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 »

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 »

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/

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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 »

Psst. NEED A CREDIT CARD?
As the nation’s banks and financial firms emerge from the wreckage of the financial crisis, they are working out how best to lend to people with tarnished credit. Overall, credit card issuers sent 418 million pitches to U.S. subprime borrowers in the first nine months of 2011, double the year-earlier volume of 207 million, according to research firm Synovate. Despite the surge, direct-mail solicitations remain far below pre-crisis levels. Many lenders still are way too leery about subprime borrowers to loosen the lending spigot, especially on unsecured loans such as credit cards. Other lenders, hungry for growth, say borrowers with dinged-up credit deserve an opportunity to rebuild their reputation. Credit cards can be a particularly good place to start because lenders offer borrowers small amounts of credit, at least at first.

Story by Jessica Silver-Greenberg for the Wall Street Journal

IMPATIENT? IT MAY HURT YOUR CREDIT SCORE
Your propensity to wait (or not) is also reflected in your credit score, according to a study from researchers at Columbia and Stanford published online in Psychological Science. Patient people tend to have higher credit scores than those who just can’t wait. “Individuals who are more willing to delay gratification have significantly higher FICO scores,” the report concluded. Participants were given a series of questions meant to gauge their willingness to delay a reward. For instance, they were asked if they would rather have $70 now, or $80 in a month. Participants who were the most willing to wait for the bigger payout had FICO scores that were roughly 30 points higher than those who were least willing to delay, the study found. The correlation held, regardless of income and other factors. Those who were the least willing to delay fell below the subprime credit score cutoff of 620, below which people generally pay much higher borrowing costs.

Study by Ann Carrns for the New York Times

CAN YOU FEAR ME NOW? BANKS FACE VERIZON-LIKE BACKLASH ON FEES
As banks look for ways to get revenue from free services like bill pay, they risk becoming a target of public outcry, as Verizon Wireless has in recent days over a short-lived plan to assess a $2 fee for certain bill payments. Consumers circulated petitions and organized boycotts over Verizon’s fee, which would have applied only to one-time credit and debit card payments made online or by phone (the fee would not have been assessed to consumers who sign up for an automatic recurring payment). Most banks have long abandoned charging for online bill pay, but some have experimented with bringing fees back for specific uses, such as for last-minute payments. The justification for such fees from banks and bill-pay providers is that the price of an expedited payment is more palatable than the late fee and finance charges that would be assessed for missing a due date entirely. Expedited bill-pay fees can be justified, experts say, but consumers may demand that other types of payments remain free, even when such services are costly to banks.

Story in Bank Technology News

BEST CREDIT CARDS FOR 2012
The start of a new year is typically when consumers take a close look at their finances and make resolutions on saving money and cutting expenses. Changing credit cards can save substantial money on interest payments, or earn some extra cash with attractive rewards. But credit cards are not one-size-fits-all, and shopping for the best credit card to fit your specific needs is a must. The credit card offer you receive today is determined by your credit score and how you have handled finances in the past. Here are some of the top credit cards on the market today.

BRINGING EXPIRED DEBT BACK TO LIFE
No one was more surprised than Thomas Carpenito with the credit card invitation that landed in his mailbox earlier this year. The 27-year-old had about $10,000 in old debts and a credit rating 200 points below “good.” Far from a mistake, the offer was part of a controversial and growing partnership between debt collectors and banks that profits both. To get the new credit card, Mr. Carpenito agreed to repay $400 on a seven-year-old debt that had expired under New York’s statute of limitations. CompuCredit, a leader in the business, collected about $15 million in newly resurrected debts and fees by issuing credit cards to people with banged-up credit in the first nine months of 2011, according to a securities filing. It also has drawn scrutiny by federal authorities for allegedly deceptive practices. Many banks, hungry for new revenue streams, are eager partners. They receive fees and higher-than-average interest rates by granting debt collectors access to their license with MasterCard. The debt companies typically
agree to cover losses to banks if borrowers stop paying. Collectors aren’t afraid of the risks in issuing new credit cards because they instantly turn a profit on virtually worthless debts–purchased for pennies on the dollar–when people agree to start making payments on them. The credit card agreements essentially create assets out of thin air.

