Consumers might also consider linking their checking account to either a savings account or a credit card, says Bill Hardekopf, the chief executive of LowCards.com, a credit-card comparison site. There is usually a $5 to $10 fee for dipping into another account, but for customers who pay off their credit-card balance each month, this can be a good option, he says.
On Monday, the Federal Reserve introduced a new website intended to create a transparent database where consumers can compare terms and rates for more than 300 credit card issuers.
“The database will help consumers compare credit card agreements and find a card that best suits their personal finance needs,” said a statement from the Fed. The database is part of the CARD Act which requires card issuers to post their written agreements on their Web sites. The new site can be found here: http://www.federalreserve.gov/creditcardagreements/
While the concept is to be commended, the website itself falls short of becoming a helpful tool for credit card shoppers. There are several factors that limit the site’s effectiveness:
1) The Fed has simply collected the legal agreements and made them available online. It does not simplify the fine print of the terms and conditions so consumers have to sift through the long, difficult legalese of each issuer’s document.
2) The site only lists issuers, not specific credit cards. Hence, if a consumer wants to find information for a specific card from an issuer that markets many cards, the consumer needs to click on to the numerous links for that issuer in order to find that specific card’s information.
3) Consumers cannot sort or search by APR, annual fee, or other factors that are most important in selecting or comparing credit cards.
4) The database will only be updated every three months. Issuers can
make changes in rates and terms very often so the database can quickly become outdated.
5) The database does not include issuers with fewer than 10,000 open accounts and it does not include agreements on cards that are no longer being offered. If you are an existing cardholder with one of these
accounts, you will not be able to find your card’s information on this website.
“The database is a good idea because the terms and conditions are the meat of the credit card offer and consumers should read through these before they apply for a credit card. Unfortunately, the fine print is still so hard to understand, and many consumers will quickly give up,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card
Guidebook. “This website provides some helpful information, but it may be overwhelming to the people who need it most. It would be nice if banks and issuers could write these credit card agreements in a language that we could all understand.”
There are easier, more thorough sources for consumers to compare credit card offers. The LowCards Complete Credit Card Index is more comprehensive and much easier to understand. It lists over 1,000 credit cards by name and provides the ongoing APR, grace period and annual fees in one easy-to-see chart that can be sorted by the desired search. That Index can be found here:
http://www.lowcards.com/CreditCardIndex.aspx
The LowCards.com Weekly Credit Card Rate Report May 27, 2010
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 13.63% which was the same as last week.
Here are the averages from the LowCards.com Complete Credit
Card Index for the previous ten weeks:
May 20 13.63%
May 13 13.62
May 6 13.57
April 29 13.56
April 22 13.55
April 15 13.57
April 8 13.78
April 1 13.72
Mar. 25 13.72
Mar. 18 13.75
Mar. 11 13.72
The average cash advance rate for this week was 21.50%
which was the same as last week.
The credit cards with the lowest interest rates in the nation this week are:
1. 5.15% First Tennessee Platinum Premier Visa
2. 6.15% Illinois State Police Platinum
3. 7.15% Navy Federal Credit Union
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 LowCards.com Complete Credit Card Index
( http://www.lowcards.com/CreditCardIndex.aspx ) is the most
objective and comprehensive resource on the Internet which
allows consumers to compare rates for all 1060 credit cards
offered in this country. Created by Hampton & Associates,
the company has been analyzing the credit card industry
and supplying objective websites on various consumer
expenses for eight years.
5 Ways to Curb Bank Overdraft Fees
“It’s the kind of fee that will come back and bite you,” says Bill Hardekopf, the chief executive of LowCards.com, a credit-card comparison site.
Changes in Bank, Debit Card Fees May Have Limited Impact
Stores will either “increase profits or increase customer service,” predicts Bill Hardekopf, CEO of the free consumer credit card website LowCards.com. “I don’t think consumers will notice a difference at the retail level.”
Credit Card Database is Heroic, and Mystifying
A number of Web sites have sprung up in recent years that boil down the terms and conditions into language most consumers can understand. Still, several people who run such sites said they saw value in the Fed’s database, in case a consumer misplaced the terms and conditions or had a dispute with the issuer.
“The terms and conditions of a credit card are really what one needs in order to shop for a credit cards,” said Bill Hardekopf, who runs one such site, LowCards.com. “You can’t just look at the advertised slogan.”
But he added: “Most definitely they are difficult to read. Not just difficult, they are boring.”
Several recently released studies confirm that consumers are making substantial strides in paying their credit card balances.
