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This may be the most practical Business Monthly of the year Most issues of the Cedar Valley Business Monthly tend to celebrate some aspect of the local economy, from its long tradition of familyowned businesses to individual leaders who have built and maintained a vibrant Jim Offner is the Courier community. business editor. This issue is Contact him at different. Once a jim.offner@ year, the zine pauses to ask some of the sharpest financial minds in the area to offer insights on key issues that affect businesses, the people who run them and their customers. This issue of Cedar Valley Business Monthly attempts to cover a full range of financial

issues, from the cover story on credit card use to tips on how to deal with important decisions like retirement, taxes and health care. There is an array of business people in these pages who will offer advice on what to do with money now and in the future. All offer some common-sense advice. Such firmly grounded outlooks are one reason the Cedar Valley has weathered some pretty serious economic tempests in the last couple of years. One of the ongoing issues is credit. Banks say there is plenty of cash to lend to borrowers. Credit may be tighter these days, but it hasn’t seemed to slow the parade of mortgagees looking to refinance their deals at today’s lower interest rates. A major credit agency says

credit card debt in Iowa, and particularly the Cedar Valley, is at a low point, pointing to the fiscal conservative and common-sense spending attitudes of the populace. Car dealers say business has been good. Retailers reported a nice sales bump during the holiday shopping season. Meanwhile, unemployment continues to hover well below national averages month after month. Maybe all of that is an indication of why the area has weathered the economic crisis with relatively little damage. The region’s latest economic indicators seem to point out that more consumers are saving, providing a buffer against the harshest elements of the ongoing national economic slump. That’s not to say the Cedar


Roby said. Dubuque experienced the largest decline in credit card delinquency from the second quarter of all metropolitan areas in the U.S. at 48.4 percent. The metropolitan area with the largest increase in delinquency since last quarter was Lewiston, Idaho, at 92.7 percent. Financial experts say the economic downturn has turned consumers away from credit cards. According to TransUnion, more than 8 million consumers stopped using bank-issued, general purpose credit cards since last year. Instead, consumers seem to be turning to a different type of plastic: debit cards “What is interesting is the increase in debit card use,” said Joe Vich, CEO of Community National Bank in Waterloo. “It looks like a credit card, but it accesses your checking account. That usage nationally is up dramatically and has been over the last couple of years. It’s a growing trend not only to not write checks but to keep from overextending on credit.” Vich said the industry has seen debit card usage grow by around

15 percent annually. Roby said that trend applies to Veridian’s customers, with a 19 percent increase in debit-card usage, even with the increased credit-card activity. Itzen said debit-card transactions have “gone through the roof.” At Lincoln Savings Bank in Reinbeck, many customers eschew credit cards altogether, said Steve Tscherter, president and CEO. “I would wager 50 percent of our customers don’t even carry credit cards,” he said. “Being in rural markets with better than half our business, that reflects the age bias, and the older customers are averse to credit.” And the half of Lincoln’s customers who do use credit cards likely are being more prudent than before about using them, Tscherter said. “It ties to the fact that we’ve seen a couple of million dollar reduction in consumer loans the last year and 25 percent over the last two years,” he said. “So, people are noticeably drawn in with their spending and credit. It’s to their credit that they’re being cautious and conservative.”

From page A3 Veridian’s November 2010 credit card transaction volume increased by 109 percent compared to November 2009. “This increase can be attributed to our low interest rates and marketing promotions during 2010,” Roby said. Incidence of credit card delinquency was highest in Nevada (1.28 percent), followed by Florida (1.09 percent) and Mississippi (1.06 percent). The lowest credit card delinquency rates were found in North Dakota (0.48 percent), South Dakota (0.53 percent) and Nebraska (0.56 percent). “I guess I’m not surprised because of the character of the people in the Midwest and Iowa in particular,” said Wade Itzen, president of the Waterloo-Cedar Falls markets for BankIowa. Veridian has seen a downturn in defaults, Roby said. “Although nationwide default rates are up, Veridian has actually experienced a decrease in defaults from 2009 to 2010,”

Valley is immune from the perils that threaten the national business climate. Some of the ideas presented this month perhaps will spark

an idea, a path to more profits. In some cases, this issue may serve to reaffirm the path you and your business have taken is the right one.

Business Monthly - January 2011  

Getting Credit: Iowa consumers among nation's leaders in paying off bills, cutting use of plastic