In 1998, credit card issuers could count on a response rate of 1.2% to the offers for new cards that they sent out. For every 1,000 pieces mailed, 12 people would sign up.

The projected response rate this year is only 0.28%, or four times less than what the credit card industry received less than a decade ago. Now, for every 1,000 pieces of mail, not quite three of us bite at the offers being sent to us.

Yet, from the industry’s point of view, direct mail is still very effective. Why? Because 42% of us got our newest card via a piece of mail. That’s the finding of a recent study of 400 cardholders, by the Auriemma Consulting Group, publisher of Cardbeat, a market research report for the credit card industry.

Still, as Cardbeat's Managing Editor, Megan Bramlette reported:

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“Our data shows that most consumers do not enjoy receiving card solicitations in the mail. In fact, about 14% say that they are overwhelmed by the number of mail solicitations that they receive.”

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OK - I’ve been late in acknowledge some carnivals and posts that have caught my attention. Here is is the update from the last two weeks.

Carnivals

108th Carnival of Personal Finance.

83rd Festival of Frugality

Carnival of Long Term Investing #9

Posts that caught my attention

The two posts that really caught my attention this week came from authors with personal experience in the topics that they wrote.

Cutting the Cable Cord by The Wastrel Show was about her experiment on cutting their cable expenses (just paying for basic services). She found out that she can actually live with it. Hoever, she then mentioned that she gets her video DVDs from Netflix! Hey, if you really want to save, then then get your DVDs from your local library (they free!).

Single Ma’s How to close credit cards without hurting your credit score? is a great post based on her personal experience. I can rave on and on about how good this post is. But it’s best that you head over and check it out yourself.

Even those who are not close to the mortgage business can't help but see all the newspaper articles about subprime lending. The various branches of our government are weighing in on the problems that are happening as a result of the lax underwriting. We've seen the posturing statements by the Congress's Committee Chairmen.  However, not much concrete has happened until this week. We are finally seeing some action in the trenches.

FannieMae has announced that it will comply with new guidelines issued by a consortium of agencies. The rest of the industry will likely follow. These guidelines include:

All fixed rate interest-only loans will be underwritten using the fully amortized payment, not just the interest portion. For example an application for a $200,000 6.5% loan would be underwritten with the payment of $1,264, not just the interest portion, $1,083. That's 16.7% higher, which means that qualifying ratios are affected. A borrower who had ratios of 36% before would have ratios of 40% now.

All interest only ARMs will be underwritten using the fully amortized payment at the fully indexed rate. The initial rate on a 5/1 ARM, for example, might be 6%. The initial interest-only payment would be $1,000 but if index plus margin is 7.5%, the borrowers would have to qualify for a payment of $1,398, 40% higher.

Option ARMs, the negative amortizing loans, must be underwritten as above AND the payment has to be based upon a loan balance of 115% of the initial loan. Thus a $200,000 loan would have to be underwritten assuming that it was really a $230,000 loan. Using a figure of index plus margin equal to 7.5%, that means the payment would be $1,608, a full 60% higher than the initial payment.  If some lender is discounting that initial payment rate even further, VERY likely the case, it means that the payment for underwriting purposes might be double the actual obligatory initial payment.

No one knows exactly what the full implications are going to be, but for many borrowers who are at the borderline for qualifying purposes are going to be disappointed. It is likely that the number of Option ARMs that have been originated in the recent past, as many as 50% of all loans in some markets, are going to see drastically reduced volume.

There are going to be further restrictions on stated income loans. Those lenders who told their borrowers who can't qualify to lie about their income will have that option taken off the table except for borrowers with very strong credit.

Finally, there are many lenders whose oversight does not lie with these agencies.  In fact, it's not clear exactly who DOES regulate them, meaning who did let them get away with poor practices?  If they don't sell loans to FannieMae and the investors who buy the loans don't adopt the same rules, there will be little change. Not a good sign.