A TransUnion study shows the average debt per credit card consumer is now $5,165, down 11% from the $5,776 of year ago and almost 5% from the $5,434 in fourth quarter of 2009.
Equifax data shows the late payments on bank issued credit cards were down 6% in March and 17% from last year.
Finally, Standard & Poor’s Ratings Service showed the number of seriously delinquent credit cards fell in March for the first time since last August. Accounts at least 90 days behind dropped to 3.0% from 3.2% in February.
What could be the reason for these changes?
The National Foundation for Credit Counseling gives some credit for these changes to the CARD Act. One provision that went into effect in February requires issuers to print on every credit card statement the length of time it will take to get out of debt if the consumer only pays the minimum amount due. 25% of the 2,000 respondents in a recent NFCC survey said that disclosure encouraged them to pay more each month. Standard Poor’s data found the percentage of an accountholder’s balance paid in March jumped to 19.5% from 8.2% in February.
Issuers are also seeing the results of these changes. The six major credit card companies released delinquency and default data this week. Every major issuer reported small drops in the delinquency rates from March to April:
March April
Bank of America 7.07% 6.73%
Citigroup 6.06 5.85
Discover 5.39 5.20
Capital One 5.30 5.07
Chase 4.51 4.40
American Express 3.30 3.10
Five of the six issuers reported a drop in the charge-off rate from
March to April; only Bank of America reported an increase:
March April
Bank of America 12.54% 12.71%
Citigroup 11.55 11.23
Capital One 10.87 9.68
Chase 9.51 9.03
Discover 8.51 8.42
American Express 7.50 6.70
These declines, though small, are good news for issuers because defaults represent large losses. According to R.K. Hammer, credit card charge-offs increased 59% in 2009, accounting for $89 billion in losses for banks in the United States. Industry wide, the charge-off rate hit a high of 10.10% in the third quarter of last year according to the Federal Reserve.
“It is encouraging to find multiple sources that show consumers are measurably reducing their credit card debt. Issuers have discontinued some accounts, cut credit limits and tightened lending standards–all of this has contributed to driving down credit card debt and the risk of default,” says Bill Hardekopf, CEO of LowCards.com and author
of The Credit Card Guidebook. “What happens next will be a key to continued recovery. Will consumers continue to pay down debt even during a time of recovery? Have they changed their ways or switched to another form of payment? Will issuers loosen their standards for lending and try to grow their credit card revenue again?”
The Senate isn’t quite finished regulating banks and the credit card industry.
Last week, the Senate passed an amendment sponsored by Senator Dick Durbin (D-Ill.) that could reduce interchange fees that card processors (Visa/Mastercard) charge to merchants and allow stores to give customers discounts for paying with cash, check or debit cards.
The Durbin amendment is good news for retailers, but bad news for issuers, processors such as Visa and MasterCard, and possibly some cardholders.
“The CARD Act reminded us that regulations have consequences. When the government adds new rules and regulations that cost banks money, banks find ways to charge the consumer more in other areas to make up the lost revenue,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. “Banks warned that the CARD Act would bring higher rates and fees. And they did. Issuers weren’t bluffing then and they aren’t bluffing now. If this passes, consumers may not be happy with what the regulations mean for them.”
The interchange fee is a stealth fee that receives little attention from the average consumer, but it provides important revenue to banks. Each time a consumer uses a credit card or debit card to make a purchase, the bank and card processor charge a fee that is approximately 2% of the purchase price.
If a consumer makes a $100 purchase with a debit card, the retailer gets approximately $98. The remaining $2 is the interchange fee and is divided three ways: about $1.75 goes to the card issuing bank, $0.18 goes to the Visa or MasterCard association, and the remaining $0.07 goes to the retailer’s merchant account provider.
In 2008, banks collected an estimated $50 billion in interchange fees. The interchange fees provided vital revenue for issuers during a time of high defaults and losses.
According to The Nilson Report, consumers made 36 billion debit and prepaid card transactions and 20 billion credit card transactions in 2009. Last year, the interchange fees averaged 2.23% for American Express, 2.06% for Visa and MasterCard and 1.88% for Discover.
Retailers have lobbied Congress against the interchange fee for years, complaining that the fee is too high.
Provisions of the Durbin Amendment
The amendment will allow stores to give customers discounts for paying with cash, check or debit cards. The seller can also decline credit cards for small dollar purchases (interchange fees exceed profits on some sales).
The amendment will direct the Federal Reserve to issue rules to ensure that debit interchange fees are “reasonable and proportional” to processing costs. It does not give the Fed the power to set interchange fees.
