BANK OF AMERICA TESTS OUT NEW DEAL SERVICE
Bank of America thinks it has a better way for consumers to save money other than those daily deal sites like Groupon. Bank of America is offering discounts to its customers based on their previous spending patterns. The offers will be made through the bank’s website. Customers must use their Bank of America debit or credit cards to get the savings. Those in on the deals will get the discounts, not when they buy, but in the form of cash payments once a month. The so-called BankAmeriDeals will begin testing the service this week with its employees in North Carolina.

Story by Michael Finney for ABC7

http://abclocal.go.com/kgo/story?section=news/7_on_your_side&id=8519169

YOU PROBABLY GOT LESS CREDIT CARD JUNK MAIL LAST MONTH
Credit card offer mailings fell year-over-year in December, the first such decline in 2 years, according to Citigroup analysts. But competition remains intense to find new customers, with the bank noting mailings for all of 2011 jumped 37% to nearly 5 billion, citing data from Mintel Comperemedia. Last month’s decline shows “large card issuers are still acting rational and not getting overly aggressive,” says Citi. Bank of America and Wells Fargo were the only two of 10 banks specified by the Mintel data that increased mailings in December compared to November.

Story by Andrew Johnson for the Wall Street Journal

http://blogs.wsj.com/deals/2012/01/26/you-probably-got-less-credit-card-junk-mail-last-month/?KEYWORDS=%22credit+cards%22

HACKER’S DEMO SHOWS HOW EASILY CARDS CAN BE READ THROUGH CLOTHES AND WALLETS
Pull out your credit card and flip it over. If the back is marked with the words “PayPass,” “Blink,” that triangle of nested arcs that serves as the universal symbol for wireless data or a few other obscure icons, Kristin Paget says it’s vulnerable to an uber-stealthy form of pickpocketing. As she showed on a Washington D.C. stage Saturday, she can read all the data she needs to make a fraudulent transaction off that card with just a few hundred dollars worth of equipment, and do it invisibly through your wallet, purse, or pocket.

Story by Andy Greenberg for Forbes

http://www.forbes.com/sites/andygreenberg/2012/01/30/hackers-demo-shows-how-easily-credit-cards-can-be-read-through-clothes-and-wallets/

SHOULD YOU BREAK UP WITH YOUR CREDIT CARD?
Credit cards are like relationships. It’s sometimes hard to break up and the split may hurt you more than the other party. While it may feel good to cut up that credit card, losing the available credit could hurt your credit score and raise the costs of future loans. Closing a credit card account that you have paid off or don’t use seems like a logical thing to do. However, the “credit utilization ratio” is one of the major factors in calculating your credit score, accounting for approximately 30 percent of your score. Closing an account can have a dramatic effect on that ratio. When it comes to your credit cards, the credit utilization is the ratio of all your credit card balances to the credit limits available on your cards. Having a low ratio–not having much debt but a lot of available credit–is beneficial to your credit score. A high ratio may indicate that you may be a risk for default. A healthy credit utilization ratio is anything below 30 percent.

http://www.lowcards.com/blog/should-you-break-up-with-your-credit-card-3121/

IRS CLARIFIES ITS STAND WHETHER FREQUENT FLIER MILES ARE TAXABLE
Consumers will owe taxes on miles they receive for opening a bank account, but miles they get for making purchases on credit cards or for taking a trip are tax-free, the federal agency says.

Story by David Lazarus for the Los Angeles Times

http://www.latimes.com/business/la-fi-lazarus-20120131,0,1163342.column?page=1

MASTERCARD JOINS PUSH ON NEW CARD TECHNOLOGY
MasterCard is joining rival Visa in pushing merchants to upgrade their checkout systems to handle high-tech credit and debit cards that store information inside a computer chip rather than a magnetic stripe, in a move that could hasten adoption of the technology. Such technology is common in foreign countries, where banks for years have issued chip-enabled cards to their customers to cut down on fraud and meet regional standards or country regulations. It has yet to catch on in the U.S. market. Both MasterCard’s and Visa’s plans also require the banks that handle card transactions for retailers, known as merchant acquirers, be equipped to handle chip-based cards by April 2013. MasterCard’s move follows initiatives announced last year by Visa, which is trying to boost merchant adoption by allowing certain retailers to avoid some annual security assessments while eventually shifting the liability for card fraud onto the shoulders of merchants who don’t upgrade. Visa’s security incentive is set to kick in this October and its liability shift is scheduled for October 2015.

Story by Andrew Johnson for the Wall Street Journal

http://online.wsj.com/article/SB10001424052970204740904577193491695404570.html?KEYWORDS=%22credit+cards%22

CONSUMER FINANCIAL PROTECTION BUREAU COMPLAINTS TALLIED FOR 2011
The new Consumer Financial Protection Bureau has received about 12,000 complaints over the past six months from consumers who had problems with their credit cards and mortgages, according to the CFPB’s semi-annual report to Congress. In the half year ending Dec. 31, 2011, the agency received 9,307 credit card complaints and 2,326 mortgage complaints through its website, by phone, and through referrals from other federal regulators. There is no clear winning category among credit card complaints. “Billing disputes” edged out “Identity theft/fraud/embezzlement,” but collectively accounted for about a quarter of all complaints.

Story by Ben Hallman for the Huffington Post

http://www.huffingtonpost.com/2012/01/31/cfpb-consumer-financial-protection-bureau-complaints_n_1244755.html

MORE MIDDLE-INCOME BORROWERS SEEK DEBT HELP
More middle-income consumers are seeking help through formal debt-reduction plans, according to an Atlanta-based credit counseling outfit. In 2007, the average income for clients entering debt-management plans through the nonprofit Credability was $43,000, and their average credit card debt was roughly $22,000. Last year, though, their average income was $54,000, and their average credit card debt was $24,000. A spokesman said the housing debacle and continued high unemployment rates were probably behind the trend. Middle-income borrowers are more likely to own homes, but they are now unable to borrow against the equity of their houses, because home values have fallen and lending requirements have tightened. They must increasingly turn to credit cards for emergency spending.

