U.S. credit card companies announced Thursday and Friday that they will waive or rebate the transaction fees on credit card donations to major U.S. humanitarian aid organizations involved in the relief efforts following last week’s devastating earthquake in Haiti.

Consumers, however, will still need to be on their toes to benefit from the waivers: the transaction fees will be waived only for select major relief organizations, and those differ for each credit card company.

The announcements came after an article in the Huffington Post cast light on the fact that credit card companies rake in as much as $250 million a year from the 1-3 percent interchange fee they charge for processing credit card transactions, including those to non-profits and charitable institutions. Donations to humanitarian relief organizations increase dramatically after major disasters, and donations made via credit cards typically account for more than 85 percent of donations, according to reports.

Several politicians, including Senate Banking Committee Chairman Chris Dodd (D-CT), and Rep. Betsy Markey, (D-CO) last week appealed to card issuers to waive the transaction fees, as their U.K. counterparts already do.

“Across the country, Americans are offering their hard-earned dollars to aid the Haitian people, but their donations could do more if credit card companies weren’t skimming off the top,” said Senator Dodd in a statement. “I urge credit card companies to join the cause and waive the transaction fees that are taking these generous donations away from the Haitian relief effort.”

American Express said early on that it would rebate transactions fees charged on donations to the relief organizations listed on the USAID-approved InterAction website. The rebate will be made effective retroactively on donations made from the date of the earthquake on January 12 through February 28. Amex also pledged $250,000 to relief efforts.

Visa International announced that through February, it will not apply transaction fees to donations made to 11 major charities involved in Haitian relief efforts. The charities include American Red Cross, AmeriCares, CARE USA, Oxfam America, Save the Children, US Fund for UNICEF, World Vision, Direct Relief International, International Rescue Committee, Mercy Corps, and Habitat for Humanity. Visa also made a $200,000 contribution to the Red Cross.

MasterCard Worldwide will be waiving interchange fees for donations made to the following five charities: the American Red Cross, AmeriCares, CARE USA, Save the Children, and UNICEF. For donations with Canadian MasterCards, the company will waive fees to select Candian relief organizations, including Canadian Red Cross; Doctors Without Borders,UNICEF Canada, and World Vision. The company also announced that it made a corporate donation of an undisclosed sum to relief efforts, and it will be double-matching employee contributions.

According to Discover Card’s website, it will waive merchant transaction fees for 11 charities, the same those listed above for Visa International. In addition, on its website, Discover is encouraging cardholders to donate using their Cashback Bonus earnings, which the company will match up to a total of $1 million.

Credit card companies have waived their processing fees for charity only once before, after the South Asian tsunami in December 2004; at the time, fees were waived for only 5 major relief organizations.

Visa and MasterCard are the two major electronic payment networks; the companies collect the transaction fees in exchange for processing credit card transaction for cards issued by banks, such as Chase, Bank of America, Capital One, and others. According to The Nielson Report, Visa holds close to half of the credit card market share, making its commitment to waive transaction fees for select major relief organizations particularly significant. Amex and Discover differ from Visa and MasterCard in that they are both payment processing networks and issuers of their own credit card brand.

Visa and MasterCard are the two major electronic payment networks; the companies collect the transaction fees in exchange for processing credit card transaction for cards issued by banks, such as Chase, Bank of America, Capital One, and others. According to The Nielson Report, Visa holds close to half of the credit card market share, making its commitment to waive transaction fees for select major relief organizations particularly significant. Amex and Discover differ from Visa and MasterCard in that they are both payment processing networks and issuers of their own credit card brand.

Defaults on store-branded credit card accounts soared during the holiday shopping season, according to a report released Thursday by Fitch Ratings. On an annualized basis, credit card defaults on retail credit cards rose to 12.56 percent in December, up from 11.36 percent the month before. That’s an almost ten percent increase month over month, bringing default levels close to the all-time record for retail credit cards of 12.81 percent set in August of 2009.

The sharp rise in defaults comes after two months of declining charge-offs. Throughout the year, however, defaults on store credit cards have averaged 11.88 percent, considerably higher than its historical average of 8.34 percent. The Fitch index tracks retail credit cards issued by 165 major U.S. retailers, including Wal-Mart, Best Buy, and Home Depot.

The uptick in defaults on retail credit cards follows the trend in the rest of the credit card sector, but retail defaults top those on bank-issued credit cards by about 2 percent. Defaults on bank credit cards averaged 10.56 percent in November, according to Moody’s.