“Keep in mind that ‘reasonable and proportional’ is open-ended. It does not put a cap on the fee,” says Hardekopf.
Cost of Reform for Cardholders
Banks say they charge the interchange fee to cover operating costs to process credit card transactions, to maintain the processing network, and to protect against fraud. They warn that if the interchange fees are cut, they will have to find other ways to recoup these costs.
Interchange fees are used to underwrite “free” rewards. If the funding dries up, so could the benefits for many cardholders.
Retailers will save money, but will they pass these savings onto consumers?
“It would be surprising if retailers significantly cut prices because of this. Many retailers and merchants are also struggling and need every dime they can get. If consumers currently don’t know they are paying this fee, there will probably not be a large outcry if the price doesn’t change,” says Hardekopf. “Consumers may find the biggest savings with merchants that give discounts for alternative payments.”
Effect on Smaller Banks and Credit Unions
The amendment’s debit fee requirement exempts banks and credit unions with assets under $10 billion (99% of banks and credit unions), allowing them to collect the higher fee. However, these cards will cost more for merchants to accept. While merchants have to accept all cards in the Visa and MasterCard network, they can set a higher minimum payment for a community bank-issued card, encouraging consumers to use another card or form of payment. This could hurt the smaller banks and credit unions because the interchange fees are an important source of revenue for their own cards, which typically charge lower rates and fees than the big banks.
Results of Similar Legislation
In 2003, Australia’s central bank required that the interchange fee be cut in half, to less than 1 cent. According to the New York Times, banks and credit card companies claim the lower fees have cost them about $1 billion Australian dollars annually, or $919 million, and there have been several changes in Australia’s credit card industry. Banks have reduced credit card reward programs. Banks now require customers to pay their credit card bill faster. Annual fees have increased for reward programs.
The Senate could vote on the Financial Reform Bill on Wednesday. If it passes, leaders of the Senate and the House (which has passed its own bill in December 2009 that does not include these amendment) will meet the following week to negotiate differences between the two bills. The Senate and House would each vote one more time on this compromise bill before President Obama signs it.
The LowCards.com Weekly Credit Card Rate Report May 20, 2010
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 13.63% which was higher than last week at 13.62%.
Here are the averages from the LowCards.com Complete Credit
Card Index for the previous ten weeks:
May 13 13.62%
May 6 13.57
April 29 13.56
April 22 13.55
April 15 13.57
April 8 13.78
April 1 13.72
Mar. 25 13.72
Mar. 18 13.75
Mar. 11 13.72
The average cash advance rate for this week was 21.50%
which was lower than last week at 21.56%.
The credit cards with the lowest interest rates in the nation this week are:
1. 5.15% First Tennessee Platinum Premier Visa
2. 6.15% Illinois State Police Platinum
3. 7.15% Navy Federal Credit Union
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 LowCards.com Complete Credit Card Index
( http://www.lowcards.com/CreditCardIndex.aspx ) is the most
objective and comprehensive resource on the Internet which
allows consumers to compare rates for all 1060 credit cards
offered in this country. Created by Hampton & Associates,
the company has been analyzing the credit card industry
and supplying objective websites on various consumer
expenses for eight years.
Watch Out for a Credit Card Act Loophole
And as we reported in a February Bucks post on “What the Credit Card Act Means for You,” things may get worse if credit card issuers decide to increase minimum payments, a prediction of Bill Hardekopf of LowCards.com.
Credit-Card Reward Programs May Cost You
“It’s only smart to consider getting a rewards card if you completely pay off your balance each and every month on time,” said Bill Hardekopf, the founder of LowCards.com. “Otherwise, the rewards you get will be more than eaten up by the interest you pay.”
LOWCARDS.COM WEEKLY CREDIT CARD UPDATE
A summary of this week’s top credit card stories.
Contact: Bill Hardekopf, billh@LowCards.com
SENATE VOTES TO CURB DEBIT CARD FEES
The Senate, voting 64-33, moved Thursday to curtail the “swipe fees” that
financial companies impose on debit transactions, underscoring the
increasingly populist tint of pending legislation that would overhaul
regulation of the financial services sector. Under the amendment
offered by Senator Richard Durbin (D., Ill.), the Federal Reserve
would be authorized to regulate the fees charged to businesses by
financial firms on debit cards, and empower merchants to offer
discounts to customers if they pay with cash, check or a debit card. The
provision wasn’t in the financial regulation bill that passed the House of
Representatives in December, and the issue is likely to be hotly debated in
coming congressional negotiations over the final regulatory overhaul bill.