Story by Jessica Silver-Greenberg for the Wall Street Journal

YOU CAN EXPECT MORE BANK FEES IN 2012
Banks will continue to experiment with fee increases in the New Year, according to our own analysis and industry experts, as they attempt to make up billions in lost revenue due to the bad economy and new regulations. Here is some of what you can expect for 2012.

Story by Maggie Shader for Consumer Reports

CONSUMER BUREAU: NOW IT CAN DO SOMETHING
With President Obama’s recess appointment of a new chief to run the consumer bureau, the agency can flex new powers regulating financial products from non-banks–including student loan providers, debt collectors, payday lenders, and mortgage originators and servicers. Obama on Wednesday made a recess appointment of former Ohio attorney general Richard Cordray to be the first director of the Consumer Financial Protection Bureau. That move has ignited controversy. Republicans, who had tried to block a recess appointment for months, are calling it an unprecedented overstepping of executive powers. In the meantime, under Cordray’s leadership, the bureau will start tackling industries that have been unregulated for years.

Read the rest of this entry »

CREDIT CARDS SPENDING INCREASED OVER THE HOLIDAYS
In a turnaround from last year, shoppers were not afraid to pull out the plastic this holiday season. Spending on credit cards jumped 7 percent in November and was up in the first half of December, according to First Data, a company that tracks consumer payment data. The move back to credit is part of a strategy this year by credit card companies to get people spending on high-interest plastic, and also reflects buoyed consumer confidence. While the increased spending boosts a hurting economy, it also poses risks for shoppers.

Story by Catherine New for the Huffington Post
http://www.huffingtonpost.com/2011/12/28/holiday-spending-credit-card_n_1173045.html

DEBTS GO BAD–THEN IT GETS WORSE
A personal bankruptcy is supposed to cut borrowers loose from lenders and debt collectors, but Capital One Financial Corporation, one of the nation’s largest credit card issuers, sometimes doesn’t want to let go. A court appointed auditor concluded earlier this year that Capital One pursued 15,500 “erroneous claims” seeking money previously erased by a bankruptcy-court judge. More than 800 of those borrowers have filed lawsuits or other legal actions against Capital One, the auditor said in a Dec. 6 court filing. Without admitting or denying wrongdoing, Capital One agreed to reimburse about 130 borrowers, lawyers and bankruptcy trustees for legal costs incurred trying to fend off Capital One. Debt collection is a major component of Capital One’s business that gets little attention from analysts and investors. As of Sept. 30, Capital One had $2.7 billion in net income so far this year on revenue of $12.22 billion, but it also was forced to write off $2.9 billion in uncollectible loans. As a result, like most lenders, Capital One invests significant resources into trying to collect from customers who are behind on their bills. But unlike most others who outsource their debt collection, Capital One largely relies on employees.

Story by Jessica-Silver Greenberg for the Wall Street Journal
http://online.wsj.com/article/SB10001424052970203686204577114530815313376.html?KEYWORDS=%22credit+cards%22

GIFT CARDS: USE THEM BEFORE YOU LOSE THEM
The holiday presents have been unwrapped and most of us received at least one gift card. Now is the time to shop with these cards while they are still fresh in our hands. The National Retail Federation predicts that 80% of
people have purchased gift cards this holiday season . Total holiday spending on gift cards in 2011 will reach $27.8 billion. That number grows each year because gift cards are the easiest present to give, saving time and shopping stress for the giver. Surprisingly, it is also a present that goes unused. Last year, 113 million Americans received gift cards during the holidays, but at the start of the 2011 holiday shopping season, a quarter of recipients still had an unused gift card from last year (Consumer Reports).
http://www.lowcards.com/blog/gift-cards-use-them-before-you-lose-them-3026/