Randy Johnson – Author of How to Save Thousands of Dollars on your Home Mortgage and Savvy Borrower articles. Randy is a mortgage broker who has financed over $1 billion in properties. He writes about home buying and real estate finance topics for CreditBloggers.com.

I have a confession to make. Mrs Credit Card is away for a couple of weeks and I am left to do the grocery shopping (no takeouts for me). But it is an interesting exercise to go through a grocery budget and deciding what to buy for the week. Here is what I did and the saving lessons I took from being the grocery shopper.

1. Clear Up Youe Closet - How much canned food do you have in your closet and fridge? I was surprised to find lots of stuff in my kitchen cabinets. I have been steadily clearing them and finishing as many canned food as possible. I think all of us tend to buy more stuff than necessary and keeping storing stuff. I probably saved quite a bit eating what we already have. Admittedly, I am better off eating fresh food, but i simply cannot stand any canned food idling around.

2. Making my grocery list - Being alone for a couple of weeks, I tried to be organised by just having a couple of types of meals in a week. I decided to have pasta on alternate days and basic potatoes and meat on alternate days. Salad is a staple every day as well as some fruits like pears and strawberries. This helped me keep my shopping list simple.

3. Use Your Grocery Card - Mrs Credit Card always reminded my to show my grocery card as I could get discounts. True enough, I did get a couple of discounts after the cashier swiped my card.

4. Use Your Coupons - I have to admit that I have slacked in this area. Mrs Credit Card has always cut coupons. She knows which coupons appears in which newspaper, which day of the week. I told myself that I was simply not going to waste my time cutting coupons. Hence, I probably missed the opportunity to save some money from coupons. On the other hand, what I intend to buy may not have coupons?

5. Stop Buying Junk Food - As Mrs Credit Card was not around, I stopped buying Oreos, Ritz or any other “stuff to snack on”. It prevents me from snacking and I cut down on junk food as well.

5. Use a cash back credit card - Whenever I go to the the supermarket, I always charge my expenses to my Blue Cash® from American Express as it pays 5% cash rebates on supermarket spending once your annual spending on your card exceeds $6,500. Many people still use cash to shop at the supermarket, but I use my credit card to get “cash rebates”.

Well, this sums up my experience the last two weeks doing grocery shopping for myself. It’s been a long while since I did that ages ago. I’m probably more savvy now. But if there was anything I could have done better, please leave a comment below.

Money doesn't have to be boring! Each week, CreditBloggers.com takes a look at the lighter side of the personal finance world in a series called Funny Money Friday.

Cutting up a credit card is one of the great symbolic acts in modern times. Whether you are cutting up offers you've received in the mail, old expired cards or cards that you've paid off and don't want to use any more, there is something really powerful about taking scissors to your plastic. Just remember not to close those old accounts after you cut them up in order to avoid credit score damage.

Here are some creative ways to destroy your credit cards starting with "A":

 Art - This couple saves their names off old credit cards and keeps them in a small jar.

Animal - A new puppy's sharp teeth can make quick work of a credit card.

Axe - This guy really meant it.

Architecture -  A handy way to remind yourself that you are paying off your debt in the hopes of buying a house.

Aeration - With a hole punch.

Autopsy - An inquisitive fellow dissected his credit cards to remove hidden RFID chips.

Happy Friday!

Emily Davidson is editor of CreditBloggers.com and a former credit expert for the credit bureau, TransUnion. She writes about credit and personal finance topics.

Working with consumers directly each day gives you the benefit of a "front-line" perspective on economic changes in the US. Fed chairman, Ben Bernanke, said this week that US subprime foreclosure and mortgage delinquency woes will "likely get worse before they get better." Unfortunately, my experiences lead me to agree.

