Showing papers on "Credit card published in 2010"

House Prices, Home Equity-Based Borrowing, and the U.S. Household Leverage Crisis

Abstract: Using individual-level data on homeowner debt and defaults from 1997 to 2008, we show that borrowing against the increase in home equity by existing homeowners is responsible for a significant fraction of both the rise in U.S. household leverage from 2002 to 2006 and the increase in defaults from 2006 to 2008. Employing land topology-based housing supply elasticity as an instrument for house price growth, we estimate that the average homeowner extracts 25 cents for every dollar increase in home equity. Home equity-based borrowing is stronger for younger households, households with low credit scores, and households with high initial credit card utilization rates. Money extracted from increased home equity is not used to purchase new real estate or pay down high credit card balances, which suggests that borrowed funds may be used for real outlays. Lower credit quality households living in high house price appreciation areas experience a relative decline in default rates from 2002 to 2006 as they borrow heavily against their home equity, but experience very high default rates from 2006 to 2008. Our conservative estimates suggest that home equity-based borrowing added $1.25 trillion in household debt, and accounts for at least 39% of new defaults from 2006 to 2008.

Present-Biased Preferences and Credit Card Borrowing

Abstract: Some individuals borrow extensively on their credit cards. This paper tests whether present-biased time preferences correlate with credit card borrowing. In a field study, we elicit individual time pref- erences with incentivized choice experiments, and match resulting time preference measures to individual credit reports and annual tax returns. The results indicate that present-biased individuals are more likely to have credit card debt, and to have significantly higher amounts of credit card debt, controlling for disposable income, other socio-demographics, and credit constraints. (

Cognitive Abilities and Household Financial Decision Making

Abstract: We analyze the effects of cognitive abilities on two examples of consumer financial decisions where suboptimal behavior is well defined. The first example refers to consumers who transfer the entire balance from an existing credit card account to a new account, but use the new card for convenience transactions, resulting in higher interest charges. The second example refers to consumers who face higher APRs because they inaccurately estimate their property value on a home equity loan or line of credit application. We match individuals from the US military for whom we have detailed test scores from the Armed Services Vocational Aptitude Battery test (ASVAB), to administrative datasets of retail credit from a large financial institution. We show that our matched samples are reasonably representative of the universes from which they are drawn. We find that consumers with higher overall composite test scores, and specifically those with higher math scores, are substantially less likely to make a financial mistake later in life. These mistakes are generally not associated with the non-mathematical component scores. We also conduct some complementary analyses using two other data sources. We use the National Longitudinal Survey of Youth (NLSY) to show that higher ASVAB math scores are associated with lower subjective discount rates. Finally, we use the Health and Retirement Survey (HRS) to demonstrate that particular forms of cognitive ability matter for specific types of suboptimal behavior. We find that the mathematical component of the test is what matters most for financial decision making and financial wealth. In contrast, non-mathematical aptitudes appear to matter for non-financial forms of suboptimal behavior (e.g. failure to take medicine). The HRS results also demonstrate the large ramifications of low math ability on long-term economic success.

What 'Triggers' Mortgage Default?

Abstract: This paper assesses the relative importance of two key drivers of mortgage default: negative equity and illiquidity. To do so, the authors combine loan-level mortgage data with detailed credit bureau information about the borrower's broader balance sheet. This gives them a direct way to measure illiquid borrowers: those with high credit card utilization rates. The authors find that both negative equity and illiquidity are significantly associated with mortgage default, with comparably sized marginal effects. Moreover, these two factors interact with each other: The effect of illiquidity on default generally increases with high combined loan-to-value ratios (CLTV), though it is significant even for low CLTV. County-level unemployment shocks are also associated with higher default risk (though less so than high utilization) and strongly interact with CLTV. In addition, having a second mortgage implies significantly higher default risk, particularly for borrowers who have a first-mortgage LTV approaching 100 percent.