ANONYMOUS CLAIMS HACK OF DATA FROM SECURITY GROUP
Members of the loose-knit movement “Anonymous” claimed to have stolen a raft of emails and credit card data from U.S.-based security think tank Stratfor, promising it was just the start of a weeklong, Christmas-inspired assault on a long list of targets. One alleged Anonymous affiliate said the goal was to use the credit data to take a million dollars–including, apparently, from individuals’ accounts–and give the money away as Christmas donations. Images posted online claimed to show the receipts. A Twitter account tied to Anonymous posted a link to what they said was Stratfor’s tightly guarded, confidential client list. Among those on the list: The U.S. Army, the U.S. Air Force and the Miami Police Department.

Story by the Associated Press
http://online.wsj.com/article/SB10001424052970203479104577120530217909036.html?KEYWORDS=%22credit+cards%22

FOUR WAYS TO START YOUR KIDS WITH CREDIT
Mired in debt, many adults do not feel qualified to teach their kids about credit. That’s one reason they want it done in a classroom. But since that won’t happen anytime soon, at least not a broad scale, they’d better get over their fear of finance and share some credit card wisdom with the kids. This is a great time of year for that talk. College students are home for the holidays and the temptation to spend is at a peak. There are four basic routes to introduce your kids to credit cards while minimizing risks.

Story by Dan Kadlec for Time
http://moneyland.time.com/2011/12/29/4-ways-to-start-your-kids-with-credit/

THE TOP 10 CREDIT AND DEBIT CARD STORIES OF 2011
This past year was a very eventful one in the debit and credit card industry. Here is a review of the top ten stories of 2011.
http://www.lowcards.com/blog/top-10-credit-and-debit-card-stories-of-2011-3029/

VERIZON WIRELESS: YEP, THAT’LL BE $2 TO PAY YOUR BILL ONLINE
Verizon Wireless plans to charge subscribers a new $2 fee every time they pay their wireless bills online or directly over the phone. The new fee will go into effect starting January 15 and doesn’t apply to customers paying
their bills with an electronic check or who enroll in autopay using a credit, debit, or AT&T cards. Verizon said that customers making single payments online will be notified of the fee before they complete their transactions. The fee associated with paying your bill online is part of a larger trend by companies to extract more money from customers to access certain forms of payment

Story by Marguerite Reardon for CNET
http://news.cnet.com/8301-30686_3-57349742-266/verizon-wireless-yep-thatll-be-%242-to-pay-your-bill-online/

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SOME CREDIT CARD ISSUERS POST LOAN GROWTH
Some large credit card issuers are showing small signs of loan growth as competition for borrowers reaches a fever pitch. American Express, Capital One and Discover said their cardholders’ balances have inched up. While it is too early to tell if the increases will lead to lasting growth, the results are a positive sign for an industry that faces headwinds going into the new year. With improvements in delinquencies and loan charge-offs losing steam, credit card issuers are under pressure to increase loans to raise revenue. That’s led to a boost in marketing by the industry’s biggest players, who hope to win customers using other lenders’ credit cards.

Story by Andrew Johnson for the Wall Street Journal

COMPANY TO LAUNCH NO-FEE ATMS THAT INSTEAD RELY ON ADS
The company, Free ATMs NYC, plans to roll out several thousand ATMs that have no fees and are not tied to any one bank across the country by the end of next year. Instead of fees, customers will watch an ad. The commercials would be part of the process if you made a monetary transaction at one of these ATMs, which would then cover the fee that banks normally charge you if you use one of their ATMs but do not have an account with them. The fee-free ATMs, however, cannot stop your bank from charging you for using a non-affiliated ATM, so you may still get hit with a fee from your bank.

Story by Maggie Shader for Consumer Reports

CONSUMERS RECEIVING CONVERSION FEE ANTITRUST CHECKS
Millions of credit cardholders are receiving an unexpected holiday surprise: an $18 check. The check is a refund from the Currency Conversion Fee Antitrust Settlement, a class-action lawsuit that was filed against credit card companies, accusing them of improperly disclosing fees for credit and debit transactions made abroad.