For the last few months, I've received a deluge of emails from consumers with credit problems who are coming up on an urgent refinance. Rising interest rates, the recent decision to drop authorized user accounts from FICO scores and big increases in consumer credit levels are all pointing toward trouble. Here's one email I received this week:

I need to get refinanced by June of the next year when my interest-only mortgage resets. What can I do to increase my score? It is in the high 400's (terrible), mostly due to debt from credit cards and medical bills. I'm scared because I'm not in a regular loan and my payment can (and will) change tremendously.

Yikes, a credit score in the 400's usually represents several different credit and financial issues and isn't likely to be resolved in a short amount of time. Paying down her active debt accounts down to a 10% debt-to-credit limit level could help. Adding new positive account information via a secured credit card could also do some good.

As for the medical collection records and any other negative accounts (liens, judgments, charge-offs) there isn't much she can do. She should pay them off but understand at the same time that the payment will not do much to improve her credit.  Negative records like these remain on credit reports for 7 years, whether or not they are paid. This article on rebuilding credit has more tips.

Ideally, she should start working on improving her credit and weighing her refinance options now. Subprime mortgage lenders have cracked down on their underwriting standards and it will likely be hard to find a lender who will work with her (even if she improves her credit a 100+ points). Communicating with her lender, trying to find a co-signer for her refinance, contacting a HUD-approved counselor or even evaluating bankruptcy options are all good steps to take before it is too late.

Are you worried about an upcoming refinance? Share your advice and stories in the comments section below.

Emily Davidson is editor of CreditBloggers.com and a former credit expert for the credit bureau, TransUnion. She writes about credit and personal finance topics.

Alright, despite the fact that I’m always raving about certain cards and that I encourage students to get a credit card as soon as possible to build their credit, there are things that I dislike about credit cards and their issuers. Below are my top 10 pet peeves.

1. Sending too much junk mail - Yes, I could easily choose not to receive any junk mail from credit card companies. But because I’m Mr Credit Card, I really do go through each and every mail just to see if there is anything new or is there any new marketing tactic that these credit card companies come up with. I know a friend of mine who works in Chase and he says that their response rate on these credit card mailings is less than 1%!

Now, if instead of sending cards with 0% APR Balance Transfer Deals, I would warm up to a company if they sent me mails on how to improve your credit score, what to do before you apply for a credit card, how to avoid certain disputes etc. If they sent me some education materials, I would be much more receptive to their card offers. The credit card industry have a thing to learn from sophisticated direct marketing folks!

2. Sending Me Offers for Cards I already have! - Yes, even after I got my Chase Flexible Rewards Card, they kept sending me mails with the offer! Come on, sort out your computer systems and perhaps we’ll be more likely to open your next offer!

3. Sneakily raise fees - Remember the times when a late fee or an over-the-limit fee was just $19? Then it went to $25, $29, $35 and now $39 (the maximum fee so far). I’ve no doubt it will soon be $49! Credit Card fee inflation has sure been rising faster than the normal goods inflation!

4. Inconsistent Method of Balance Calculations - While companies like Citibank and American Express use the normal average daily balance method to calculate monthly balances, Discover Cards use the one-cycle and two-cycle methods. For example, all Discover Cards use the two-cycle method except for the latest Discover Motiva Card. Chase use to use the two-cycle method, but a few cards used the normal one-cycle method. Come on now, if you want to use the two-cycle method, then use it for all cards. Be consistent.

5. Removing Maximum Balance Transfer Fees - I think credit card companies realize it is a money losing proposition to keep offering 0% teaser deals. Heck, many people (taking advice from us pf bloggers) are doing the arbitrage - getting the 0% deal and putting it in an online bank like HSBC and earn a one-time higher yield! So rather than stop offering money losing 0% deals (cause no one wants to be the first to blink), some issers have decided to screw the consumer instead.

Bank of America for example have no longer any cap on their balance transfer fee. So if you transfer $20,000, you may be slapped with a $600 balance transfer fee! (3% of balance transfer amount). Some cards are sneakily doing that as well. Before you attempt a balance transfer, it is best you check with customer service and get the updated terms and conditions on this point! Citicards also have some cards with no cap on the maximum balance transfer fee!