The record default rates on credit cards are linked to the continuing high unemployment rates, and they are expected to remain high at least through the first half of the year. Retail credit cards may be particularly vulnerable to defaults, as many offer less value and versatility to consumers. They typically come with lower credit limits, and some cards can only be used at the store they are co-branded with. As a result, consumers struggling to make ends meet often prioritize keeping their bank-issued credit cards in good standing, so they can continue to benefit from the greater versatility and higher credit line of those cards.

If the high credit card defaults on store credit cards continue, retailers may become far less aggressive at pushing offers giving shoppers 10 % off if they take out a store-branded credit card. Retailers may be forced to become more selective in offering new accounts and may also tighten the standards for approving new credit card applications.

The high defaults are a double whammy for retailers. They indicate that retail sales may continue sluggish, as financially strapped consumers are forced to pull back on spending and credit card usage. According to a recent report from the Federal Reserve, revolving credit usage, which is largely a measure of credit card usage, dropped by a record $17.5 billion in November, more than three times the average monthly drop in the preceding months.

On the bright side, late-stage delinquencies on store credit cards, i.e. credit card payments that are more than 60 days late, but which haven’t yet been written off, improved slightly, an indication that long-term charge-offs could be stabilizing.

As the world rushes to help with the relief efforts of the devastating tragedy in Haiti, an unlikely party stands to profit from the outpouring of care and concern: credit card companies.

According to the Huffington Post, most donations to relief organizations are made using credit cards, either through hotlines set up for donations or on the websites of relief organizations. All credit card charges come with an interchange fee, or transaction fee, of about 3 percent. As a result, only about 97 cents of each dollar donated actually reaches the beneficiaries.

If 3 percent sounds like little but chump change, think again. As much as 85 percent of donations taken in after major disasters like the Haiti earthquake are paid through credit cards. According to Huffington Post estimates, credit card companies may be raking in as much as $250 million a year in profits from charitable donations. Most card issuers are reluctant to wave the transaction fee, claiming that the money goes to cover processing costs. However, the true costs of each transaction are a mere fraction of the average 3 percent fee charged; credit card companies pocket the difference.

American card issuers in this regard are far behind their U.K. counterparts. According to the U.K. Card Association, credit card issuers in the U.K. waive the credit card transaction fee for fundraising efforts to provide humanitarian assistance following major disasters and crises worldwide.

Rep. Betsy Markey (D-Colorado) on Thursday appealed to credit card issuers to waive processing fees for donations to the Haitian relief efforts, sending a letter to the heads of the all major card issuers. More appeals are sure to follow. Even before Markey sent the letter, American Express announced that it would rebate transaction fees to about 65 relief organizations involved in raising funds for Haiti relief efforts. Amex also announced that it will donate $250,000 to relief organizations, and it will match employee donations for relief efforts.

If you live in the U.S. and are considering making a donation to help relief efforts and Haiti, what can you do to make sure that the entire donation gets credited to the relief organization of your choice? Consider using one of the following options:

Capital One’s No Hassle Giving Site.
Capital One will pick up the transaction costs for donations submitted through its No Hassle Giving Site, ensuring that 100 percent of your money gets donated to the charity you choose. You can even choose to use some of your Capital One rewards points for the donation. You have to be a holder of a Capital One Visa or MasterCard to be able to donate at the site.

American Express GivingExpress® Online.
Through its GivingExpress service, American Express offers a service similar to Capital One’s. Amex does charge a (discounted) transaction fee, but has announced that it will rebate the fee to for donations to relief organizations listed on the USAID website in support of Haiti relief. You can choose between millions of charities and nonprofit organizations, and make the donation using either your American Express card card or rewards points accumulated on your Amex card. The service allows cardholders to set up recurring donations and to spread donations out over the year, and you earn rewards points on donations charged to your card.

Text Message Donations.
Donations via cell phone text messages are becoming increasingly popular. They are quick, easy, quick, and don’t have a transaction fee; instead, the amount gets billed to your next cell phone bill. Here are a few options:

• A $10 donation to the Red Cross. Simply text “Haiti” to 90999. The Red Cross has put up a website where you can track the mobile giving by state and the total amount donated.
• A $5 donation to Yele Haiti. Text “Yele” to 501501. Yele Haiti is a nonprofit organization led by hip-hop singer and Haiti native Wyclef Jean, which undertakes charitable projects in Haiti.