BANK OF AMERICA HIT HARDEST BY FEE CRACKDOWN
Bank of America has been the hardest hit of the large U.S. banks by new rules aimed at reducing the fees banks charge consumers, according to research by Credit Suisse analyst Moshe Orenbuch. Regulation E, which requires banks to get customer consent before charging overdraft fees, costs Bank of America $3.3 billion annually, versus $1.4 billion at Wells Fargo and $1.077 billion at JPMorgan Chase. U.S. Bancorp was a distant fourth, losing $460 million in annual revenues. The rule went into effect in July 2010. The differential comes in part from the fact that, unlike other banks, which allow customers to opt in on overdraft fees so that they can access funds when their accounts are empty, Bank of America chose not to give customers that option.

Story by Dan Freed for MSN

TEN TIPS FOR REDUCING CREDIT CARD DEBT IN 2012
Credit card issuers are once again aggressively marketing their cards, especially to consumers with good or excellent credit scores. Many people are probably seeing more credit card solicitations in their mailboxes with attractive rewards and balance transfer offers. Consumers need to guard against running up large account balances and getting themselves in a financial pinch once again. Here are ten tips for reducing credit card debt in 2012.

US BANK BUYS $700 MILLION CREDIT CARD PORTFOLIO FROM BANK OF AMERICA
U.S. Bank has bought a $700 million portfolio of credit cards from Bank of America, as BofA exits the business of handling cards for other financial institutions. U.S. Bank said that the portfolio being acquired by its Elan Financial Services unit includes small business and consumer cards from 28 banks, credit unions and other financial institutions, including investment bank Edward Jones. It’s one of the largest credit card acquisitions Elan has made in its four decades. U.S. Bank is eagerly growing that business and has made more than 500 card acquisitions over the last six years. The Elan unit issues co-branded cards for smaller banks and credit unions and such companies as Kroger, REI and Toyota.

Story by Jennifer Bjorhus for the Minneapolis Star Tribune

HIGHER CARD USE, BETTER PAYMENT HABITS LIFT DISCOVER 4Q PROFIT
Shoppers spent more with Discover cards as the holiday shopping season began, helping lift the credit card company’s fiscal fourth quarter profit 46 percent. Discover Financial Services said that sales volume on its namesake cards rose 8 percent to $25.03 billion in the quarter. The total number of transactions Discover’s networks processed rose 5 percent. Discover executives said during a conference call to discuss the results that the increased use shows that its customers are reaching for their cards more often compared with other cards they carry–Discover is becoming their “primary card.” The trend is partially because more merchants accept Discover now, and also because consumers are seeking benefits like Discover’s cash-back rewards when they make purchases. Also helping boost results during the quarter was an improvement in customer payment habits. Rates of late payments and defaults fell.

Story by Eileen AJ Connelly for the Associated Press

AMEX LOOKS BEYOND CREDIT CARDS
American Express is pushing to broaden its appeal with the new Serve card and compete against a slew of new digital-payment services that have cropped up in recent years. The Serve card also is different from many other American Express cards in that, as a prepaid card, it doesn’t come with a line of credit that lets a customer carry a balance. Until recently, such cards were mainly sold by other financial providers, and through grocery stores, pharmacies and other retailers. Serve comes with a physical card, but the core of the service is a digital platform that competes with eBay Inc.’s PayPal service. It allows customers to transfer money to other users and pay for purchases online and on smartphones. Serve and other prepaid products could help American Express add customers who don’t meet its underwriting standards for a credit or charge card. The company is also offering prepaid cards under its own name and in partnership with retailer Target Corp.