Household Leverage and the Recession of 2007 to 2009

Abstract: This paper shows that household leverage as of 2006 is a powerful statistical predictor of the severity of the 2007–09 recession across U.S. counties. Those counties that experienced a large increase in household leverage from 2002 to 2006 showed a sharp relative decline in durable consumption starting in the third quarter of 2006—a full year before the official beginning of the recession in the fourth quarter of 2007. Similarly, counties with the highest reliance on credit card borrowing reduced durable consumption by significantly more following the financial crisis of the fall of 2008. Overall, the statistical model shows that household leverage growth and dependence on credit card borrowing as of 2006 explain a large fraction of the overall consumer default, house price, unemployment, residential investment, and durable consumption patterns during the recession. The findings suggest that a focus on household finance may help elucidate the sources of macroeconomic fluctuations.

Efficient trace and revoke schemes

Abstract: Our goal is to design encryption schemes for mass distribution of data , which enable to (1) deter users from leaking their personal keys, (2) trace the identities of users whose keys were used to construct illegal decryption devices, and (3) revoke these keys as to render the devices dysfunctional. We start by designing an efficient revocation scheme, based on secret sharing. It can remove up to t parties, is secure against coalitions of up to t users, and is more efficient than previous schemes with the same properties. We then show how to enhance the revocation scheme with traitor tracing and self-enforcement properties. More precisely, how to construct schemes such that (1) each user’s personal key contains some sensitive information of that user (e.g., the user’s credit card number), in order to make users reluctant to disclose their keys. (2) An illegal decryption device discloses the identity of users that contributed keys to construct the device. And, (3) it is possible to revoke the keys of corrupt users. For the last point, it is important to be able to do so without publicly disclosing the sensitive information.

What "Triggers" Mortgage Default?

Abstract: This paper assesses the relative importance of two key drivers of mortgage default: negative equity and illiquidity. To do so, the authors combine loan-level mortgage data with detailed credit bureau information about the borrower's broader balance sheet. This gives them a direct way to measure illiquid borrowers: those with high credit card utilization rates. The authors find that both negative equity and illiquidity are significantly associated with mortgage default, with comparably sized marginal effects. Moreover, these two factors interact with each other: The effect of illiquidity on default generally increases with high combined loan-to-value ratios (CLTV), though it is significant even for low CLTV. County-level unemployment shocks are also associated with higher default risk (though less so than high utilization) and strongly interact with CLTV. In addition, having a second mortgage implies significantly higher default risk, particularly for borrowers who have a first-mortgage LTV approaching 100 percent. (This abstract was borrowed from another version of this item.)

How Credit Card Payments Increase Unhealthy Food Purchases: Visceral Regulation of Vices

Abstract: Some food items that are commonly considered unhealthy also tend to elicit impulsive responses. The pain of paying in cash can curb impulsive urges to purchase such unhealthy food products. Credit card payments, in contrast, are relatively painless and weaken impulse control. Consequently, consumers are more likely to buy unhealthy food products when they pay by credit card than when they pay in cash. Results from four studies support these hypotheses. Analysis of actual shopping behavior of 1,000 households over a period of six months revealed that shopping baskets have a larger proportion of food items rated as impulsive and unhealthy when shoppers use credit or debit cards to pay for the purchases (Study 1). Follow-up experiments (Studies 2-4) show that the vice-regulation effect of cash payments is mediated by pain of payment and moderated by chronic sensitivity to pain of payment. Implications for consumer welfare and theories of impulsive consumption are discussed.

Mobile device credit account

Abstract: Providing for a mobile communication device (MCD) credit account and credit transactions by way of such an MCD is described herein. As an example, a credit account sponsored by a financial or commercial entity can be associated with a unique ID of an MCD. The MCD can interface with another electronic device and initiate credit transactions, such as commercial purchases, credit transfers, currency conversions, and the like, via the interface. Further, rules provided by the sponsoring entity can guide such transactions, enforcing credit limits, for instance. A management component can then synchronize transactions conducted by the device with a server of a financial institution over a remote communication interface, such as the Internet or a cellular/mobile communication network. Accordingly, a mobile device can replace a traditional credit card in transacting credit business.