Senate Democratic leaders hope to pursue next week final passage of the
broader bill, which is designed to address the root causes of the 2008
financial crisis.
Story by Greg Hitt and Michael R. Crittenden for the Wall Street Journal.
http://online.wsj.com/article/SB10001424052748704635204575242501678773926.html?mod=rss_Today’s_Most_Popular
BANKS HEMORRHAGE CASH WITH CARDS
WANTING TO BE AMERICAN EXPRESS
Once interest rates were allowed to rise as high as banks could push them,
credit cards became a ticket to enormous profit. In the ten years that ended
on December 31, 2007, credit card issuers together earned more than
$50 billion. At JPMorgan Chase, cards accounted for 20 percent of both
revenue and profit in 2007. Then the harshest economic decline since the
1930s crushed the job market, and a record number of cardholders
stopped paying their bills. The three biggest card-issuing banks lost at
least $7.3 billion on cards in 2009. Bank of America, after earning
$4.3 billion on cards in 2007–a third of its total profit–sustained
a $5.5 billion loss in 2009. JPMorgan Chase lost $2.2 billion last year
on cards and, in mid-April, reported a $303 million loss for the first
quarter. They’re all chasing American Express, which has long catered
to a wealthier group. The firm made $2.1 billion in 2009, helped by
expense cuts and a default rate that was among the lowest in the big
six. The company’s stock was the top performer in the Dow Jones
Industrial Average in 2009, returning 118 percent.
Story by Lisa Kassenaar for Bloomberg News
http://www.bloomberg.com/apps/news?pid=20601109&sid=alqIrcJYUnP8&pos=11
CREDIT CARD MAIL SOLICITATIONS INCREASE 29%
As the economy recovers, households are receiving substantially more credit
card offers in the mail. During the first quarter of 2010, US households
received 481.3 million credit card offers, a 29% increase from the 372.4
million offers mailed during the same period a year ago, according to the
latest study by Synovate Mail Monitor. Some credit card issuers, such as
Capital One and HSBC, more than doubled their mail offers during this
quarter versus the prior quarter. While the total offers represent a
substantial increase over recent volume, the figures are far below the
record 1.58 billion pieces sent in the third quarter of 2005.
http://www.lowcards.com/blog/category/credit-card-press-releases/
SECURED CREDIT CARD BANK STOPS ISSUING NEW CARDS
A small New Jersey bank that specializes in credit cards for people with
damaged credit histories has shut down its card program because of
regulatory problems. New Millennium Bank, a three-branch bank based in New
Brunswick, said Monday in its first-quarter earnings report that it has
temporarily stopped accepting and processing applications and issuing new
cards as the result of an agreement with the Federal Deposit Insurance Corp.
The bank previously advertised its cards on several credit card Web sites
and issued cards nationwide. The cards offered in this end of the market
have been frequently dubbed “fee harvester” cards for their high fees,
particularly application processing fees and annual fees, which in the past
often ate up most of the credit limit. These dubious practices earned
secured cards a special provision in the federal credit card legislation
that took effect in February, which limits fees in the first year to
25 percent of the account’s opening credit limit.
Story by Eileen AJ Connelly for the AP
http://www.usatoday.com/money/industries/banking/2010-05-10-millennium-bank-credit-cards_N.htm
LOWCARDS.COM WEEKLY CREDIT CARD RATE REPORT
Based on the 1000+ cards in the Lowcards.com Complete Credit Card Index,
the average advertised APR for credit cards this week increased for the
third consecutive week to 13.62%, up from the 13.56% last week. Six
months ago, the average was 12.81%. One year ago, the average was 11.66%.
http://www.lowcards.com/ratereport/credit-card-rate-report.asp
WILL PEOPLE FLOCK TO POST CREDIT CARD
PURCHASES? SWIPELY SAYS SO
The latest “social payments” website to draw strong investor interest is
Swipely Inc., a company that enables people to automatically post
information about their purchases and discuss the purchases with their
friends. Like Blippy, Swipely lets people connect their credit cards to the
service so that they can post their purchases. But unlike Blippy, Swipely
does not post the amount that was spent. With Swipely, people who log in can
see the purchases that were imported and then decide which ones they want to
post to the site. They can also decide to autopost everything if they
prefer. People can also email their receipts to Swipely to be posted or have
Swipely automatically gather information from their email receipts from
selected merchants.