Read the rest of this entry »

The LowCards.com Weekly Credit Card Rate Report February 2, 2012

The LowCards.com Weekly Credit Card Rate report is based on
our Complete Credit Card Index which tracks the advertised rates
of 1060 credit cards in the United States.

Our index showed that the Annual Percentage Rates for credit cards
was 14.25% which was higher than 14.17% from last week.

Here are the averages from the LowCards.com Complete Credit
Card Index for the previous ten weeks:

Jan. 26 14.17%
Jan. 19 14.05
Jan. 12 14.04
Jan. 5  14.01
Dec. 29 14.00
Dec. 22 14.00
Dec. 15 14.05
Dec. 8  14.17
Dec. 1  14.16
Nov. 22 14.12

The average cash advance rate for this week was 21.57% which was
lower than 21.58% from last week.

The credit cards with the lowest interest rates in the nation this week are:

1. 5.00% Speedway SuperAmerica Credit Card
2. 5.15% First Tennessee Platinum Premier Visa
3. 6.25% Lake Michigan Credit Union Platinum Visa

The LowCards.com credit card rate report is compiled weekly using data from
1060 credit cards which are tracked on the LowCards.com website. The Complete Credit Card
index is available here:

http://www.lowcards.com/CreditCardIndex.aspx

Rates may occasionally change due to the number of cards
being tracked.

About LowCards.com: LowCards.com ( http://www.lowcards.com )
simplifies the confusion of shopping for credit cards. It is
a free, independent website that helps consumers easily
compare credit cards in a variety of categories such as
lowest rates, rewards, rebates, balance transfers and lowest
introductory rates. It also gives an unbiased ranking and
review for each card.

Credit cards are like relationships. It’s sometimes hard to break up and the split may hurt you more than the other party. While it may feel good to cut up that credit card, losing the available credit could hurt your credit score and raise the costs of future loans.

Closing a credit card account that you have paid off or don’t use seems like a logical thing to do. However, the “credit utilization ratio” is one of the major factors in calculating your credit score, accounting for approximately 30 percent of your score. Closing an account can have a dramatic effect on that ratio.

When it comes to your credit cards, the credit utilization is the ratio of all your credit card balances to the credit limits available on your cards. Having a low ratio–not having much debt but a lot of available credit–is beneficial to your credit score. A high ratio may indicate that you may be a risk for default. A healthy credit utilization ratio is anything below 30 percent.

Closing an old or unused card erases some of your available credit and increases your credit utilization ratio. For example, say you have two credit cards–one with a $3,000 balance and one with no balance, and each card has a $5,000 credit limit. Your credit utilization ratio is currently 30 percent ($3,000 divided by $10,000), a very attractive ratio for lenders to see. But if you close the account with no balance, you decrease your available credit by $5,000 so your credit utilization ratio increases to 60% ($3,000 divided by $5,000).

Another major factor in calculating your credit score is the length of time you’ve had credit. If you have to close a credit card account and you are choosing between two equal cards, close the one with the shorter history. It is usually better to keep your credit card accounts open for a long period of time.

Rather than closing an inactive credit card account, it may be beneficial to keep that account open and just make a small transaction on it every month or two. Buy lunch on that card and pay that balance completely at the end of the month. That will keep your account active and enhance your credit score by prolonging your account history and keeping your credit utilization ratio low.

Here are some considerations on whether to cancel a credit card account:

* Look at your total available credit. Add up how much available credit you have and how much credit you are using. Your goal should be to keep your credit utilization ratio below 30%. If you have few credit cards, or a high credit utilization ratio, keep the account open. If you have several credit card accounts with large credit lines and you pay them off each month, you should see a minimal effect from closing a credit card.

* What is your credit score? If your credit score is excellent, losing a few points won’t be a big deal. If you are building or repairing your credit score, leave the account open.

* Does unused credit tempt you to overspend? If these temptations have historically gotten in the way of sound financial judgment, it is better for you to close an account even if it does slightly lower your
credit score. Running up needless debt is one of the worst financial mistakes you can make.

* Will you be applying for a loan in the near future? If you have a good credit score and no plans to apply for a loan, close the account. However, if you are going to buy a house or a car in the near future, keep your credit accounts open until you have been approved for the loan.

If you do choose to cancel your account, follow these steps:

* Pay off the total credit card balance.

* Wait for the next bill or call customer service to make sure the balance is zero.

* Call customer service and cancel the card. They will ask a few questions and may even offer some incentives to change your mind.

* Send a written confirmation and keep a copy for your records.

* Check your credit report to make sure the account is closed. This will take a few weeks. Go to www.annualcreditreport.com and check your report for free. Every year, you get one free credit report from each of the three credit bureaus.

A SET-BACK FOR CREDIT CARD USERS?
For years, consumer advocates have fought for and won better protections for credit card users. But a recent Supreme Court ruling raises concerns those rights may be more limited than many had thought. Based on the ruling made last week, experts say consumers who sign up for a credit card with a so-called binding arbitration clause can’t dispute charges or fees in the courtroom. Supporters of arbitration say it’s more efficient than court proceedings and can result in quicker resolutions for consumers. But when it comes to credit cards, many experts are concerned that “big banks have disproportionate power or influence in comparison to the little guy” in arbitration. The final word on the matter will likely come down to the Consumer Financial Protection Bureau, which is tasked with providing disclosure rules for credit cards. Depending on what the CFPB’s study on arbitration finds, the bureau could decide to ban or at least regulate forced arbitration.

Story by AnnaMaria Androitis for SmartMoney

CITIBANK DEEMS FREQUENT-FLIER MILES TAXABLE, BUT DOES THE IRS?
Frequent-flier miles clearly have value–why else would people want them? But do they also represent taxable income? Citibank seems to think so. It’s sending tax forms to people who received thousands of miles as a reward for opening a checking or savings account. Those forms value each mile at about 2.5 cents and list the total dollar amount as miscellaneous income. As tax time rolls around, the question of whether airline miles are a form of income is something that potentially affects millions of people. At the very least, the tax agency needs to clarify what happens when, as in this case, a business declares your miles as income paid to you. What happens if you don’t do likewise?