Verification of portable consumer devices for 3-d secure services

Abstract: Apparatuses, methods, and systems pertaining to the verification of portable consumer devices for 3-D Secure Systems are disclosed. In one implementation, a verification token is coupled to a computer by a USB connection so as to use the computer's networking facilities. The verification token reads identification information from a user's portable consumer device (e.g., credit card) and sends the information to a validation entry over a communications network using the computer's networking facilities. The validation entity applies one or more validation tests to the information that it receives from the verification token. If a selected number of tests are passed, the validation entity sends a 3-D Secure datum to the verification token. The verification token may enter the 3-D Secure datum into a hidden field of a Purchase Authentication Page appearing on the computer's display.

Tokenized data security

Abstract: Provided are devices, methods, systems, computer readable storage media and other means for tokenizing data. In some examples, credit card numbers are tokenized using a pre-generated token map and absent the use of a networked database that stores a relatively large quantity of credit card numbers in a central location. The token map may be generated by a token map generator such that the token map can be used by a tokenizer to replace a portion of an account number with a token, and by a detokenizer to replace the token with the original portion of the account number. A pre-parser and parser may also be used to locate an account number and/or token in a message received over a network.

Nobody Sells Gold for the Price of Silver: Dishonesty, Uncertainty and the Underground Economy.

Abstract: The underground economy has attracted a lot of attention recently as a key component of cybercrime. In particular the IRC markets for stolen identities, phishing kits, botnets, and cybercrime related services have been extensively studied. It is suggested that sophisticated underground markets show great specialization and maturity. There are complex divisions of labor and service offerings for every need. Stolen credentials are traded in bulk for pennies on the dollar. It is suggested that large sums move on these markets.

Concern with Immediate Consequences Magnifies the Impact of Compulsive Buying Tendencies on College Students' Credit Card Debt

Abstract: This research examines whether temporal orientation moderates the impact of compulsive buying tendencies (CBT) on credit card debt. Participants completed the consideration of future consequences scale, a compulsive buying scale, and reported their credit card debt. Results revealed that CBT mediated the relationship between concern with immediate consequences and credit card debt, and high concern with immediate consequences magnified the impact of CBT on credit card debt. This suggests that compulsive buyers who focus on maximizing immediate consequences are at a much higher risk of building up significant amounts of credit card debt.

Vertical bagging decision trees model for credit scoring

Abstract: In recent years, more and more people, especially young people, begin to use credit card with the changing of consumption concept in China so that the business on credit cards is growing fast. Therefore, it is significative that some effective tools such as credit-scoring models are created to help those decision makers engaged in credit cards. A novel credit-scoring model, called vertical bagging decision trees model (abbreviated to VBDTM), is proposed for the purpose in this paper. The model is a new bagging method that is different from the traditional bagging. The VBDTM model gets an aggregation of classifiers by means of the combination of predictive attributes. In the VBDTM model, all train samples and just parts of attributes take part in learning of every classifier. By contrast, classifiers are trained with the sample subsets in the traditional bagging method and every classifier has the same attributes. The VBDTM has been tested by two credit databases from the UCI Machine Learning Repository, and the analysis results show that the performance of the method proposed by us is outstanding on the prediction accuracy.

Support vector machine based multiagent ensemble learning for credit risk evaluation

Abstract: In this paper, a four-stage support vector machine (SVM) based multiagent ensemble learning approach is proposed for credit risk evaluation. In the first stage, the initial dataset is divided into two independent subsets: training subset (in-sample data) and testing subset (out-of-sample data) for training and verification purposes. In the second stage, different SVM learning paradigms with much dissimilarity are constructed as intelligent agents for credit risk evaluation. In the third stage, multiple individual SVM agents are trained using training subsets and the corresponding evaluation results are also obtained. In the final stage, all individual results produced by multiple SVM agents in the previous stage are aggregated into an ensemble result. In particular, the impact of the diversity of individual intelligent agents on the generalization performance of the SVM-based multiagent ensemble learning system is examined and analyzed. For illustration, one corporate credit card application approval dataset is used to verify the effectiveness of the SVM-based multiagent ensemble learning system.