Story by Tomio Geron for the Wall Street Journal
http://blogs.wsj.com/venturecapital/2010/05/11/will-people-really-flock-to-post-their-credit-card-purchases-online/?mod=rss_WSJBlog
CREDIT CARD GLITCH SNARES NEARLY
12,000 CUSTOMERS OF STATE FARM BANK
Nearly 12,000 State Farm Bank customers with Visa-branded credit cards
have seen unauthorized and sometimes huge charges on their accounts
recently, though the bank is working “feverishly” to fix the problem. So
far, nearly 80 percent of the affected customers have had their accounts
corrected, said company spokesman Kip Diggs. The bank’s “glitch” came
to light between Wednesday and Friday of last week. Some credit card
accounts had incorrect payment fees applied. Some check card accounts
showed incorrect debits.
Story by Tony Snells for the Commercial Appeal.
http://www.commercialappeal.com/news/2010/may/11/credit-card-glitch-snares-nearly-12000-customers-s/
The LowCards.com Weekly Credit Card Rate Report May 13, 2010
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 13.62% which was higher than last week at 13.57%.
Here are the averages from the LowCards.com Complete Credit
Card Index for the previous ten weeks:
May 6 13.57%
April 29 13.56%
April 22 13.55%
April 15 13.57
April 8 13.78
April 1 13.72
Mar. 25 13.72
Mar. 18 13.75
Mar. 11 13.72
Mar. 4 13.64
Feb. 25 13.62
Feb. 18 13.54
The average cash advance rate for this week was 21.56%
which was lower than last week at 21.60%.
The credit cards with the lowest interest rates in the nation this week are:
1. 5.15% First Tennessee Platinum Premier Visa
2. 6.15% Illinois State Police Platinum
3. 7.15% Navy Federal Credit Union
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 LowCards.com Complete Credit Card Index
( http://www.lowcards.com/CreditCardIndex.aspx ) is the most
objective and comprehensive resource on the Internet which
allows consumers to compare rates for all 1060 credit cards
offered in this country. Created by Hampton & Associates,
the company has been analyzing the credit card industry
and supplying objective websites on various consumer
expenses for eight years.
As the economy recovers, households are receiving substantially more credit card offers in the mail.
During the first quarter of 2010, US households received 481.3 million credit card offers, a 29% increase from the 372.4 million offers mailed during the same period a year ago, according to the latest study by Synovate Mail Monitor. Some credit card issuers, such as Capital One and HSBC, more than doubled their mail offers during this quarter versus the prior quarter.
While the total offers represent a substantial increase over recent volume, the figures are far below the record 1.58 billion pieces sent in the third quarter of 2005.
“Direct mail is an expensive advertising vehicle, and since credit card issuers are investing more money in this area, it is a significant sign that business is turning around for them,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. “While this is a good sign for credit card issuers, many households would probably rather avoid the return of unsolicited credit card offers.”
The study shows direct mail offers are also becoming more widespread for soliciting new debt as more issuers offer attractive introductory interest rates. 65% of the total offers mailed in the first quarter had an introductory purchase APR compared to just 58% in the final quarter of 2009.
How Issuers Find Your Information:
Even if you don’t want a new credit card but you have a good credit score, issuers are determined to get an offer in front of you any way that they can. Since direct mail is successful, they will buy lists of names and addresses.
“Many businesses and non-profits that require your name and address may sell your information to a creditor for their own revenue,” says Hardekopf. “Credit card issuers buy the names and addresses. They usually don’t cross-reference these lists to see if you are under 21, alive, or even human. That is why you have instances of children and even pets getting a credit card offer.”
Credit bureaus can also sell your name and address to lenders and direct marketers. If you get a pre-screened/pre-approved loan offer, you have already met some of the criteria that the issuer submitted when it purchased a list of eligible borrowers from the credit reporting bureaus. Credit bureaus do not release specific information on a consumer but provide lists based on consumer characteristics. The CARD Act does require lenders to exclude anyone who is under the age of 21 from the pre-screened list.
In the past, some colleges and universities shared their alumni lists with banks as part of affinity credit card programs. This proved to be a substantial fundraiser for schools. Most lists targeted alumni and excluded current students.
If You Are Interested in the Offer:
* Read the terms and conditions carefully. Know how long the grace period is. Look at all of the fees–annual fee, late fee, balance transfer fee, cash advance fee, and especially if you travel a great deal, the foreign transaction fee.
* Look at the range of APRs in the terms and conditions. If you have average credit, you probably won’t qualify for the lowest rate. Remember that these rates are variable and will increase if the Federal Reserve raises interest rates. If it has an introductory rate, know what interest rate you will pay once this intro period ends.