Story by David Lazarus for the Los Angeles Times

ON SMALL PURCHASES, CASH IS STILL KING
Even though credit card issuers have been providing significant incentives for consumers to use their cards over the past year, consumers are once again turning to cash to pay for small purchases. According to a new Javelin study released on Tuesday, 79% of consumers used cash to make a purchase over the past seven days compared to 65% who used a credit or debit card. The increased use of cash may be a side effect of
the interchange fee regulations that capped these swipe fees for debit card purchases. While a smaller fee was good news for most retailers, it provided a cruel twist for the smaller merchants. Business owners specializing in lower-priced items like coffee, candy and ice cream now have to pay a higher fee when their customers use debit cards for transactions because many card companies discontinued the discounts that were often given merchants for small transactions. Issuers say the higher swipe fee previously paid by retailers subsidized the discount for smaller transactions.

WE LOVE OUR DEBIT CARDS, BUT NOT OUR BANKS
The recession served as a wake-up call for many of us to get a better handle on our finances, and for a lot of folks, that meant replacing one piece of plastic, the credit card, with another, the debit card. But now, regulatory changes have made those debit cards less of a cash cow for financial institutions. That’s left many banks scrambling to introduce new fees to make up for that lost money. The problem: consumers are dead set against the fees, and they don’t necessarily want to start using their credit cards again, either. A new report finds that few have sympathy for the banks. In fact, 70 percent of the people surveyed for the report said they think banks are the ones benefiting from the new regulations. Experts say that while consumer may have won the monthly debit fee battle, they should be prepared for other, more subtle fees to start sneaking up on them.

Story by Allison Linn for MSNBC

FEDERAL RESERVE SIGNALS THAT RECOVERY IS YEARS AWAY
The Federal Reserve, declaring that the economy would need help for years to come, said Wednesday it would extend by 18 months the period that it plans to hold down interest rates in an effort to spur growth. The Fed said that it now planned to keep short-term interest rates near zero until late 2014, continuing the transformation of a policy that began as shock therapy in the winter of 2008 into a six-year campaign to increase spending by rewarding borrowers and punishing savers.

Story by Binyamin Appelbaum for the New York Times

U.S. CONSUMERS MAKING PROGRESS IN PARING DOWN DEBT
With the U.S. economy showing signs of life, here is another reason to think the recovery may be for real: Americans are making rapid progress shedding debt, according to McKinsey. Since 2008, all types of U.S. private-sector debt–such as mortgage, credit card and corporate loans–have fallen as a percentage of the broader economy, the management consulting firm says in a new report. Household debt in the U.S. has fallen a total of $584 billion over the last four years, a 15 percent decline relative to people’s overall disposable income. Debt carried by businesses has also declined. Consumers are likely to remain cautious about taking on debt for years to come. But that could slow economic growth.

Story by Alain Sherter for MarketWatch

NEW GUIDE GEARED TO CONSUMERS
A new guidebook from the federal government offers consumers information on subjects ranging from fuel economy to money management. The Federal Citizen Information Center, a part of the federal General Services Administration, recently published its 2011 edition of the Consumer Action Handbook and launched a new website (publications.usa.gov) offering free versions of this and other guidebooks. The consumer handbook contains an overview of the Credit Card Protection Act, which went into effect over the course of last year, including rules on changes in fees and interest rates and late payments. For example, credit card issuers must notify consumers 45 days in advance of any changes to fees and rates.

Read the rest of this entry »

The LowCards.com Weekly Credit Card Rate Report January 26, 2012

The LowCards.com Weekly Credit Card Rate report is based on
our Complete Credit Card Index which tracks the advertised rates
of 1060 credit cards in the United States.

Our index showed that the Annual Percentage Rates for credit cards
was 14.17% which was higher than 14.05% from last week.

Here are the averages from the LowCards.com Complete Credit
Card Index for the previous ten weeks:

Jan. 19 14.05%
Jan. 12 14.04
Jan. 5  14.01
Dec. 29 14.00
Dec. 22 14.00
Dec. 15 14.05
Dec. 8  14.17
Dec. 1  14.16
Nov. 22 14.12
Nov. 17  14.14

The average cash advance rate for this week was 21.58% which was
higher than 21.47% from last week.

The credit cards with the lowest interest rates in the nation this week are:

1. 5.00% Speedway SuperAmerica Credit Card
2. 5.15% First Tennessee Platinum Premier Visa
3. 6.25% Lake Michigan Credit Union Platinum Visa

The LowCards.com credit card rate report is compiled weekly using data from
1060 credit cards which are tracked on the LowCards.com website. The Complete Credit Card
index is available here:

http://www.lowcards.com/CreditCardIndex.aspx

Rates may occasionally change due to the number of cards
being tracked.

About LowCards.com: LowCards.com ( http://www.lowcards.com )
simplifies the confusion of shopping for credit cards. It is
a free, independent website that helps consumers easily
compare credit cards in a variety of categories such as
lowest rates, rewards, rebates, balance transfers and lowest
introductory rates. It also gives an unbiased ranking and
review for each card.

Even though credit card issuers have been providing significant incentives for consumers to use their cards over the past year, consumers are once again turning to cash to pay for small purchases.

According to a new Javelin study released on Tuesday, 79% of consumers used cash to make a purchase over the past seven days compared to 65% who used a credit or debit card.

The increased use of cash may be a side effect of the interchange fee regulations that capped these swipe fees for debit card purchases. While a smaller fee was good news for most retailers, it provided a cruel twist for the smaller merchants. Business owners specializing in lower-priced items like coffee, candy and ice cream now have to pay a higher fee when their customers use debit cards for transactions because many card companies discontinued the discounts that were often given merchants for small transactions. Issuers say the higher swipe fee previously paid by retailers subsidized the discount for smaller transactions.