Circuits of power: a study of mandated compliance to an information systems security de jure standard in a government organization

Abstract: Organizations need to protect information assets against cyber crime, denial-of-service attacks, web hackers, data breaches, identity and credit card theft, and fraud. Criminals often try to achieve financial, political, or personal gain through these attacks, so the threats that their actions prompt are insidious motivators for organizations to adopt information systems security (ISS) approaches. Extant ISS research has traditionally examined ISS in e-commerce business organizations. The present study investigates ISS within government, analyzing power relationships during an ISS standards adoption and accreditation process, where a head of state mandates that all government agencies are to comply with a national de jure ISS standard. Using a canonical action research method, designated managers of ISS services across small, medium, and large agencies were monitored and assessed for progress to accreditation through surveys, interviews, participant observation at round table forums, and focus groups. By 2008, accreditation status across the 89 agencies participating in this study was approximately 33 percent fully accredited, with 67 percent partially compliant. The research uses Clegg's (1989) circuits of power framework to interpret power, resistance, norms, and cultural relationships in the process of compliance. The paper highlights that a strategy based on organization subunit size is helpful in motivating and assisting organizations to move toward accreditation. Mandated standard accreditation was inhibited by insufficient resource allocation, lack of senior management input, and commitment. Factors contributing to this resistance were group norms and cultural biases.

Household Leverage and the Recession of 2007 to 2009

Abstract: We show that household leverage as of 2006 is a powerful statistical predictor of the severity of the 2007 to 2009 recession across U.S. counties. Counties in the U.S. that experienced a large increase in household leverage from 2002 to 2006 showed a sharp relative decline in durable consumption starting in the third quarter of 2006 - a full year before the official beginning of the recession in the fourth quarter of 2007. Similarly, counties with the highest reliance on credit card borrowing reduced durable consumption by significantly more following the financial crisis of the fall of 2008. Overall, our statistical model shows that household leverage growth and dependence on credit card borrowing as of 2006 explain a large fraction of the overall consumer default, house price, unemployment, residential investment, and durable consumption patterns during the recession. Our findings suggest that a focus on household finance may help elucidate the sources macroeconomic fluctuations.

Handheld mobile credit card reader

Abstract: A handheld mobile credit card reader includes a handy housing having a clamping space for holding a mobile electronic device, a card reader module mounted in a compartment in the housing and having a card slot set in alignment with a card-sliding slot at the front side of the housing for allowing a person to slide an electronic card therethrough and a card reader unit adapted for reading data from the electronic card being moved through the card slot, and a signal transmission device set in the front side of the housing for the connection of the attached mobile electronic device and electrically connected with the card reader unit for transmitting fetched data from the cad reader unit to the attached mobile electronic device for enabling the attached mobile electronic device to transmit the data to a remove remote credit card transaction processing center wirelessly to make a payment.

Price incentives and consumer payment behaviour

Abstract: In this paper we estimate the effect of particular price incentives on consumer payment patterns using transaction-level data. We find that participation in a loyalty program and access to an interest-free period tend to increase credit card use at the expense of alternative payment methods, such as debit cards and cash. Interestingly though, the pattern of substitution from cash and debit cards differs according to the price incentive. An implication of the findings is that the Reserve Bank reforms of the Australian payments system are likely to have influenced observed payment patterns.

Multi-alerts based system

Abstract: Systems and methods for defining, observing and detecting triggering user account events that initiate a user account alert message to be sent to one or more users are disclosed. Location and merchant, transaction result, device and, usage history/trend types of user account alerts and trigger criteria can be defined or selected by users, issuers were notification alert engines. Alternatively, user account alerts and trigger criteria can be defined by analyzing previously observed user account events, such as credit card transactions, to determine user profiles and user account usage trends, i.e. credit card spending patterns, as baselines for comparing newly observed user account events. If information associated with the newly observed user account events match any of the trigger criteria or are inconsistent with the determined user profile or user account usage trends, then user account alerts can be sent to one or more users.