* Compare the offer with other cards. The bold print may say the offer is a great deal, but that doesn’t mean it is the best credit card for you. The
LowCards Complete Credit Card Index ( http://www.lowcards.com/CreditCardIndex.aspx ) compares interest rates, grace periods and annual fees for over 1,000 credit cards.
* If you don’t want the card, shred the application and throw it away.
How to Reduce the Solicitations:
“If you have a good credit score and good payment history, it is difficult to stop the banks from courting you. But you can put a stop to some of the direct mail,” says Hardekopf.
The credit bureaus offer a toll-free number that enables you to “opt-out” of having pre-approved credit offers sent to you for five years. Call 1-888-5-OPTOUT (567-8688) or visit www.optoutprescreen.com for more information. When you call, you’ll be asked for personal information, including your home telephone number, your name, and your social security number. The bureaus will keep your information confidential and will use it only to process your request to opt out of receiving pre-screened offers of credit.
You can also send a letter to the three major credit bureaus (Experian, TransUnion, Equifax) to notify them that you don’t want your personal information distributed for promotional purposes.
LOWCARDS.COM WEEKLY CREDIT CARD UPDATE
A summary of this week’s top credit card stories.
Contact: Bill Hardekopf, billh@LowCards.com
FRUGALITY AMONG CONSUMERS IS OUTLIVING THE RECESSION
Even as the economic recovery plods ahead, many American consumers are
refusing to come along. They’re not spending freely–and they have no plans
to. Many of them have steady income. They aren’t saddled by high debts.
They don’t fear losing their jobs. Yet despite recent gains, they’ve lost so
much household wealth that they’re far more cautious about spending than
before the recession. Their behavior suggests that the Great Recession
may have bred a new frugality that will endure well into the recovery.
And because consumers fuel about 70 percent of the economy, their
tightfisted habits means the rebound could stay unusually sluggish.
Story by Jeannine Aversa and Bernard Condon for the AP.
http://www.google.com/hostednews/ap/article/ALeqM5g7KO8ZME7dMMPR6r58Wq0bYuUPuwD9FERJ780
BANKS MAINTAINING STRINGENT LENDING STANDARDS
The Federal Reserve’s quarterly Senior Loan Officer Opinion Survey on
Bank Lending Practices released this week shows that the majority of banks
are in no hurry to ease their lending requirements and are maintaining their
stringent standards for lending. The April survey reveals some banks made
further decreases in credit lines and tightened credit standards on new
credit card applications.
http://www.lowcards.com/blog/banks-maintaining-stringent-lending-standards/
SENATORS TAKE AIM AT $40 BILLION OF CREDIT CARD FEES
Visa and MasterCard faced a renewed threat to one of the credit-card
industry’s biggest revenue sources after Senator Patrick Leahy backed
legislation to help merchants cut the cost of accepting payment cards.
Leahy, a Vermont Democrat and chairman of the Senate Judiciary Committee,
will co-sponsor a measure by Senate majority whip Dick Durbin of Illinois
that lets merchants offer customers discounts for using cash or a particular
card brand. The measure, which is planned as an amendment to the financial
industry overhaul bill, also would allow retailers to set maximum or minimum
transaction amounts for payment cards.
Story by Peter Eichenbaum for Bloomberg.
http://www.businessweek.com/news/2010-05-04/senators-take-aim-at-40-billion-of-credit-card-fees-update2-.html
PLASTIC MAKES A COMEBACK: MASTERCARD PROFITS SURGE
With more shoppers feeling comfortable enough about the economy and their
jobs to reach for the plastic again, MasterCard’s quarterly profits jumped
24% as debit card use soared. An increase in travel-related spending gave an
extra boost to MasterCard, which earns additional fees when consumers use
their cards abroad. The global charge card giant had profits of $455
million, with revenues growing 13% to $1.1 billion. MasterCard said about 5%
of that gain came from raising the prices it charges to merchants for
processing transactions. It also enjoyed an 11% boost in international
business.
DELTA WAIVES FIRST BAG FEE FOR SKYMILES CARDHOLDERS
Starting June 1, Delta SkyMiles credit cardmembers will receive a free first
checked bag on every Delta flight–up to a $50 savings per person on a
round-trip ticket–available for up to nine people in the same reservation.
The new Card benefit applies to up to nine people traveling in the same
reservation including the Cardmember. A family of four could save up to $200
when flying round-trip. Cardmembers receive a first checked bag fee waiver
upon check-in.
Story by Kelly Yamanouchi for the Atlanta Journal Constitution
http://www.ajc.com/business/delta-waives-first-checked-520302.html
SHOULD STATES IMPOSE USURY LAWS,
LOWER CAPS ON INTEREST RATES?