Many consumers who once used a debit card for small purchases are learning to carry cash to cover these transactions, or pay a fee to cover the store’s cost of processing the debit card. The debit card fee regulations are costing some retailers more money. We are certainly not seeing much lowering of prices that retailers were promising when the swipe fee regulations were being discussed.

While consumers are turning to cash, most credit card issuers continue to provide fairly lucrative incentives for consumers to use their cards. The Chase Freedom card offers a $200 cash back bonus once a new cardholder spends $500 during the first three months. Capital One Cash offers 1% cash back on all purchases plus a 50% cash back bonus, in addition to a $100 bonus for spending $500 on the card during the first 90 days.

Truth about credit cards: They’re not always evil

Credit cards are not evil. There, I said it. But that’s not how some people see them. They see credit cards as the devils that tempt them to spend more than they should. Debit cards are the angels in their wallet who keep them from piling up mountains of high-interest debt.
I can understand that. Credit counselors say people who can only buy what they can pay for on the spot are more likely to spend less than those who charge it.

But let’s be honest — credit cards don’t make you spend more. And thanks to the Credit CARD ACT of 2009 , many of the worst tricks and traps commonly used by credit card companies have been outlawed.
“Credit cards can actually be extremely beneficial if you use them correctly,” says Bill Hardekopf, CEO of Lowcards.com. “That means paying off your entire balance on time each and every month.”
Credit cards are also the safest way to pay because they have built-in fraud protection required by federal law.

We Love Our Debit Cards, But Not our Banks

The recession served as a wake-up call for many of us to get a better handle on our finances, and for a lot of folks that meant replacing one piece of plastic, the credit card, with another, the debit card.
But now, regulatory changes have made those debit cards less of a cash cow for financial institutions. That’s left many banks scrambling to introduce new fees to make up for that lost money.
The problem: Consumers are dead set against the fees, and they don’t necessarily want to start using their credit cards again, either.

Some customers may not be able to use credit cards more because they have lower credit limits than before the recession and credit crunch. Others may have found it easier to keep their spending under control if they use a debit card rather than a credit card, even if they pay the credit card off each month.

And others may find that they just aren’t getting as good of a deal on their credit cards, said Bill Hardekopf, CEO of lowcards.com. His research shows that the average advertised annual percentage rate for a credit card is now 14.05 percent, compared with 11.64 percent when the an earlier set of credit card regulations, known as the CARD Act, was passed in 2009.

Story by Allison Linn

Another major dispute on interchange fees could take place, and this one may have new, painful consequences on consumers. This time, the battle centers around the swipe fee that retailers pay on credit card transactions.

According to CNBC, there is an antitrust suit between five million retailers and Visa, MasterCard and 13 large banks, including Citi, Bank of America, Chase, Capital One, U.S. Bancorp and Wells Fargo. Retailers claim that banks and the payment systems have unfairly worked together to increase the amount of the interchange fee retailers pay on credit card transactions.

The amount that each retailer pays as a swipe fee on a credit card varies widely but the industry average is approximately 2 percent. This antitrust suit could cut that figure by three-quarters down to 0.5 percent. That would be one more devastating revenue blow to the banks as well as Visa and MasterCard, leading to billions of dollars in lost income.

Last year, the Durbin amendment went into effect on October 1, cutting the interchange fee on debit card transactions from an average of 44 cents to no more than 21 cents (plus 0.05 percent of the transaction, with the possibility of an additional cent if banks comply with fraud prevention procedures). Banks tried to make up for this lost revenue by implementing a monthly debit card fee which led to consumer outrage. Banks eventually rescinded this monthly fee.

If the retailers win this antitrust suit, it could have have a significant impact on consumers:

* Banks will lose billions of dollars at a time when they have already suffered significant cutbacks in revenue. Whenever banks lose revenue in one area, they try to make up for it in another area and that always comes at the expense of the consumer. An increase in existing fees, the introduction of new fees, and an increase in the credit card interest rates are changes that could be pushed by banks.

* A significant decrease in credit card reward programs. The lucrative cash back and airline mile rewards will likely decline. Most banks eliminated debit card rewards when the Durbin amendment passed. The same could happen with credit card programs if retailers win this suit.

* A likely decrease in attractive balance transfer offers. Currently, credit card issuers are offering 0 percent interest rates for extended periods of time in order to lure customers from their competitors. The Citi Platinum Select card offers 0 percent for 21 months; the Discover More card offers 0 percent for 18 months; and the Slate from Chase card offers 0 percent for 12 months with no balance transfer fee. If retailers win this antitrust suit, look for credit card issuers to scale back these balance transfer offers.

* On the positive side, a possible decrease in prices at store level. Retailers claimed the passage of the Durbin amendment could lead to a decrease in prices since they would no longer have to pay the high swipe fees on debit card transactions. It is difficult to see if this actually took place. However, retailers may face more pressure from consumer groups to cut prices if the interchange fee is also slashed on credit card purchases.

BANK OF AMERICA, BIG BANKS FACE MASSIVE CREDIT CARD CASE
Private antitrust litigation pitting some five million retailers against Visa, MasterCard, and 13 large banks has slipped under the radar of many analysts and investors who follow those companies, but the case may deliver a multi-billion dollar shock to bank bulls in the coming months. Estimates of the potential cost of a settlement of the antitrust case vary dramatically, from a few billion dollars into the hundreds of billions. At least as worrisome to the financial companies, according to Deutsche Bank research, is the risk that a settlement or judge’s ruling could take the 2 percent “interchange” fees banks and card companies charge retailers on credit card transactions to as low as 0.5 percent. That would equal the rate in Australia, but still be higher than the 0.3 percent charged in the European Union. The
impact of such a change would be several times as costly as the Durbin Amendment, which caps fees banks can charge on debit cards and is one of the new rules most hated by the big banks.