Housing Wealth and Consumption Growth: Evidence from a Large Panel of Households

Abstract: This article uses a large panel dataset that tracks the housing wealth and credit card spending of 12,793 individuals in Hong Kong to study the relationship between housing wealth and household consumption. I identify a significant effect of housing wealth on consumption. A pure wealth effect can explain part of the sensitivity: households with multiple houses have much stronger consumption responses. Consistent with a relaxation of the credit constraints, mortgage refinancing significantly increases households' consumption sensitivities. However, for the majority of the households that do not refinance, consumption sensitivity appears to be due to a reduction in precautionary saving. (JEL E21, G21)

Methods and systems for exchanging/transferring gift cards

Abstract: Methods and systems for exchanging various forms of value, including coins, currency, credit, debit, and/or bank account funds, for prepaid cash cards, credit cards, phone cards, and the like. In one embodiment, a value exchange machine includes a coin input region, a coin sorting/counting apparatus, a card reader, and a communications facility configured to communicate with a remote computer network. In another embodiment, a value exchange system includes one or more of the value exchange machines connected to one or more remote computers via a communications link. A user wishing to purchase, for example, a prepaid cash card can visit one of the value exchange machines, select the desired transaction, and pay for the card with coins, currency, a credit card, a debit card, and/or bank account funds. After confirming payment, the value exchange machine dispenses the card to the user.

Optimizing debt collections using constrained reinforcement learning

Abstract: The problem of optimally managing the collections process by taxation authorities is one of prime importance, not only for the revenue it brings but also as a means to administer a fair taxing system. The analogous problem of debt collections management in the private sector, such as banks and credit card companies, is also increasingly gaining attention. With the recent successes in the applications of data analytics and optimization to various business areas, the question arises to what extent such collections processes can be improved by use of leading edge data modeling and optimization techniques. In this paper, we propose and develop a novel approach to this problem based on the framework of constrained Markov Decision Process (MDP), and report on our experience in an actual deployment of a tax collections optimization system at New York State Department of Taxation and Finance (NYS DTF).

Automatic Food Documentation and Volume Computation Using Digital Imaging and Electronic Transmission

Abstract: Capturing accurate food intake data from participants enrolled in nutrition studies is essential for understanding relationships between diet and chronic disease (1). Numerous methods are employed to assess dietary intake such as food records, 24-hour recalls, or food frequency questionnaires. While each of these techniques is valuable, the error associated with each is unique. The food record requires a motivated participant, is tedious for some, places attention on the act of eating thus altering intake and is difficult for subjects with low literacy skills (2). Interviewing subjects about the previous day’s intake avoids the reactivity involved when recording current intake, but also requires the individual reporting intake to have good recall skills, knowledge of food names and ability to estimate amounts eaten; and requires a well-trained interviewer which makes this a costly process (2, 3). Food frequency questionnaires are limited by food lists and lack of detail regarding food preparation, and require respondents to summarize past intake over many months or the past year. Such instruments are known to contain significant measurement error (4). While all these methods provide valuable information about dietary intake, improving methodology even modestly would advance our knowledge about the influence of food intake on health. FIVR (Food Intake Visual and voice Recognizer), a subproject of the Genes, Environment, and Health Initiative from the National Institutes of Health (RFA-CA-07-032 at www.gei.nih.gov/index.asp), is designed to use new digital photographing technology to reduce measurement error associated with a food record. The intent is to create a tool that would both increase accuracy of intake records and reduce the recording burden for respondents. Using a mobile phone with a camera (Figure 1), the participant will photograph foods both before and after eating. In this way initial portion size is recorded as well as portions left uneaten. The photographs would be used to identify both the types and amounts of foods consumed. This paper briefly describes the technology and techniques involved. Figure 1 Typical Mobile Phone Interface showing (a). operator instruction screen, (b) menu of activities available and (c) camera poised to record meal. Creating sufficiently detailed images Capturing images of meals using a mobile phone presents its own unique challenges. Identifying foods from a picture requires a clear image; the automatic calculation of the amount eaten (volume) requires three or more clear images to be taken by the mobile phone user. Since a single image will not support estimation of food volume, rather 3-dimensional objects must be viewed at more than one angle (5, 6). The three images in Figure 2 are captured from 3 slightly different angles. A calibration object is also required in the images for determination of 3-dimensional size (see Figure 2). The calibration object (fiduciary marker) included in the images in Figure 2 is a card with black and white squares of known size. However, a standard credit card can be used to establish the relationship between size in image pixels and actual size of the object in milliliters. Images are also required before and after the meal is eaten to document the volume of food consumed. Figure 2 Three images captured by moving the camera using the FIVR mobile phone system. Quality of the image hinges on several factors including resolution (roughly indicated by number of pixels per image). Higher resolution (more pixels per image) creates larger files, which makes transferring images slower and more subject to failure, thus testing and refinement of the image details is integral to developing a successful system. Camera focus is critical since the best volumetric estimation is obtained when the three images are in focus and taken with the plate at the same distance from the camera. With fixed focus cameras, the images will be blurred if not taken at the right distance (which is often too great). With auto-focus cameras, the focusing is assured but the distance still must be maintained by the user. Ways to adjust the image to correct for small variations in distance are still being explored.