Lastly, a word of caution. Major natural disasters bring out the best-and the worst-in people, and the Haiti disaster is no exception. Numerous scams have cropped up purporting to be fund-raising for victims of the Haiti earthquake; many of them are “text to” scams or illegitimate websites. According to the Internet Storm Center, hackers are using SEO techniques to make links related to searches for Haiti donations appear high on Google. When unsuspecting consumers click on the link, they are directed to a compromised website, where malware is downloaded to their computer.

To protect yourself, if you are considering giving a donation, go through the Capital One No Hassle Giving site or American Express GivingExpres or use this list of organizations that help Haiti earthquake victims. Further, if you get solicitations for donations from an organization you haven’t heard about before, check it out first at the BBB’s website.

The Federal Reserve Board on Tuesday finalized the amendments to the Truth in Lending Act, which will lead to greater consumer protections for credit card usage. The 1,100-page document details how the provisions of the Credit CARD Act, which was signed into law in May last year, should be implemented. Credit card companies have until February 22 to implement most of the new rules; a few rules will not become effective until August 2010.

The new credit card rules aim to level the playing field and do away with many of the deceptive and unfair lending practices, which many credit card issuers have engaged in in the past. They outlaw some of the more onerous practices, and aim to provide greater transparency and certainty in lending terms for credit card users.

The new credit card rules aim to level the playing field and do away with many of the deceptive and unfair lending practices, which many credit card issuers have engaged in the past. They outlaw some of the more onerous practices, and aim to provide greater transparency and certainty in lending terms for credit card users.

Many of the new rules passed in the Credit Card Act were already introduced in provisions passed by the Federal Reserve Board in December 2008. However, the Credit Card Act added a number of additional mandatory practices and disclosures. In particular, the new credit card law:

Puts new curbs on interest rate hikes. Card issuers will no longer be able to raise interest rates retroactively on existing balances (excepting, of course, promotional rates), unless the cardholder is 60 days behind with payments. Card issuers can still raise interest rates on future charges, but they have to provide 45 days notice and give the consumer the right to opt out. (The interest rate on variable rate cards will still fluctuate with the base rate they are tied to.)

Introduces protections for underage consumers. The new law puts limits on how credit cards can be marketed to students on college campuses, banning the practice of inducing students to sign up by offering them free gifts as incentives. In addition, credit card companies will no longer be able to issue credit cards to consumers under 21, unless the person demonstrates that he or she has the ability to make the required payments on the account, or obtains the signature of a co-signer.

Bans over-limit fees. Credit card companies will no longer be able to charge an over-limit penalty fee, unless the cardholder opts in for over-limit protection.

Creates fairer billing and payment practices. Some of the more deceptive ways in which card issuers maximized profits from credit cards have been outlawed. The double-cycle billing method of calculating interest charges will be a thing of the past. In addition, card issuers will no longer be able to allocate payments to the balance with the lowest interest first. Any portion of a payment above the minimum required payment has to be allocated to the balance with the highest interest rate.

Introduces clearer disclosures on credit card statements. Going forward, credit card statements must educate consumers about the costs of making only the required minimum payment each month. Statements will also disclose how much cardholders would save in interest charges if the monthly payment is high enough to pay the balance off within 36 months.

Puts an end to fee-harvester credit cards. Credit cards for people with bad credit in the past have been known to charge credit card fees (such as an annual fees, application fees, monthly fees) totaling almost the credit limit of the card. Going forward, credit card companies can no longer charge fees totaling more than 25% of the initial credit limit annually.

The last provisions of the Credit CARD Act are set to go into effect on August 22, 2010. These include rules that require penalty fees and charges to be “reasonable and proportionate,” and provisions which require credit card companies to reevaluate interest rate hikes going back all the way to January 1, 2009, based on cardholders’ current credit profile.

The Federal Reserve Board has created a guide to the new credit card rules on its website, which includes an example of the interest charge disclosures that will appear on credit card statements in the future.

U.S. consumer credit dropped $17.5 billion in November, the Fed said in a report released Friday. The record drop took economists by surprise; most had predicted a $5-6 billion drop, in line with the $4.2 billion drop in October. The decline marks the 10th straight monthly decline in a row, the longest since the Fed began tracking the data in 1943, according to the Associated Press.

The largest drop was in revolving credit, largely a measure of credit card balances, which plummeted by 18.5 percent or $13.7 billion to $874 billion in November. Non- revolving credit, which includes auto loans and mobile home loans, dropped by $3.8 billion. The consumer credit numbers do not include mortgages on residential real estate.

