Credit Card Debt Management

The world’s first independent credit card company, established in 1950, is changing hands. Owned by Citigroup since 1981, the sell of Diners Club international network and franchisor brand to Discover Financial for $165 million was approved this month. This was cash money, a serious investment that belies how badly Discover wants to expand its payment network around the globe.

According to Banking Times, the sell was designed to “cut costs and increase efficiency,” as Citigroup was pretty banged up by bad debt, including that acquired in the subprime mortgage fallout. Citigroup’s profits for 2007 were down more than 50%, and 2008 isn’t projected to be much better.

According to the article, this acquisition is expected to be a big boost to the ailing Discover Financial:

“Diners Club is accepted at more than 8 million locations in 185 countries and Discover expects the purchase to improve its presence among business travellers, particularly outside the North American market. The transaction should add between $10 million and $15 million to the group’s annual pre-tax profit.”

Other finer points include the fact that Citigroup will retain ownership of 13 Diners licensee territories (roughly 30 percent of the total), including USA, Canada, Europe and Japan. It’s interesting that MasterCard was co-branded on Diners Club cards since 2004, a partnership that is expected to continue in the territories controlled by Citigroup. Discover’s acquisition — which gets it into the commercial market for the first time with more than 80,000 such credit cards — totals $30 billion in charge volume. Everything is expected to be finalized within 60 days.

Those who made international purchases with a Visa, MasterCard or Diners Club, between the years 1996 and 2006, may have a refund coming their way. According to Stars and Stripes, a publication geared toward U.S. military personnel, international shoppers could get $25 or between 3 and 5 percent of all such purchases. It’s all part of a class action settlement in a lawsuit claiming the card companies did not adequately disclose information about the foreign transaction fee attached to each international purchase. According to the article, a separate lawsuit is pending against American Express.

The total bounty is $336 million. Those wanting to claim their piece of the pie need to do so before May 30. Purchases made through post exchanges or commissaries are ineligible, as they are considered part of U.S. commerce. However, eligibility may be granted to purchases made from international vendors on a U.S. military post, or purchases made stateside from an international vendor with a foreign transaction fee attached.

According to the article, many servicemen thought the settlement notices they received were hoaxes. It’s not a hoax — it’s for real! Those who think they might be eligible should go to CCFSettlement.com for more information and to claim a portion of the money.

Vehicle rental insurance has gotten a really bad rap. Is it overpriced? Sure. Is it a good way for car rental companies to turn an extra profit? Definitely. Is it really necessary? Maybe.

SmarterTravel.com has an interesting post on the merits of rental insurance, calling for a paradigm shift in our society’s conventional thinking. That article provides a comprehensive list of details to consider before deciding to decline rental insurance.

As it pertains to credit cards, many people think their credit card coverage is adequate. However, if your credit card offers rental car insurance, it may be secondary coverage. This means it covers the difference after your primary insurance has paid all it will toward the damage.

Your credit card’s rental insurance, even if it is comprehensive, may not cover extra fees the rental car company can tag on. These could include administrative fees, etc.

American Express and Diners Club provide rental car insurance in most countries. If your Visa or MasterCard provide rental coverage in the U.S., you’ll be covered in foreign countries as well. The article points out that American Express’ Premium Rental Car Protection is a good way to get coverage above and beyond that company’s usual secondary rental insurance coverage.