With the era of cheap credit considered over, lenders are increasing credit
card rates, particularly on customers they deem risky, and borrowers are
finding themselves in a hole that will be tough to dig out of. It has shed
light on a morality play: Americans are struggling with their inner saint
who wants to lend a hand in a time of need and their inner capitalist who
wants to make money. And it has consumer advocates calling on the government
to rein in what they see as lending practices that are so egregious that
consumers can spend their entire lives paying off their debts.
Story by Michael Diamond for Asbury Park Press.
http://www.app.com/article/20100502/NEWS03/5020337/Should-states-impose-tougher-usury-laws-lower-caps-on-interest
LOWCARDS.COM WEEKLY CREDIT CARD RATE REPORT
Based on the 1000+ cards in the LowCards.com Complete Credit Card Index,
the average advertised APR for credit cards this week increased to 13.57%,
up slightly from the 13.56% last week. Six months ago, the average was
12.69%. One year ago, the average was 11.65%.
http://www.lowcards.com/ratereport/credit-card-rate-report.asp
10 QUESTIONS TO TEST YOUR CREDIT CARD I.Q.
Take this short quiz and find out some important information about using
and managing your credit cards.
Continental and United announced their merger today. Reward card and frequent flyer members should prepare for changes.
Both companies are describing this merger as good for members of their frequent flyer programs. According to their official announcement, “the merger will create the industry’s leading frequent flyer program, providing more opportunities for more customers to earn and redeem more miles in more places worldwide with more partners.”
It is too soon to predict if frequent flyer members will benefit from this merger. Combining the two airlines will cut costs for airlines but it will likely reduce the number of routes and seats for travelers. This could lead to higher prices for tickets and less availability. Obviously, the seats go to the paying flyers first, so it is going to be even more difficult to use your miles to book the flight that you want. Consumers may also have to earn and redeem more miles as the ticket prices increase.
Possible Changes for Airline Reward Cards:
Both airlines have their own credit card rewards program (the Continental World MasterCard and the United Mileage Plus Signature Visa) and cardholders will continue to receive mileage credit when using them. After the merger goes into effect, some cardholders will have to get a replacement for the new airlines. After Northwest Airlines merged with Delta, the Delta Skymiles card replaced the Northwest Airlines Worldperks Visa.
It is probable that the new reward card will cost more for some customers than current card because the two current cards are different.
The Continental World MasterCard offers 25,000 bonus miles after the first purchase. It offers 2 miles per $1 spent when you purchase tickets from Continental using the card. It offers 1 mile per $1 spent on all other purchases. The annual fee is $85. Additional miles cost $32 per 1,000 miles.
The Mileage Plus Signature offers 30,000 bonus miles after you spend $250. It offers 1 mile per $1 spent. The annual fee is $65. Additional miles cost $67.25 per 1,000 miles with a $35 processing fee.
Switching to the replacement card may be relatively easy for most cardholders because Chase issued both cards. However, this is a good time to re-evaluate your reward cards. Do you use the points? Have they been accumulating for years and you still aren’t close to a free ticket. For the average consumer, it takes several years to accumulate enough points for a free ticket and this could possibly get more difficult with the merger. If it takes over two years to earn a ticket, consider switching to another card that allows you to use points for cash, hotels, or retail purchases. You can redeem at much smaller increments and use the points faster.
The Merging of Frequent Flyer Programs:
The OnePass and Mileage Plus programs will continue to operate independently until the merger is completed. Miles in both programs are still valid and able to be used according to existing program rules. Eventually, a new frequent flyer program will blend both programs together.
Miles held in both programs will be combined together, more than likely on a 1:1 basis. If you participate in both programs, this merger could allow you to combine points from both programs and accelerate your path to a ticket.
Pay attention to the notices you receive that describe the changes. It is possible that the new terms could change your frequent flyer points. If you have enough points for a free ticket, the best idea may be to protect yourself and use them now.
The Federal Reserve’s quarterly Senior Loan Officer Opinion Survey on Bank Lending Practices released this week shows that lending remained tight for consumer loans over the past three months.
The April survey of 56 domestic banks and 23 U.S. branches and agencies of foreign banks shows that the majority of banks are in no hurry to ease their lending requirements and are maintaining their stringent standards for lending. Some banks made further decreases in credit lines and tightened credit standards on new credit card applications.