Story by Dan Freed for CNBC

BANKS MOVE AHEAD TO INCREASE OVERDRAFT PROTECTION FEES
The cost of not having enough money just got steeper. The median overdraft fee banks charge customers surged to $30 from $27.50 last year, according to a study released by Moebs Services. The survey looked at overdraft fees from more than 2,500 banks and credit unions of all sizes across the country. Moebs said the jump was the largest one in 30 years of collecting data, and that banks are trying to make up for money lost due to regulatory changes.

Story by Catherine New for Huffington Post

A HEALTHY OUTLOOK FOR CREDIT CARD ISSUERS
Banks released fourth quarter earnings this week and the reports show that credit cards issuers are in a much healthier position than the last few years. Consumer use of credit cards is growing, while the default and delinquency rates continue to drop. Credit card lending is entering a sweet spot where cardholders are charging more purchases to accounts once again while staying current on their payments.

PUSHING MOBILE PAYMENTS
Sprint Nextel Corp. this week tripled the number of smartphones it offers with a seldom-used technology for tap-and-go payments, as the carrier and its rivals try to convince a reluctant public to make mobile payments mainstream. So far customers and retailers have remained tepid toward the technology, called near-field communication, or NFC, prompting Sprint and others to try a different tack: touting NFC’s “side benefits,” which include mobile coupons and digital-key replacement. A chief technology officer for Verizon Wireless said he expected it to be at least three years before NFC use for payment is anything more than a niche. He said retailers are concerned their transaction fees may rise, though he said they ultimately would benefit through targeted couponing and speedier checkout. Under one scenario, a venture like Isis could absorb those fees in exchange for profit-sharing through the coupons.

Story by Greg Bensinger for the Wall Street Journal

TAXI-CAB DRIVERS RILED UP OVER CREDIT CARD PROCESSING FEE
San Francisco taxicab drivers are up in arms about being forced to absorb a 5% service charge to process credit card payments. Rules that went into effect last April shifted the fees from five of the largest cab companies in the city to drivers. Since then, several hundred drivers have protested at City Hall and some say they have been telling passengers they only take cash or claim their card equipment is broken. Dozens of drivers have begun using technology from San Francisco start-up Square, which makes a small white card reader that attaches to smartphones. Square charges merchants 2.75% to process payments on the go, but drivers must pay for their phones and data charges themselves.

Story by Geoffrey Fowler for the Wall Street Journal

ZAPPOS ATTACKED: 25 MILLIONS ACCOUNTS AT RISK
Online retailer Zappos announced that criminal hackers broke into its systems and had access to personal information on potentially more than 24 million customer accounts. That would make this the largest data breach since hackers got into Sony’s PlayStation Network last year. Zappos is emailing customers to tell them that information such as names, email addresses, billing and shipping addresses, phone numbers, the last four digits of credit card numbers, as well as encrypted versions of account passwords might have been compromised in the breach. Zappos reset all passwords to prevent further unauthorized access. It also claimed that full credit card numbers and other payment information (which is stored in a separate database), was unaffected and not accessed. Even if no full credit card numbers were stolen, the amount of information that may have been stolen is significant. Knowing such information as a name, address, phone, and just the last four numbers of credit cards (often used by companies to verify identity over the phone) could be enough for criminals to steal identities.

Story by Erik Sherman for CBS

AVOID APPLYING FOR STORE CREDIT CARDS
We’ve all been tempted by the immediate benefit–save 10% or maybe even 15% on your current purchase when you apply for the store’s credit card. But this is not a wise financial move for most consumers. Most retail stores offer credit cards with interest rates between 23% and 30%, much higher than bank-branded credit cards. According to the LowCards.com Weekly Credit Card Rate Report, the average advertised APR last week among the nation’s 1000+ credit cards was 14.04%. These cards, also known as private label credit cards, carry higher interest rates than bank-branded cards because they tend to be held by riskier borrowers with fewer credit options. But in the past year, overall credit card default rates have dropped significantly and private label cards with high rates are more appealing to issuers that need the revenue.

http://www.lowcards.com/blog/avoid-applying-for-store-credit-cards-3084/

Read the rest of this entry »

The LowCards.com Weekly Credit Card Rate Report January 19, 2012

The LowCards.com Weekly Credit Card Rate report is based on
our Complete Credit Card Index which tracks the advertised rates
of 1060 credit cards in the United States.

Our index showed that the Annual Percentage Rates for credit cards
was 14.05% which was slightly higher than 14.04% from last week.

Here are the averages from the LowCards.com Complete Credit
Card Index for the previous ten weeks:

Jan. 12  14.04%
Jan. 5    14.01
Dec. 29  14.00
Dec. 22  14.00
Dec. 15  14.05
Dec. 8   14.17
Dec. 1     14.16
Nov. 22  14.12
Nov. 17  14.14
Nov. 11  14.17

The average cash advance rate for this week was 21.47% which was
higher than 21.46% from last week.

The credit cards with the lowest interest rates in the nation this week are:

1. 5.00% Speedway SuperAmerica Credit Card
2. 5.15% First Tennessee Platinum Premier Visa
3. 6.25% Lake Michigan Credit Union Platinum Visa

The LowCards.com credit card rate report is compiled weekly using data from
1060 credit cards which are tracked on the LowCards.com website. The Complete Credit Card
index is available here:

http://www.lowcards.com/CreditCardIndex.aspx

Rates may occasionally change due to the number of cards
being tracked.

About LowCards.com: LowCards.com ( http://www.lowcards.com )
simplifies the confusion of shopping for credit cards. It is
a free, independent website that helps consumers easily
compare credit cards in a variety of categories such as
lowest rates, rewards, rebates, balance transfers and lowest
introductory rates. It also gives an unbiased ranking and
review for each card.

Banks released fourth quarter earnings this week and the reports show that credit cards issuers are in a much healthier position than the last few years.

Consumer use of credit cards is growing, while the default and delinquency rates continue to drop.

Credit card lending is entering a sweet spot where cardholders are charging more purchases to accounts once again while staying current on their payments.

