August 30, 2007

GMAC Delivers School Supplies to Irving Elementary
Courier (Cedar Valley, Iowa) (08/25/07) Wind, Andrew

GMAC Mortgage employees spent 12 days gathering pencil boxes, folders, and backpacks before donating the school supplies to Irving Elementary School students in Waterloo, Iowa. The collection effort culminated in a presentation at the school. Over half the students at Irving Elementary are financially disadvantaged, and many parents cannot afford to buy school supplies, which is "why we want to help them out," says Steve Sesterhenn of GMAC. The project was part of Community Build Day 2007, a cross-country initiative developed by 74 financial services companies.
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Melcum Study Finds Change Programs Will Fail if Employees Don't Grasp the Rationale
Finance Visor (08/06/07)

Change programs are destined to fail if employees don't understand why the organization is making the change, according to Melcrum's latest study into managing change communication. In one of the 27 interviews with change and communication experts, published in the comprehensive new report "Delivering Successful Change Communication," Roger D'Aprix, vice president of ROI Communication, stresses the importance of keeping the employee perspective in mind at all times. "That's one of the great failings of companies in the midst of change and all the chaos that surrounds it. People tend to forget that there are human beings on the other side." But to create a compelling rationale for change, communicators must look outside the organization, says D'Aprix. "I firmly believe the only way you can rationalize the change is by reference to the marketplace and the forces that are driving the organization." The problem, he continues, is that internal communication professionals are not nearly well enough linked to the external aspects of the business. "My observation is that communication people have been craft people. They've focused on the media and content they create without understanding the organization they're part of, and more particularly the marketplace. This aspect needs work and communicators must pay more attention to it," he said. In the report, D'Aprix summarizes the critical issues employees need to understand, particularly during continuous change, i.e. when change has become "business as usual" for the organization. The role of leadership during change is another common theme running through the 21 case studies published in the report. Senior communicators from leading global corporations including Shell, Intel, Vodafone and Ford Motor Credit, agreed that visible leadership was crucial to keeping their change programs on track, even when the changes being communicated were unpopular. In a case study on sustaining employee engagement during a major restructuring at Ford Motor Credit, communications director Chris Solie describes how honesty and vision from the company's leaders was key to maintaining morale and engagement. "Employees respect our CEO for giving them the hard facts and presenting them with a plan for the company's future."
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Wariness Urged in Using Credit Cards for Medical Bills
New York Times (08/30/07) P. A21; Freudenheim, Milt

Paying for medical bills with credit cards could result in exorbitant interest rates for patients who fall behind on payments--not only for that card, but for any others as well. Electrical company sales manager Tom Kern says that when he had various medical problems and no health insurance, he incurred bills on several cards yet he paid all of them on time. However, he says one company unexpectedly raised his interest rate to 22.9 percent; when he called and inquired about the rate hike, the company told him that he had too many cards with balances that were too near to the credit limit. Although Kern says the issuer ended up cutting his interest rate to 19 percent, it would not restore the original 6.9 percent on the card. Access Project executive director Mark Rukavina says consumers should arrange an extended payment plan with hospitals before charging their medical bills.
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Survey: Cashless Society on Horizon
American Banker (08/28/07) Wolfe, Daniel

The majority of baby boomers and echo boomers say that they believe cash will disappear in time, according to a recent survey published by Visa. The study found that 79 percent of baby boomers--those born 1946 and 1964--believed that cash would eventually disappear. Seventy-four percent of echo boomers--those born between 1979 and 1989--also predicted an eventual cashless society. The findings are important because baby boomers and echo boomers are "the powerhouses of U.S. consumer spending," and have influential spending habits, said Visa Chief Economist Wayne Best. Visa estimates that by 2015 most spending will be done by baby boomers and echo boomers.
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Rising Reliance on Credit Cards Could Reflect Subprime Fallout
Investor's Business Daily (08/27/07) P. A1; Krause, Reinhardt

The credit card business to date seems to have escaped the growing reach of the subprime meltdown, with card delinquencies remaining flat even as defaults have skyrocketed among homeowners, but analysts at Merrill Lynch say the sector's resistance to the turmoil may be weakening. "The next shoe to drop from this subprime mortgage fiasco, which has already fed into the asset-backed market, is probably going to be the credit card business," according to Merrill Lynch economist David Rosenberg. Credit card borrowing was up 11 percent in May and June, likely because homeowners are using plastic to pay for daily expenses in order to free up more cash to make their mortgage payments. Moreover, while borrowers previously have tapped into mortgage equity to produce the money needed to resolve credit card and other debt, a Goldman Sachs report notes that "cash-outs" peaked during the fourth quarter of 2005.
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The Big Lie About Credit Card Debt
MSN Money (07/30/07) Weston, Liz Pulliam

Though the median balance for U.S. household credit card debt was reported as $2,200 by the Federal Reserve's latest survey, other polls often distort the statistic to make it seem as if Americans are in denial about their level of indebtedness. For example, a GfK Roper poll released in June 2006 by CreditCards.com stated that "By some estimates, the average American household has over $9,300 in credit card debt," and then asked respondents to declare whether they had more debt, less debt, or the same amount of debt than the "average." When more than 90 percent of those surveyed reported having either a similar amount of debt or a lower amount of debt, poll takers concluded that Americans are either in denial or are lying about their debt. However, the survey was based on a false statistic, which means the participants' answers were likely quite accurate. Such myths may stem from data published by CardWeb.com, which includes corporate credit card totals when calculating its average household debt figure; CardWeb also includes balances that are on the verge of being paid off. Figures can also become skewed when the 8.3 percent of households with at least $9,000 on their credit cards are averaged in with the majority of U.S. households that possess no credit card debt, according to figures from the Federal Reserve survey. Such misrepresentation is disturbing, as it alters the national debate about consumer debt and bankruptcy. Misleadingly high debt statistics also offer false comfort to individuals who are heading toward financial disaster.
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