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CONSUMER PROTECTIONS LACKING FOR MOBILE PAYMENTS
If you use your cell phone to make mobile payments, your level of protection against financial liability if something goes wrong will vary depending on your wireless carrier’s policies and your cell phone contract, according to a new analysis by Consumers Union, the advocacy arm of Consumer Reports. Consumers Union wants mobile payments to have the same guaranteed protections that debit and credit card transactions have, and ideally, would like to see the protections afforded to cell phone owners in California applied nation wide.

Story by Maggie Shader for Consumer Reports

http://news.consumerreports.org/money/2011/12/consumer-protections-lacking-for-mobile-payments.html#.TunzUWttOA8.gmail

NEW CREDIT REWARD DEALS: BONUS DEALS AND REWARDS ARE ENTICING, BUT WATCH OUT
Things are looking rosier for credit card holders. Consumers are paying down balances and facing fewer punitive actions by credit card companies such as higher rates, late-payment fees, and canceled cards, according to a nationwide survey by the Consumer Reports National Research Center. And with reports of delinquencies and defaults down, card issuers have resumed stuffing your mailbox with offers, many of them featuring low-rate introductory deals or lucrative rewards. New federal rules barring many abusive practices by card issuers seem to be having an effect. Only 12 percent of the 1,258 Americans surveyed in July said their credit card companies had generally treated them unfairly, down from 22 percent in 2009. More people are being approved: Only 14 percent were denied a card in 2011, compared with 24 percent last year. But that doesn’t mean you can let down your guard. Thirty-five percent of survey respondents said in the past year they had experienced at least one credit card problem, such as a new annual fee, higher interest rate, lower credit limit, or limits on rewards. Average interest rates on new cards were 14.11 percent in September, up from 11.64 percent in May 2009, according to LowCards.com.

Story in Consumer Reports

http://www.consumerreports.org/cro/magazine-archive/2011/december/money/credit-card-deals/overview/

CFPB ASKS CONSUMERS FOR INPUT ABOUT CREDIT CARD CONTRACTS
When the fledgling Consumer Financial Protection Bureau recently collected consumer complaints about credit cards, one of the overarching themes was confusion over the terms of the cards. Whether consumers were complaining that their interest rate suddenly went up or that they were charged a penalty fee, it often came down to one thing: they didn’t understand the contract. And in credit card land, using the card constitutes agreeing to the contract, so you’re stuck. Now the Consumer Financial Protection Bureau has developed a prototype contract it thinks will simplify the whole mess. The average credit card contract is about 5,000 words long. The new CFPB one is a little over a thousand. It doesn’t do away with the fine print, necessarily. What it does is take all of the terms of art in the contracts and relegate them to a separate “definitions” page, so the lawyers will still be satisfied. By shunting that language elsewhere, the agreement itself can be written in plain English. In fact, the CFPB has consciously tried to write the new contract at an 11th grade reading level, to be as inclusive as possible. Inevitably, though, the new format will not be perfect or perfectly understandable. And that’s where you come in. The CFPB is asking members of the public to weigh in.

Story by Elisabeth Leamy for ABC News

http://abcnews.go.com/Business/uncle-sam-create-simpler-credit-card-contracts/story?id=15148256

OVERDRAFT FEES ON THE RISE
Overdraft fees are again taking a larger bite out of our pocketbooks. In July 2010, new regulations from the Federal Reserve required consumer consent for overdraft protection for ATM and debit card transactions. These overdraft regulations cost the banks billions of dollars in revenue, but the overdraft fees are increasing once again. Overdraft revenue fell for six quarters, but have now risen by $700 million in the second quarter of 2011, according to Moebs Services. In addition, the average number of overdrafts per household increased during the same period. Moebs found that 26 percent of consumer checking account holders intentionally overdraw their checking account. New research by the Pew Charitable Trust found that overdraft fee will cost Americans an estimated $38 billion in 2011.