This healthy outlook will probably lead to more aggressive marketing on the part of credit card issuers in 2012. We will likely see some new cards and offers, as well as an increase in the number of credit card solicitations in your mailbox, especially if you have a good or excellent credit score.

According to the Wall Street Journal, American Express credit card loans grew 4.5% from November to $53.7 billion in December. Capital One credit card loans grew 3.3% in December to $56.6 billion. Citi credit card loans were $75.9 billion in the fourth quarter, up almost 3% from the third quarter.

While these figures are positive for the issuers, so, too, are the default and delinquency rates. Charge-offs and late payments peaked in the summer of 2010 and have dropped rather steadily since then.

All six of the major credit card issuers showed declines in the delinquency rates in December, while four of the six issuers also showed drops in the charge-off rates.

* The Capital One charge-off rate dropped to 3.98% in December from 4.29% in November. The delinquency rate dropped to 3.66% in December from 3.73% the previous month.

* The American Express charge-off rate dropped to 2.3% from 2.4%. The delinquency rate dropped to 1.4% from 1.5%.

* The Citigroup charge-off rate dropped to 5.11% from 6.36%. The
delinquency rate dropped to 3.11% from 3.28%.

* The JP Morgan Chase charge-off rate dropped to 4.11% from 4.18% in November. The delinquency rate dropped to 2.48% from 2.54%.

* The Bank of America’s charge-off rate rose to 6.05% from 5.67% in November. The delinquency rate dropped to 3.82% from 3.96%.

* The Discover charge-off rate rose to 3.15% from 3.04%. The delinquency rate dropped to 2.32% from 2.43%.

Lower default rates are good for banks because they set aside less money for losses and this money can boost the bottom line.

Credit cardholders and issuers have both made changes that brought an excessive system of credit card borrowing and lending back under control. Many of the borrowers who could not pay off their debt have already defaulted, while others have diligently paid down their balances and used other forms of payment to avoid the high interest rate penalties. Credit card issuers have closed risky accounts, cut credit limits on millions of accounts, and tightened lending standards to cut their risk of defaults and late payments.

The Return of Small-Business Credit Cards
Lenders are courting small-business owners like you with growing numbers of new credit cards and generous rewards programs.

And it’s easy to see why. About 42% of small-business owners carry a credit-card balance, according to July 2011 data from the National Small Business Association in Washington, D.C.

If you are paying two different interest rates—one on purchases and another on a balance—the monthly payment that is above the minimum required could be applied to the balance with the lower interest rate first, according to Bill Hardekopf, chief executive at LowCards.com, which tracks credit card offers, including those aimed specifically at small-business owners.

In contrast, personal credit cards must apply the payment to the higher rate first to lessen the costs for the borrower.

Story by Anna Maria Andriotis for the Wall Street Journal

We’ve all been tempted by the immediate benefit–save 10% or maybe even 15% on your current purchase when you apply for the store’s credit card.

But this is not a wise financial move for most consumers.

Most retail stores offer credit cards with interest rates between 23% and 30%, much higher than bank-branded credit cards. According to the LowCards.com Weekly Credit Card Rate Report, the average advertised APR last week among the nation’s 1000+ credit cards was 14.04%.

Some cards, such as the Napa Auto Auto Care Easy Pay and the Lane Home Furnishings Credit Card, are charging a jaw-dropping 30% interest on credit card purchases. Both Goodyear and Zales have 28.99% APR on their cards; Office Depot Personal Credit Card charges 27.99%; Sears charges 25.24%; and Macy’s credit card has a 24.50% APR.

Retail cards, also known as private label credit cards, carry higher interest rates than bank-branded cards because they tend to be held by riskier borrowers with fewer credit options. Issuers suffered significant losses on these private label cards during the financial crash of 2008. In fact, General Electric and Citigroup, two of the largest issuers of private label cards, indicated that they wanted to sell off their private label business but both failed to find a buyer.

But in the past year, default rates have dropped significantly and private label cards with high rates are more appealing for banks and issuers that need the revenue. According to the Wall Street Journal, Wells Fargo is considering getting into the private label business. Packaged Facts forecasts receivables for private label card programs to reach $152 billion by 2015 (down from the pre-recession of $156 billion in 2007).

There are plenty of reasons to avoid these retail credit cards:

* Extraordinarily high interest rates applies to every applicant, no matter your credit score. If you use the card to pay for a purchase and know you can’t pay it off, you should add in the cost of your interest penalties to the price of your purchase. If your interest rate is 29.99% on a card with a $500 balance and you just make the $20 minimum monthly payment, it will take three years to pay off your balance and you will pay $295 in interest payments. Instead of paying $500 for the purchase, you are paying almost $800.

* Retail cards can pull down your credit score. Retail cards usually have low credit limits since merchants want to minimize their financial risk. If you carry a balance, this will increase your credit utilization ratio which is an important factor in your credit score.

* If you apply for multiple retail cards, this can can also pull down your credit score for two reasons. Opening these store accounts will lower the average age of the cards in your credit history, and the length of credit history accounts for 15% of your credit score. Secondly, every time you apply for a card, the issuer may pull your credit score which is a “credit inquiry”. Too many credit inquiries can lower your credit score.

TACKLE HOLIDAY DEBT NOW, BEFORE YOU FIND YOU CAN’T KEEP UP
Here they come–the post-holiday credit card bills. They’re a potent reminder of the cost of the holiday season. In just the one week before Christmas, it’s estimated that Americans spent $44 billion. How will you deal with those bills that start arriving in your mailbox this week? Don’t just set them aside and let them pile up, hoping to keep the holiday glow alive. Late fees are very costly, and will result in even more interest charges. Open the bills, take a close look–and add up what you owe. Here are three tips for dealing with your credit card bills promptly–even if you can’t pay the full balance.