Method of processing a transaction for a parking session

Abstract: Methods of processing payment transactions associated with parking sessions and at least one parking related service. The payment transactions are between the parking supplier, for example, the owner or manager of a parking lot, and a payment provider, for example, a credit card company, on behalf of a user. The methods involve retrieving parking supplier information stored in a memory based on an identifier that defines the location of the parking session, and retrieving payment provider information stored in the memory based on an identifier that defines the user, and processing the transaction, where the amount or cost associated with the transaction is based on the duration of the parking session and whether the user opted to use the at least one parking related services.

Did Bankruptcy Reform Cause Mortgage Default to Rise

Abstract: This paper argues that the U.S. bankruptcy reform of 2005 played an important role in the mortgage crisis and the current recession. When debtors file for bankruptcy, credit card debt and other types of debt are discharged--thus loosening debtors' budget constraints. Homeowners in financial distress can therefore use bankruptcy to avoid losing their homes, since filing allows them to shift funds from paying other debts to paying their mortgages. But a major reform of U.S. bankruptcy law in 2005 raised the cost of filing and reduced the amount of debt that is discharged. We argue that an unintended consequence of the reform was to cause mortgage default rates to rise. We estimate a hazard model to test whether the 2005 bankruptcy reform caused mortgage defaults to rise, using a large dataset of individual mortgages. Our major result is that prime and subprime mortgage default rates rose by 23% and 14%, respectively, after bankruptcy reform. We also use difference-in-difference to examine the effects of three provisions of bankruptcy reform that particularly harmed homeowners with high incomes and/or high assets and find that their default rates rose even more. Overall, we calculate that bankruptcy reform caused the mortgage default rate to rise by one percentage point even before the start of the financial crisis, suggesting that the reform increased the severity of the crisis when it came.

An NFR Pattern Approach to Dealing with NFRs

Abstract: Non-functional requirements (NFRs), such as security and cost, are generally subjective and oftentimes synergistic or conflicting with each other. Properly dealing with such NFRs requires a large body of knowledge – goals to be achieved, problems or obstacles to be avoided, alternative solutions to mitigate the problems, and the best compromising alternative solution to be selected. However, few patterns exist for dealing with these kinds of knowledge of NFRs. In this paper, we present four kinds of NFR patterns for capturing and reusing knowledge of NFRs – objective pattern, problem pattern, alternatives pattern and selection pattern. NFR patterns may be visually represented, and organized by rules of specialization to create more specific patterns, of composition to build larger patterns, and of instantiation to create new patterns using existing patterns as templates. We have applied the NFR pattern approach to the TJX incident, one of the largest credit card theft in history, as a realistic case study.

Purchase transaction system with encrypted payment card data

Abstract: Systems and methods are provided for securing payment card information. A user may present a payment card such as a credit card to point-of-sale equipment. The point-of-sale equipment may encrypt the payment card information. An encryption algorithm may be used that takes as inputs a first part of the payment card information, a tweak formed by a second part of the payment card information, and an encryption key. The encrypted payment card information may be conveyed to a gateway over a communications network. The gateway may identify which encryption algorithm was used in encrypting the payment card information and may re-encrypt the payment card information using a format preserving encryption algorithm. A network-based service may be used to remotely perform functions for the gateway.