See my post on Balance Transfer Credit Cards and Balance Transfer Fees

6. Having Different Fees for Different Cards - I’m not talking about annual fees here. Citibank is the most guilty of this. Different citicards have different maximum balance transfer fees. Some have a cap at $99, some at $250. Some have no cap, but waive the BT fee for the introductory offer. Not only are there different fees for different cards, they change the fees among the cards as well! I have no doubt they are conducting some kind of marketing test. But this is clearly absurd. I’m sure lawsuits will arrive.

7. Not showing their reward program on the web - Chase and Capital One are the most guilty parties here. The only reason I got the Chase Flexible Rewards is to actually find out about their reward program. It turns out to be quite good actually. But why can’t they simply display their rewards on the web just like american express and citibank? It will make comparing programs more easy (hmm! perhaps that’s why they’d rather not have us see it?)

8. Not showing Consumers the Effective Interest Rate - The APR is not the real effective interest rate you are paying on your balances. The real interest rate depends on whether you are using a monthly periodic rate or daily periodic rate. Most cards these days use the daily periodic rate while a couple of credit cards still use the monthly periodic rate. To find out how this affects the real interest rate, see our article on how to calculate the effective interest rate.

9. Increasing Your APR for no good reason - I’m not talking about the universal default clause, which credit card companies have abandoned since the Senate Banking and Finance Committee started poking their noses into credit card practices. But I know friends who got their APR bumped up for no apparant reason.

10. Charging Monthly Maintenance Fees - Subprime credit cards like to charge a “monthly maintenance fee” on top of exorbitant annual fees. Alright, when you have bad credit, you cannot be fussy. But charging an annual fee north of one hundred dollars, charging more monthly maintenance fees and an APR approaching 20% seems like daylight robbery. This is one good reason why you want to make sure you have great credit!

"$15 Billion of Bottled Water Down the Drain!" is the headline on Fast Company magazine this month. Inside, a must-read article by Charles Fishman is filled with sobering facts about Americans' love of bottled water, exposing the unhealthy side of an industry that has us shelling out big bucks for something we can easily get for free.

Get this:

Fishman explains that tap water in America is almost always high quality, and "if the water we use at home cost what even cheap bottled water costs, our monthly water bills would run $9,000!" He also points out that "24% of the water we buy is tap water essentially repackaged by Pepsi or Coke."

It's not uncommon knowledge that while we complain about the high price of gasoline (which most of us need in order to get around) the price of bottled water is even higher -- but we don't have to spend it.

I know that not everyone's water tastes great, but growing up I remember visiting my cousin's farm where the water seemed to me what I might now call an "acquired taste." But back then we didn't think twice about drinking it anyway. Water was water.

Even more disconcerting than the money we're wasting on the premium stuff are the costs described in Fishman's article for manufacturing the bottles, shipping them and then trying to recycle the plastic that's left over. Even the healthiest environmentalist will shudder when they read his description of the resources required to produce a bottle of Fiji water and get it to us on our store shelves.

Truth be told, I've often felt guilty when buying bottled water, which I don't do that often. Even during a recent trip, I refilled my water bottle at the airport drinking fountain rather than shell out $2 for another one. When I do buy bottles of water at home I often refill them and stick them in the freezer for another use. I have my money vices (I splurged on Starbucks on that same trip!), but spending money on bottled water to me usually feels...well, like money down the drain. When I remember, I tote sports bottles I have filled from the faucet at home. And when I don't, I kick myself for having to buy a bottle.

After reading Fishman's article it's going to be even harder for me to buy bottled water. I think I'd better stock up on a couple more sports bottles.

Gerri Detweiler – Personal finance author, radio host and credit expert. Gerri contributes budgeting, debt recovery and savings information online.