Story by Terry Savage for Chicago SunTimes

CREDIT CARD ISSUERS RAMP UP COSTLY ADD-ON SERVICES
Credit card companies have ramped up their marketing of credit insurance, credit monitoring, identity theft protection services and other add-on products. The new emphasis on these add-on services reflects that credit card companies are searching for ways to squeeze more profit from their businesses. They’re challenged by new regulations that tightened restrictions on fees and interest rates in recent years. Likewise, ID theft insurance often comes with a host of restrictions. Policyholders can often only file claims on one ID theft incident per year. There is also frequently a cap on the amount of coverage, which could in some cases be less than the actual losses. Consumers should also pause before purchasing ID theft protection services, which has exploded in recent years. In August, Javelin forecast that about 25 million people would spend roughly $3.5 billion on such services in 2011.

Story by Eileen AJ Connelly for the Associated Press

CREDIT CARD DEBT INCREASES SIGNIFICANTLY
Americans are borrowing and charging much more, according to the latest Federal Reserve G19 report released this week. Consumers increased their overall borrowing by $20.4 billion in November which represents the largest increase in ten years. Many analysts believe this is a sign that Americans are feeling better about the economy. However, there could also be some red flags in this latest report. Revolving credit, the majority of which is credit card debt, increased at an annual rate of 8 1/2 percent and grew for the third straight month. The $5.6 billion jump represents the largest gain since March 2008. With the strong holiday sales, we will likely see another increase in December during the peak of the shopping season. While this increase may be good news for retailers, it also means that consumers will soon be getting credit card bills with much higher balances. Consumers can’t get lured into running up more credit card debt if they can’t afford to quickly pay it off. Increasing credit card debt is not a trend to be carried over into the new year.

TV ADVISER ON MONEY OFFERS CARD
For more than a decade, Suze Orman has exhorted her viewers on CNBC to spend less than they earn, flashed her blazing smile from the covers of best-selling books and endorsed the occasional auto loan provider and brokerage firm. Never before, however, has she built a financial product from scratch and urged her considerable number of fans to use it frequently. That changes with the introduction on Monday of her Approved card, which works a lot like a bank debit card but does not come with a checking account. It is a prepaid debit card, and companies that offer similar cards have drawn criticism for sky-high fees and poor disclosure. Ms. Orman seeks to broaden the debit card market by charging low fees and offering new services, including unlimited access to credit reports. She has put more than $1 million of her own money into the venture and is prepared to add more, since the product may not break even right away. But her move also raises so many questions that it is hard to even know where to start.

Story by Ron Lieber for the New York Times

FEE LIMITS MAY SPUR CASH-ONLY SALES
Consumers could see more $5 or $10 minimum charge rules–or at least polite requests–when using credit or debit cards this year, as merchants try to cope with an unintended effect of new federal limits on how much card issuers can charge them in so-called “swipe fees.” Those regulations already sparked an uproar when some banks tried to impose monthly debit card use fees on consumers to offset the revenue hit–only to retreat in the face of a withering backlash. But the fallout didn’t end there. In an odd twist that stems from the way swipe fees have been assessed, the new rule could prompt card issuers to actually raise fees on smaller purchases in order to offset lost revenue from lower fees on larger ones. And that means stores with a lot of small-ticket sales, such as coffee shops and gas stations, may force or coax consumers into paying with plain old cash for purchases under a certain amount, experts predict. Stores now can refuse to accept credit cards for those smaller purchases, and they may request that customers not use debit cards for them either.

Story by J. Scott Trubey & Arielle Kass for the Atlanta Journal Constitution

ISRAELI HACKER RESPONDS TO CREDIT CARD HACKING
An Israeli hacker has published details of hundreds of Saudi credit cards online and is threatening to post more in revenge for acts by Arab hackers. Last week a hacker, claiming to be from Saudi Arabia, published information about tens of thousands of Israeli credit cards online. It was one of the worst incidents of data theft in Israel. Experts say the attacks draw attention to the potential for virtual or cyber wars in the Middle East. The Israeli hacker told the newspaper he had information on an additional 300,000 working Saudi credit card numbers. “If they publish one more little detail on Israel, we will attack in full force and publish all of the credit card details,” he said. The latest attacks have underscored the hostile relationship between Israel and Saudi Arabia. They have also shown the potential for politically motivated cyber attacks to escalate in the region with Arab and Israeli hackers warning of possible future action.

Story by Yolande Knell for the BBC

STORE DEBIT CARDS ARE ON THE RISE
A store credit card isn’t the only way to get exclusive perks. Although not widely publicized, two major retailers offer store-branded debit cards that draw directly from customers’ checking accounts. The cards from Nordstrom and Target are still a rarity among retailers and haven’t yet hit the radars of most shoppers. But they also reflect the growing preference for debit cards that consumers have shown in recent years. At a time when consumers are searching for ways to keep debt in check, store debit cards could soon find a wider audience. A Nordstrom spokesman said there’s been an uptick in demand for the company’s debit card in recent months, even though the card has been available since 2005.

Read the rest of this entry »

The LowCards.com Weekly Credit Card Rate Report January 12, 2012

The LowCards.com Weekly Credit Card Rate report is based on
our Complete Credit Card Index which tracks the advertised rates
of 1060 credit cards in the United States.

Our index showed that the Annual Percentage Rates for credit cards
was 14.04% which was slightly higher than 14.01% from last week.

Here are the averages from the LowCards.com Complete Credit
Card Index for the previous ten weeks:

Jan. 5    14.01%
Dec. 29  14.00
Dec. 22  14.00
Dec. 15  14.05
Dec. 8   14.17
Dec. 1     14.16
Nov. 22  14.12
Nov. 17  14.14
Nov. 11  14.17
Nov. 4   14.12
Oct. 27  14.16

The average cash advance rate for this week was 21.46% which was
higher than 21.44% from last week.

The credit cards with the lowest interest rates in the nation this week are:

1. 5.00% Speedway SuperAmerica Credit Card
2. 5.15% First Tennessee Platinum Premier Visa
3. 6.25% Lake Michigan Credit Union Platinum Visa

The LowCards.com credit card rate report is compiled weekly using data from
1060 credit cards which are tracked on the LowCards.com website. The Complete Credit Card
index is available here:

http://www.lowcards.com/CreditCardIndex.aspx

Rates may occasionally change due to the number of cards
being tracked.