The large decline in revolving credit comes on the background on record unemployment numbers. The unemployment rate hovers close to a 26-year high, with 7.2 million jobs lost since the onset of the recession; the economy lost 4.2 million jobs in 2009 alone.

The drop in revolving consumer credit is brought about by numerous factors. Firstly, credit card companies are facing record charge-offs, writing off credit card debt to the tune of an annualized 10 cents per dollar across the industry. Secondly, in the face of record defaults and a continuing weak economy, card issuers have been tightening lending terms and scaling back credit limits, giving consumers less credit to work with.

Analysts in the Wall Street Journal earlier this year predicted that financial institutions would scale back credit card lines by as much as $2 trillion in 2009 and $2.7 trillion by the end of 2010. If these numbers bear out, it would shrink total available credit card lines available to consumers by more than half. This, in turn, might influence consumer confidence and thereby consumer spending and credit card usage.

And this, according to analysts is the most worrisome part of the record drop in revolving consumer credit. It is an indication that consumers continue to scale back on their spending, in the face of high unemployment rates, a continuing weak economy, and dwindling credit limits. With consumer spending driving 70 percent of the U.S. economy, most analysts fear that if the trend continues, it could make it difficult for the economy to stage a rebound.

The race is on, or so it seems, to come up with the best mobile phone device for swiping and processing credit cards. Mophie, a manufacturer of accessories for the iPhone and iTouch, has announced that it will introduce a new add-on credit card reader, which enables small businesses to swipe and process credit cards on the spot.

The Mophie reader works through a small device attached to the audio jack of the iPhone or iTouch. The transaction is processed through a special third party application. Mophie is presenting the new device at this month’s Consumer Electronics Show in Las Vegas.

The Mophie announcement comes at the heels of the beta release of Square, Twitter founder Jack Dorsey’s much publicized bid on a portable credit card reader, also to be attached to first the iPhone and iTouch, and eventually to all types of smart phones. In addition, later this month, industry giant Verifone Holdings will start shipping a new device called PayWare Mobile, which will enable small businesses to turn mobile phones into credit card readers.

The new credit card readers have been made possible by the increasing popularity of smart phones, which allow consumers to hook up to the Internet and which, despite their minute size, are able run sophisticated software programs for pretty much anything, including processing credit cards.

The new smart phone devices like Square or Mophie’s card reader may eventually replace more expensive point-of-sale wireless credit card terminals currently used by small businesses. More than that, however, they could eventually increasingly replace cash as the way consumers not only make payments, but take payments.

At least, that is the ambition of the credit card processing add-on developed by Square. For all their fancy technology, most wireless credit card processing devices can still only be used by small businesses with a merchant account. According to Square-founder Dorsey, Square users will be able to swipe credit cards and process transactions via their smart phone without having to go through the cumbersome and expensive process of signing up for and maintaining a merchant account.

Square aims to level the playing field and enable both smaller businesses and individuals to piggyback onto its own merchant account, removing the limitations of expense and logistics, which currently make it impossible for consumers to process credit card sales.

If Square’s iPhone app – or something similar to it - catches on, consumers could eventually be using smart phone apps to accept payment by credit cards when holding a yard sale or buying a couch on Craigslist, bringing us yet one step closer to the end of cash.

Before that, however, the founders of Square and other mobile payment readers will have quite a few logistics to sort out. Critics argue that the idea of making it possible for consumers to take credit cards without having a merchant account of their own is little but a pipeline dream. Still, at one point in time, so was the iPhone, the Internet, personal computers, and all of the numerous other gadgets and software apps, which over just a couple of decades have transformed much of how we live our life.

True or false: Did rock singer Courtney Love take out 104 American Express cards, charge $352,059.67 to them, and then refuse to pay off the charges?

In a real-life mystery that would have even Robert Downing Jr.’s indomitable Sherlock Holmes scratching his head, American Express is suing rock singer Courtney Love for $352K in charges to credit cards issued in her name. Love, in turn, is countersuing American Express, claiming that she never made the charges, nor even took out the 104 Amex credit cards issued in her name in the first place. Love, according to TMZ, is suing the behemoth card issuer for an unspecified amount in damages and interest, accusing Amex of “messy business practices,” by allowing a large number of credit cards to be issued in her name without her knowledge.