http://www.lowcards.com/blog/overdraft-fees-on-the-rise-2994/

CONSUMERS CRY FOUL OVER DEBT COLLECTORS
Complaints about debt collectors are pouring into a federal database that tracks allegations of illegal late-night phone calls, arrest threats and other abuse. The debt-collection industry, booming as many Americans struggle to catch up on their payments or walk away from what they owe, was the subject of a record 164,361 complaints through Dec. 8 of this year, according to the Federal Trade Commission. The total is 17% higher than the 140,036 debt-collection complaints the FTC got for all of 2010. The number of debt-collection complaints is surging even though the mountain of overdue bills is shrinking. As of Nov. 30, a total of $96.8 billion in auto loans, credit cards and other unsecured consumer-finance debt was at least 60 days past due, down 19% from $119.5 billion at the end of 2010, according to data from Equifax Inc. and Moody’s Analytics. Debt collectors are regulated under a patchwork of state and federal laws. U.S. oversight is shared by the FTC and Consumer Financial Protection Bureau.

Story by Jessica Silver-Greenberg for the Wall Street Journal

http://online.wsj.com/article/SB10001424052970204336104577095431265584066.html?KEYWORDS=%22credit+cards%22

FREE CHECKING ISN’T CHEAP FOR BANKS
Despite a public perception that taking deposits is a can’t-lose business, maintaining a checking account costs banks between $250 to $450 a year. In many cases those accounts aren’t even turning a profit. The average checking account cost banks $349 in 2011, says Mike Moebs of Moebs Services Inc, a research firm. But the average revenue per account is just $268, implying a loss of $81. That equation helps explain the thinking behind some of the recent, highly-controversial steps banks have taken to raise the prices their customers pay for checking accounts.

Story by Victoria Finkle for American Banker

http://www.americanbanker.com/issues/176_238/checking-account-free-checking-debit-fees-1044756-1.html?pg=2

CITIGROUP SPENT $1.18 MILLION ON 3Q LOBBYING
Citigroup Inc. spent $1.18 million to lobby the federal government on new rules that affect its ability to trade complex Wall Street securities, cyber security, new housing rules and other issues in the third quarter, according to a recent disclosure report. That’s about 10 percent lower than the $1.31 million the New York bank spent in the second quarter, and about 12 percent lower than the $1.34 million it spent in the third quarter last year. Banks are heavily spending to influence new rules that govern the Dodd-Frank Act, which was passed last year.

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DEBIT CARD FEE CAP HAS A NASTY SIDE-EFFECT
Just two months after one of the most controversial parts of the Dodd-Frank financial overhaul law was enacted, some merchants and consumers are starting to pay the price. Many business owners who sell low-priced goods like coffee and candy bars now are paying higher rates-not lower-when their customers use debit cards for transactions that are less than roughly $10. That is because credit card companies used to give merchants discounts on debit card fees they pay on small transactions. But the Dodd-Frank Act placed an overall cap on the fees, and the banking industry has responded by eliminating the discounts. Merchants now are trying to offset their higher rates by raising prices, encouraging customers to pay in cash or dropping card payments altogether. Redbox, a unit of Coinstar Inc. that rents movies through vending machines, says it is raising prices by 20% to $1.20 a movie starting next month due to higher costs, including debit card fees.

Story by Robin Sidel for the Wall Street Journal

http://online.wsj.com/article/SB10001424052970204319004577084613307585768.html?mod=WSJ_hp_LEFTTopStories

CREDIT CARD USE IS ON THE RISE
Purchases made with credit cards rose 8.2% in the first quarter of 2011, 9% in the second quarter and 10.6% in the third quarter, according to First Data. And a growing number of holiday shoppers are already opting for credit this year. Payments made with credit cards on Black Friday jumped 7.4% from the same day a year earlier, while debit card use only rose 3.4%. Credit card mailings have surged 85% since the beginning of 2010 to 1.3 billion credit card offers in the third quarter of 2011, according to analysis conducted by research firm Mintel Compermedia. Many of these offers come loaded with new perks. Several major issuers have eliminated charges like foreign
transaction fees and balance transfer fees, and many are offering heftier rewards. The push seems to be proving successful. Javelin Strategy & Research recently projected that online credit card use will surge 63% from 2011 to 2016, compared to a 2% increase in debit card use. Data on the projected increase in overall payment use–not just online–will be released later this month.

