday, October 25, 2009
Monday, October 19, 2009
Will Credit Scoring Begin a Slow Death?
Recently, my credit card company arbitrarily reduced the credit limit on my credit card account. After spending an inordinate amount of time weaving through the automatic phone prompts, I finally reached a human being who told me that my credit limit did not support my income.
“Really? And how do you actually know what my income is?” I asked. Never have I ever asked to update my income information nor any changes to my employment I have been a loyal customer of this account since 1995 – almost 15 years. Never late. Never over-limit. Carried balances. In short – I am a profitable account for them. . She could not answer my questions – because she was simply using a rubric to adjust credit limits on their accounts. This is an example of today’s loan officer?
I went on to tell her that I have a 30-year credit record, am a homeowner with plenty of equity, have has the same employment for eight years – previous employment was 13 years, and carry a savings balance. In other words, if you use the old-school “Three C’s of Credit” – I am a responsible borrower who has demonstrated a worthiness to sustain the credit line.
No dice. Not only was I thunderstruck by this response, I realized that now, my credit score has been adversely affected because the proportion of available credit to my card balance has been reduced – through no fault of my own. I am the same borrower today that I was before this action, but because some robot changes my credit line – and as such my score – I am now less “worthy.”
Credit scoring has yet to be put to the test in a poor-lending environment. Delinquencies are on the rise, foreclosures are continuing, unemployment levels are at 26 year highs. What this means is that credit scores for a lot of people are being affected. And without the common-sense lending approach of lenders who use to rely on experience and instinct, I’m not sure how credit becomes available again to help the economy turn around if we don’t abandon credit scoring and return to the “Three C’s” of lending.
More importantly – who’s left in the lending community that can do that anymore?
“Really? And how do you actually know what my income is?” I asked. Never have I ever asked to update my income information nor any changes to my employment I have been a loyal customer of this account since 1995 – almost 15 years. Never late. Never over-limit. Carried balances. In short – I am a profitable account for them. . She could not answer my questions – because she was simply using a rubric to adjust credit limits on their accounts. This is an example of today’s loan officer?
I went on to tell her that I have a 30-year credit record, am a homeowner with plenty of equity, have has the same employment for eight years – previous employment was 13 years, and carry a savings balance. In other words, if you use the old-school “Three C’s of Credit” – I am a responsible borrower who has demonstrated a worthiness to sustain the credit line.
No dice. Not only was I thunderstruck by this response, I realized that now, my credit score has been adversely affected because the proportion of available credit to my card balance has been reduced – through no fault of my own. I am the same borrower today that I was before this action, but because some robot changes my credit line – and as such my score – I am now less “worthy.”
Credit scoring has yet to be put to the test in a poor-lending environment. Delinquencies are on the rise, foreclosures are continuing, unemployment levels are at 26 year highs. What this means is that credit scores for a lot of people are being affected. And without the common-sense lending approach of lenders who use to rely on experience and instinct, I’m not sure how credit becomes available again to help the economy turn around if we don’t abandon credit scoring and return to the “Three C’s” of lending.
More importantly – who’s left in the lending community that can do that anymore?
Sunday, October 4, 2009
The Credit-Debit-Prepaid Card Message is Getting Messier – Part II
So if you’ve taken the time read to Part I, thanks for coming back for, what Paul Harvey used to say as, “….the rest of the story.”
Perhaps you’ve been reading some recent articles about how some of the major banks are reviewing their overdraft policies and fees.
For example, beginning Oct. 19, Bank of America will no longer charge its usual $35 overdraft fee if a customer's account is overdrawn by less than $10 in a single day. It will also limit the number of overdraft fees it charges to four a day, rather than the current 10. U.S. Bank will also waive fees if an account is overdrawn by less than $10 and will limit the number of overdraft charges to three a day. Wells Fargo and Chase will stop charging fees if an account is overdrawn by less than $5. Wells will limit its overdraft fees to four a day, while Chase will stop at three. All subsequent transactions for each bank will be denied.
BofA, Wells and U.S. Bank will allow customers to opt out of their automatic overdraft-protection programs, meaning that customers can choose to have transactions rejected at the cash register if there are insufficient funds in an account. Let’s see how teenagers like that option the next time they buy a quarter-pounder at Mickey D’s and their card is rejected.
I think card issuers should charge overdraft fees for those transactions that place the deposit account in a negative balance. The fee allows the transaction to go through and saves the customer the embarrassment of having the card REJECTED at the register. It’s the consequence of not knowing what’s in your checking account.
However, as noted in Part I, when a previous merchant places a hold on the debit transaction without your knowledge causing future transactions to place the checking account in a negative balance and hence accumulating overdraft charges, that’s another story.
Somewhere in this equation, the cardholder has to have some responsibility in all of this. So here’s a thought.
How about we all get in the habit each day that after checking our Facebook page, and the tweets we follow, how about checking the balance of your account each morning and review the transactions that cleared the night before? Online banking is no longer a luxury, it needs to become part of our daily routine in order for us to manage who charges what in this world of swipe and run
Perhaps you’ve been reading some recent articles about how some of the major banks are reviewing their overdraft policies and fees.
For example, beginning Oct. 19, Bank of America will no longer charge its usual $35 overdraft fee if a customer's account is overdrawn by less than $10 in a single day. It will also limit the number of overdraft fees it charges to four a day, rather than the current 10. U.S. Bank will also waive fees if an account is overdrawn by less than $10 and will limit the number of overdraft charges to three a day. Wells Fargo and Chase will stop charging fees if an account is overdrawn by less than $5. Wells will limit its overdraft fees to four a day, while Chase will stop at three. All subsequent transactions for each bank will be denied.
BofA, Wells and U.S. Bank will allow customers to opt out of their automatic overdraft-protection programs, meaning that customers can choose to have transactions rejected at the cash register if there are insufficient funds in an account. Let’s see how teenagers like that option the next time they buy a quarter-pounder at Mickey D’s and their card is rejected.
I think card issuers should charge overdraft fees for those transactions that place the deposit account in a negative balance. The fee allows the transaction to go through and saves the customer the embarrassment of having the card REJECTED at the register. It’s the consequence of not knowing what’s in your checking account.
However, as noted in Part I, when a previous merchant places a hold on the debit transaction without your knowledge causing future transactions to place the checking account in a negative balance and hence accumulating overdraft charges, that’s another story.
Somewhere in this equation, the cardholder has to have some responsibility in all of this. So here’s a thought.
How about we all get in the habit each day that after checking our Facebook page, and the tweets we follow, how about checking the balance of your account each morning and review the transactions that cleared the night before? Online banking is no longer a luxury, it needs to become part of our daily routine in order for us to manage who charges what in this world of swipe and run
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