“This helps explain why revolving credit, which is primarily credit card usage, fell for the 17th consecutive month in February. Revolving credit has fallen by almost $100 billion since the fourth quarter of 2008,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. “Issuers acted quickly to protect themselves from additional risk and loss during the economic downturn. Tightened credit standards, higher credit scores and lower limits are currently the parameters for lending by credit card issuers.”
According to the survey:
* 15.2% said credit standards for credit card applications tightened somewhat. 78.8% said standards remained unchanged.
* 26.5% have tightened credit limits (35% of large banks). 64.7% said limits remained basically unchanged.
* 11.8% increased the minimum required credit score. 85.3% said credit score requirements remained basically unchanged.
*22.9% decreased the size of credit lines for existing cardholders. 74.3% said credit lines remained basically unchanged.
The complete results of the Federal Reserve’s quarterly Senior Loan Officer Opinion Survey on Bank Lending Practices can be found here:http://www.federalreserve.gov/boarddocs/SnLoanSurvey/201005/fullreport.pdf
The LowCards.com Weekly Credit Card Rate Report May 6, 2010
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 13.57% which was higher than last week at 13.56%.
Here are the averages from the LowCards.com Complete Credit
Card Index for the previous ten weeks:
May 6 13.57%
April 29 13.56%
April 22 13.55%
The average cash advance rate for this week was 21.60%
which was higher than last week at 21.51%.
The credit cards with the lowest interest rates in the nation this week are:
1. 5.15% First Tennessee Platinum Premier Visa
2. 6.15% Illinois State Police Platinum
3. 7.15% Navy Federal Credit Union
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 LowCards.com Complete Credit Card Index
( http://www.lowcards.com/CreditCardIndex.aspx ) is the most
objective and comprehensive resource on the Internet which
allows consumers to compare rates for all 1060 credit cards
offered in this country. Created by Hampton & Associates,
the company has been analyzing the credit card industry
and supplying objective websites on various consumer
expenses for eight years.
Continental and United announced their merger today. Reward card and frequent flyer members should prepare for changes.
Both companies are describing this merger as good for members of their frequent flyer programs. According to their official announcement, “the merger will create the industry’s leading frequent flyer program, providing more opportunities for more customers to earn and redeem more miles in more places worldwide with more partners.”
It is too soon to predict if frequent flyer members will benefit from this merger. Combining the two airlines will cut costs for airlines but it will likely reduce the number of routes and seats for travelers. This could lead to higher prices for tickets and less availability. Obviously, the seats go to the paying flyers first, so it is going to be even more difficult to use your miles to book the flight that you want. Consumers may also have to earn and redeem more miles as the ticket prices increase.
Possible Changes for Airline Reward Cards:
Both airlines have their own credit card rewards program (the Continental World MasterCard and the United Mileage Plus Signature Visa) and cardholders will continue to receive mileage credit when using them. After the merger goes into effect, some cardholders will have to get a replacement for the new airlines. After Northwest Airlines merged with Delta, the Delta Skymiles card replaced the Northwest Airlines Worldperks Visa.
It is probable that the new reward card will cost more for some customers than current card because the two current cards are different.
The Continental World MasterCard offers 25,000 bonus miles after the first purchase. It offers 2 miles per $1 spent when you purchase tickets from Continental using the card. It offers 1 mile per $1 spent on all other purchases. The annual fee is $85. Additional miles cost $32 per 1,000 miles.
The Mileage Plus Signature offers 30,000 bonus miles after you spend $250. It offers 1 mile per $1 spent. The annual fee is $65. Additional miles cost $67.25 per 1,000 miles with a $35 processing fee.
Switching to the replacement card may be relatively easy for most cardholders because Chase issued both cards. However, this is a good time to re-evaluate your reward cards. Do you use the points? Have they been accumulating for years and you still aren’t close to a free ticket. For the average consumer, it takes several years to accumulate enough points for a free ticket and this could possibly get more difficult with the merger. If it takes over two years to earn a ticket,
consider switching to another card that allows you to use points for cash, hotels, or retail purchases. You can redeem at much smaller increments and use the points faster.
The Merging of Frequent Flyer Programs:
The OnePass and Mileage Plus programs will continue to operate independently until the merger is completed. Miles in both programs are still valid and able to be used according to existing program rules. Eventually, a new frequent flyer program will blend both programs together.
Miles held in both programs will be combined together, more than likely on a 1:1 basis. If you participate in both programs, this merger could allow you to combine points from both programs and accelerate your path to a ticket.
Pay attention to the notices you receive that describe the changes. It is possible that the new terms could change your frequent flyer points. If you have enough points for a free ticket, the best idea may be to protect yourself and use them now.