The answer to the question of who originated the charges will be for detectives and two armies of lawyers to sort out. Whether Love indeed was the victim of fraudulent credit card charges, as her lawyer implies, or whether she is simply looking for a way to avoid paying off credit card debt, we may never know. Whatever the outcome of the cases eventually may be, one thing is for sure: before the dust settles, both sides will likely have spent much more than three Grand in lawyers’ fees alone.

Whether Love was a victim of fraud or not, the case is a sobering reminder to stay on the alert. The dangers of credit card fraud are very real, and growing increasingly common. Like thousands every year, Love could well be the victim of identity theft; fraudsters could well have gotten hold of her personal financial information and used it to open credit card accounts in her name.

Celebrities like Love and other well-known personalities living in the public eye are a popular target for identity thieves. Steven Spielberg, Oprah Winfrey, Michael Jordan, Paris Hilton, and even Tiger Woods have all been victims of identity fraud of varying degrees of seriousness.

High-profile, wealthy persons may be particularly vulnerable to credit card fraud, because the usual security checks that credit card companies have in place to track unusual purchases are less effective in the case of jet-setting, big spenders. Card issuers’ fraud departments electronically monitor all credit card charges, and if an unusual pattern of charges occur, the cardholder will typically be contacted. For example, if you always use your credit card for charges below $500, if you suddenly charge a purchase of $1,500, you may get a call from your card issuers’ fraud department. Similarly, if you always make charges in Kentucky, and suddenly use your card for charges when travelling overseas, you are also likely to be targeted for a fraud check.

For people of average means aberrations in spending patterns are easy to discover. For celebrities and other jetsetters, large charges in numerous countries and locations are often the rule rather than the exception. This makes it more difficult for credit card companies to catch cases of identity fraud early in the game. In these cases, the crime may not become known until the victim of the fraud refuses to acknowledge and pay for the charges.

For regular Joes like you and me, the case is a good reminder that you can’t just rely on your credit card company to protect you from identity theft and credit card fraud, you need to stay on the alert as well. Even though card issuers, and not cardholders, are on the hook for fraudulent charges, cardholders are responsible for notifying the card issuer of unauthorized charges within a reasonable period of time. Most credit card companies do not extend their zero liability policy to credit card charges more than 60 days old.

To avoid falling victim to identity fraud, follow basic precautions to protect yourself from credit card theft. Always carefully read your credit and debit card statements every month, and follow up on any charges you don’t recognize, even minor ones. Likewise, at least once a year, but preferably every six months, obtain a copy of your credit card and review it carefully to make sure that no one has used your personal information to open credit accounts in your name. If you find discrepancies, immediately alert your credit card company and the appropriate authorities to report the identity theft.

Even as consumers geared up for the Holiday shopping season in November, more were falling behind on credit card payments, according to a report issued by Moody’s Investor’s Services. With unemployment in record territory, charge-offs are expected to get worse before they get better: Analysts at Moody’s predict that credit card default rates will peak at 12 to 13 percent towards the middle of 2010.

Overall credit card default rates rose to 10.56 percent in November, compared to 10.04 in October, edging close to the high of 10.76 in June of this year, according to the report. Credit card default rates are a measure of the uncollectible credit card debt on card issuers’ books. A default rate of 10.56 percent means that card issuers on an annualized basis have to write off 10.56 cents for every dollar of credit card debt they have on their books. The high defaults are offset somewhat by the near-high yields earned on credit cards, which at 21.09 percent continue in record territory. The excess spread, i.e. the profit after charge-offs and other expenses, fell to 7.7 percent in November, according to Moody’s.

The increase in credit card defaults comes after a two-months decline in charge-offs in September and October with write-offs decreasing to 10.04 percent in October. The worst increase in credit card defaults was reported earlier in the month by Citigroup, which saw defaults jumping from 8.79 percent in October to 10.29 percent in November.

Delinquencies also showed increases, however more modest, rising from 6.1 percent in October to 6.2 percent in November. Delinquency rates are a measure of credit card payments more than 30 days late, which have not yet been written off as uncollectible.

Card issuers have been aggressively raising credit card interest rates over the past year, citing the record default rates, increased economic uncertainty, and the new limitations on profits triggered by some of the provisions in the new Credit CARD Act, which are due to step into effect in February of 2010. Consumer advocates, on the other hand, argue that card issuers may have partly precipitated the higher levels of defaults themselves, by increasing interest rates and otherwise tightening terms in ways that make it more difficult for consumers struggling with credit card debt to meet their payment obligations.