Story by Blake Ellis for CNN Money

http://money.cnn.com/2011/12/05/pf/credit_card_use/?source=cnn_bin

CREDIT REPORT DATA GETTING MORE PERSONAL
Credit agencies are finding new ways to collect and assemble data on individual consumers. Credit reports can now reveal evictions, applications for payday loans, even if you are behind on homeowner’s association dues. Agencies analyze and sell this data to lenders, employers, insurers and renters who use these reports to make judgments about you. Taking care of what your credit report says about you should be a financial resolution for 2012.

http://www.lowcards.com/blog/category/credit-card-news/

FOR THE FAMILIES OF SOME DEBTORS, DEATH OFFERS NO RESPITE
When you die, your debts usually die with you. Surviving family members rarely have a legal obligation to pay unless they co-signed a loan, such as a mortgage or credit card. That leaves lenders in the lurch. But debt collectors have found a way to help lenders get their money anyway. Working on behalf of financial giants from Bank of America and Capital One to Discover and Citigroup, collection firms target survivors who might agree to pay at least part of what the dead person owed. Debt collectors say the survivors have a moral obligation to pay, especially in cases where they benefited from purchases rung up by someone else. ACA International, the industry’s main trade group, says that collecting payments on debts owed by the dead helps ensure that lenders will continue to extend credit at competitive interest rates to older Americans.

Story by Jessica Silver-Greenberg for the Wall Street Journal
http://online.wsj.com/article/SB1000142405297020422460457703 0043890121710 .html?KEYWORDS=%22credit+cards%22

CHASE MAKES IT EASIER FOR CONSUMERS TO OVERSPEND
Chase is notifying its Freedom MasterCard holders that their cards are being automatically switched from having credit limits to credit access lines that let users exceed limits without penalties. They’re making it easier for people to run up balances on their credit cards. In other words, they’re trying to get people to once again bury themselves in debt.

Story by David Lazarus for the Los Angeles Times

http://www.latimes.com/business/la-fi-lazarus-20111202,0,966733.column

WHITE HOUSE SEEKS SIMPLER CREDIT CARD TERMS, FEES
The White House said it wants to make it easier for credit card holders to understand the interest rates and fees they are charged to avoid more financial strain on the middle class. Previewing an announcement by the new Consumer Financial Protection Bureau, Obama administration officials said simplified credit card agreements would help avoid confusion and stress for those struggling to make ends meet. The CFPB will release a prototype agreement that explains in plain and concise language the prices and features of credit cards, “separate from the legalese,” as a model for credit card companies to follow, the White House said.

Story by Laura MacInnis for Reuters

http://www.reuters.com/article/2011/12/07/us-usa-consumer-cards-idUSTRE7B60M320111207

CITIGROUP TO LAY OFF 4,500 WORKERS
Facing stalling growth prospects around the globe, Citigroup’s chief executive said that the bank would lay off 4,500 workers in the coming months. Citi now has roughly 100,000 fewer employees than it did at the end of 2007, before the worst of the financial crisis. Most of the job losses will come from Citi’s back-office and investment banking operations, but nearly every part of Citi’s sprawling businesses will face cuts. While Citigroup has cranked out seven consecutive quarters of profits after it set aside less money to cover bad loans, the bank has struggled to increase its income. Revenue fell 10 percent to about $60 billion in the first nine months of this year, compared with the period a year ago.

