Issuers Cut Consumers Slack, for Now

  Katrina brought out the best in some major financial institutions, with American Express Co., Capital One Financial Corp., MasterCard International, Discover issuer Morgan Stanley, Visa USA and others each pledging $1 million to the Red Cross and other organizations helping hurricane victims.
  Credit card issuers also acted quickly to give cardholders in the Gulf Coast region affected by the storm a break on monthly payments, at least in the near term. Most mentioned plans to reassess such policies as communication systems and mail service began to return.
  Visa ran for its members a series of ads in 11 newspapers to try to reach displaced cardholders, encouraging them to call an emergency toll-free number to obtain a replacement card and to update their contact information. Visa promised to get qualified cardholders a card and some spending cash within one day. Most of the ads appeared in Gulf Coast papers, but Visa bought space in USA Today and several Texas papers where evacuees were relocated.
  Providian Financial Corp. suspended for 30 days the payments due, interest payments and any fees owed by credit cardholders living in areas declared a disaster by the Federal Emergency Management Agency. Additionally, Providian was trying to get money to cardholders so they could begin rebuilding, according to a spokesperson.
  "We will try to replace their cards and get them a credit-line increase," the spokesperson said. "We want them to have the same buying power as before Katrina."
  GE Consumer Finance, the issuer behind cards for Wal-Mart Stores Inc. and other store brands, was waiving fees, freezing penalties and charges, and stopping collections calls to cardholders in the Gulf Coast.
  Cap One, which lowered its bid for New Orleans-based Hibernia Corp. from $5.3 billion to $5 billion and delayed the close of the deal until the fourth quarter, did not offer a blanket break to cardholders or debtors in the Katrina-ravaged area. Instead, customers could call toll-free numbers to discuss any waivers on payments.
  Hibernia reported in October that recovering from Katrina would mean an increase in expenses related to infrastructure rebuilding and employee costs.
  One major uncertainty for Cap One is the ability of Hibernia customers to repay their loans. Before Katrina struck, Louisiana's consumer past-due loan rate was 2.83%, the second-highest in the country and 112 basis points above the 1.71% national rate, according to the Federal Deposit Insurance Corp.'s Summer 2005 state profile.
  AmEx stopped mailing statements to cardholders in the Gulf Coast for several weeks. In mid-September, AmEx began meeting with the U.S. Postal Service to determine the ZIP codes where mail was being delivered. Once mail service was restored, AmEx reported it would start mailing statements to those areas, according to a spokesperson.
  J.P. Morgan Chase & Co. provided its Gulf Coast loan customers some relief. The bank deferred payments for 90 days for mortgages, home-equity loans, lines of credit, small-business loans and auto loans. It also deferred late fees for 90 days.
  Chase credit cardholders saw their payments deferred 30 days, while the bank waived late fees and over-limit fees for an unspecified period. Chase reported it would quickly respond to requests for credit-line increases, and the issuer pledged not to file negative credit-bureau reports for 90 days for affected cardholders.
  For its credit cardholders in the region, Citi waived for 30 days all payments due along with any interest and fees, both for current and delinquent accounts. It suspended collection calls and negative credit-bureau reports. It also offered credit-line increases and waived fees on cash advances.
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