Authorities came one step closer to closing the chapter on the largest ever credit card theft in the U.S. on Tuesday, when Alberto Gonzales, a 28 year-old Florida resident, pleaded guilty to two counts of conspiracy in a federal court in Boston.

Together with his co-conspirators, Gonzales in 2008 masterminded data breaches at New Jersey-based Heartland Payment Systems, Inc., along with retailers 7-Eleven, Inc., and Hannaford Brothers Co. which compromised an estimated 130 million credit and debit card numbers. Prosecutors described the break-in as the largest ever data breach in U.S. history.

Gonzales in September also pleaded guilty to 19 counts of conspiracy, wire fraud, computer fraud and more for his role in engineering a series of cyber break-ins into several major U.S. retailers, including TJX, the parent of TJMaxx, and Marshall’s stores. Those cyber thefts are thought to have netted the hackers more than 40 million credit card numbers.

For Gonzales, it was the end of a long journey, which began in a drug and alcohol addiction at the age of 16 and led through a stint as an informant for the U.S. Secret Service, where he was engaged to help the agency track down hackers. At the same time, however, he was passing on sensitive information about ongoing investigations to other hackers. Gonzales used the proceeds from his operations to fund his drug use and a lavish lifestyle, once throwing a $75,000 birthday party for himself. According to the Boston Globe, Gonzales was addicted to the Internet, and he may have Asperger syndrome, an autism-like disorder characterized by poor social skills, high intelligence, and a few almost obsessive interests, which in Gonzales case included a passion for hacking. Numerous early attempts from his parents and school to discourage hacking were unsuccessful.

Gonzales now faces between 17 and 25 years in prison, under the terms of the plea agreement; he originally could have been sentenced to up to 35 years in prison. Sentencing for both cases is scheduled for March 18 and 19, and will take place in Boston, where Gonzales currently is in custody.

The case is a sobering reminder about just how vulnerable computer security systems storing millions of credit card numbers and other sensitive financial data often are. The hacker ring penetrated the computer security systems of the retailers involved by exploiting vulnerabilities in their wireless Internet signals. They then installed so-called “sniffer programs” to siphon off credit and debit card numbers moving through the credit card processing networks. Gonzales provided the servers used by other hackers to break into the wireless system and tested the malware used to ensure it would avoid detection by the computer systems’ antivirus programs.

Many of the retailers targeted have since been sued for damages and criticized for having too lax security measures, particularly taking too long to deploy a newer and more advanced security encryption protocol in their computer systems.

Data security breaches have been on the rise, increasing by 47% from 2007 to 2008, according to the non-profit organization Identity Theft Resource Center. By July of 2009, 310 security breaches had been reported, including a break-in at Network Solutions, where hackers compromised credit card information and other personal information for more than 4,000 e-commerce sites.

U.S. retail sales improved this Holiday season compared to last year’s bleak performance, according to data released on Monday by SpendingPulse, a unit of MasterCard Advisors. Between November 1 and Christmas Eve, retail sales climbed by 3.6 percent, according to the MasterCard report.

The numbers are a considerable improvement over last year, which went down in history as one of the worst Holiday sales seasons on record; consumers faced with the ongoing credit crisis and mounting financial uncertainty pulled dramatically back on shopping in November-December. The bounce in this year’s Holiday sales may signal that consumer spending is improving even amid tight credit and record unemployment rates, and even as many consumers vowed to cut back on credit card spending. For many retailers, Holidays sales make up as much as 25 to 40 percent of total annual sales.

Online sales were particularly strong, with a 15.5 jump in online purchases, possibly indicating that consumers are becoming increasingly comfortable with using their credit cards online. In addition, some were trapped by snowstorms in the Midwest and on the East Coast, which kept many shoppers at home the weekend before Christmas. Online sales account for about 5 percent of overall retail sales.

Despite the improvement, retail analysts weren’t overly excited about the numbers, which still are below 2007 levels, according to Reuters. Yet, the numbers at least are a significant improvement over last year’s numbers, when consumer spending was in a near free fall.

The Holiday sales report released by SpendingPulse is based on aggregated data from the MasterCard payment network of credit and debit cards purchases (excluding car and gasoline sales) along with estimates of cash and check payments. MasterCard SpendingPulse makes use of the extensive data from the MasterCard network to track and analyze industry performance and report on consumer spending earlier than traditional consumer tracking sources.