About LowCards.com: LowCards.com ( http://www.lowcards.com )
simplifies the confusion of shopping for credit cards. It is
a free, independent website that helps consumers easily
compare credit cards in a variety of categories such as
lowest rates, rewards, rebates, balance transfers and lowest
introductory rates. It also gives an unbiased ranking and
review for each card.

The Truth Behind Suze Orman’s Debit Card

Financial advisor Suze Orman has created a new prepaid debit card and she wants you — and everyone else — to buy it. The Approved Prepaid MasterCard is promoted as “better than cash” and “safer than cash.”
Like other prepaid cards, you can’t go into debt because you can only spend the money that’s loaded on the card.

Bill Hardekopf, CEO of LowCards.com, says the Approved card has some nice benefits and fewer fees than some cards.
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“If you have to get a prepaid card, Orman’s card is a very good card,” Hardekopf says. But we still believe that a debit card that’s tied to your checking account is a better alternative than any prepaid card.”

Americans are borrowing and charging much more, according to the latest Federal Reserve G19 report released yesterday.

Consumers increased their overall borrowing by $20.4 billion in November which represents the largest increase in ten years. Many analysts believe this is a sign that Americans are feeling better about the economy.

However, there could also be some red flags in this latest report.

Revolving credit, the majority of which is credit card debt, increased at an annual rate of 8 1/2 percent and grew for the third straight month. The $5.6 billion jump represents the largest gain since March 2008.

This is a big jump in credit card debt, and these are November figures. With the strong holiday sales, we will likely see another increase in December during the peak of the shopping season. While this increase may be good news for retailers, it also means that consumers will soon be getting credit card bills with much higher balances. Consumers can’t get lured into running up more credit card debt if they can’t afford to quickly pay it off. Increasing credit card debt is not a trend to be carried over into the new year.

Here are six tips for paying down the debt on your credit card:

1. Get an honest assessment of how much you owe for all credit cards debts. It may have been easier to pay the minimums without looking at the total amount that you owe, but misleading yourself only makes it worse. Write down a debt summary that includes the creditor, monthly payment, interest, balance due, credit limit and due date for each loan.

2. Pay more than your minimum payment. Your minimum payment is usually only 2-5% of your balance. At this rate, it will take years to pay off your debt. Try to pay at least twice the amount of your minimum payment every month.

3. Pay off the card with the highest APR first. Continue to pay at least the minimum on your other cards until you pay off the card with the highest rate. Then focus your effort on the card next in line. After you pay off the card, keep it open, especially your oldest cards. Losing this available credit can lower your debt utilization ratio which could lower your credit score.

4. Consider transferring your balance to a card with a lower rate. If your rate is above 15%, look for a card that offers 0% for at least 12 months. You will need to determine if the interest payments you save outweigh the fee you will pay on the amount you transfer (usually 3-4%). To take full advantage of this 0% introductory offer, don’t charge anything more on this card and try to pay off the entire balance during that introductory time period. When comparing cards for a balance transfer, also look at the ongoing interest rates. If you are unable to pay off the balance before the introductory period ends, you will then pay the ongoing interest rate. Another consideration is that the credit card issuer may only accept a portion of the amount you want to transfer because, depending on your credit limit, the issuer will want to leave room for new charges. The best offers will typically be given to applicants with a credit score in the mid-700s. If you have a score less than this, you may receive a shorter introductory period, or your application may be declined.

5. If you have a credit card balance, stop using it for anything other than necessities. Use cash instead. If you carry a balance, you are paying interest for every purchase, including clothing, entertainment or dinner. Factor that in to each purchase. Paying with cash will not only save money on interest, but it will also reduce the amount you spend.

6. Pay your bills on time, every time. Not only do you have to pay a late fee, but late payments can also appear on credit reports. Negative information like this can result in lower credit scores and higher interest payments.

Terry Savage gives ways to pay down holiday debt. Recommends LowCards to find cards for balance transfers

It didn’t work for the Kardashians. Perhaps it will for Suze Orman.

Orman is the latest celebrity to jump into the prepaid card market. As a well-known financial adviser with a strong following, she just may have the clout to capture a significant portion of the market.

Prepaid cards have historically targeted consumers with poor credit who could not qualify for a standard credit card. These cards were easy to get, but were loaded with exorbitant fees. That began to change last year when American Express introduced its own prepaid card with fewer fees.

There are some nice advantages to Orman’s Approved Card. It has fewer fees than most prepaid cards: there are no loading fees, no fee to transfer money to another card, and no fee to make electronic bill payments. The card comes with free identity theft protection and also gives the cardholder unlimited credit reports and scores from TransUnion, one of the three credit reporting agencies.

As with any card, consumers need to read the fine print to be aware of the fees that will be charged.

The Approved Card costs $3 to purchase and then has a monthly fee after the first month of $3. ATM withdrawals are free each month as long as they are made from the Allpoint network and you make a direct deposit of at least $20 each month. Otherwise, the ATM withdrawals will cost $2 per transaction.

If you get cash back when making a purchase at a retail store, that will cost you $2.

Your first call each month to a customer service representative will be free, but subsequent calls will be $2.

The opportunity to receive unlimited credit reports and scores from TransUnion can be beneficial for consumers, especially those trying to build their credit. However, the score that will be available will be the TransUnion score, not the FICO score that most banks use when deciding a consumer’s credit worthiness. Orman says TransUnion plans to collect Approved Card user data to determine if it should include prepaid card data on its credit reports in the future.

A debit card linked to your checking account is much better than a prepaid card for most consumers. A debit card will not have the monthly or usage fees that are common with prepaid cards, even this new one from Suze Orman. But for people who don’t have a bank account, or may have some credit problems, her card may be a good alternative.