Story by Eric Dash for the New York Times

http://www.nytimes.com/2011/12/07/business/citigroup-to-lay-off-4500-workers.html

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BLACK FRIDAY: $52 BILLION FOR STORES, BIG CREDIT CARD BILL FOR US
Shoppers blew away even the most optimistic projections of retail analysts by dropping just over $52 billion on Black Friday weekend, according to the National Retail Federation. It’s a bonanza for merchants, but it comes with a dark flip side: numerous surveys indicate that Americans are using their credit cards to fuel this buying binge. A Discover survey included this early red flag: The number of Americans who said they plan to spend more than their allotted holiday budget rose from 10% last year to 14% this year. Historically, consumers tend to be overly optimistic about their willpower when it comes to holiday spending, so the actual number of people who wind up blowing their budgets will almost certainly be higher by the new year. Last year, 16% of Black Friday shoppers used their credit cards; this year, that number spiked to 27%. And while around 39% of shoppers last year admitted spending more than they planned because the deals were so good, 43% did so this year.

Story by Martha White for Time

CONSUMER AGENCY SEES CONFUSION IN CREDIT CARDS
In its first three months in operation, the U.S. consumer financial watchdog received more than 5,000 complaints from credit card customers, led by billing disputes and interest rate problems. On Wednesday the agency said that between July 21 and October 21 it received 5,074 complaints from credit card customers. The complaints varied but at the top of the list were billing disputes, interest rate problems and fraud concerns. The CFPB said it forwarded 4,254 of the complaints to card issuers. According to the issuers, 74 percent of those cases have been at least partially resolved, and in 71 percent the customer did not disagree, the agency said.

Story by Dave Clarke for Reuters

ONLINE SPENDING MUCH HIGHER WITH CREDIT CARDS THAN DEBIT CARDS
Holiday shopping on Cyber Monday was extremely strong, with analysts estimating sales to be 15% to 33% above last year’s totals. Not only are a greater number of people now shopping online, but new research shows they are spending more when paying with a credit card. Consumers spend an average of $82.10 on a single online transaction with a credit card payment compared to $58.29 by those using a debit card, according to Javelin Strategy & Research’s latest Online Retail Payments Forecast report. The study was based on over 2,300 respondents. Javelin predicts this trend will continue long beyond this holiday season. U.S. consumer payments volume from online use of credit cards will climb 63 percent from 2011 to 2016, but debit card online payment volume will only grow by 2 percent.

CROOKS PREY ON UNSUSPECTING CREDIT CARD CUSTOMERS
Claims of lost or stolen credit cards go up by nearly 20% during the holiday season, according to PNC Bank. The reasons are twofold: we tend to use our cards more during this time of year, and thieves are smart enough to know that people tend to be rushed and distracted during this time of year. But some criminals don’t wait until the mall starts piping in Christmas music to take advantage of unsuspecting consumers. Could your account information be at risk? “When you hand over your card to a machine or a person, someone can copy the information,” says security expert Chris E. McGoey.

Story by Martha White for Time

BANKS STUMBLE ALONG TECH FRONTIER
Banks have spent billions of dollars over the past decade developing and deploying technology that is supposed to give consumers a new way to pay for stuff, squeezing out old-fashioned cash. Yet as financial companies spend freely in a rush to the latest frontier, known as mobile payments, previous technology stumbles offer a reminder of how tough it can be to change consumer habits. Phone companies are planning to launch similar technology, banking on the increasing number of Americans who use smartphones for everyday tasks like comparison shopping. Smartphones now represent 40% of all mobile phones owned by adults in the U.S., according to a July survey by Nielsen Holdings NV. Banks are chiming in with “mobile wallets” that make such payments easier by giving customers a way to store financial information, such as credit-card data, in phones. But there are doubts about whether these would-be financial innovators can change consumer habits in the same way that they convinced people to swipe a card at the cash register instead of reaching for cash or a check. It took 50 years for plastic to triumph in the U.S., and even today most transactions under $10 still use cash. The main gripe about mobile payments is that the current technology doesn’t significantly improve upon the tried-and-true method of swiping a piece of plastic.

Story by Robin Sidel for the Wall Street Journal

ANOTHER PROTEST SCHEDULED AGAINST BIG BANKS
The outrage toward large banks continues. Fresh off the heels of consumer protests over monthly debit card fees and “Bank Transfer Day” is a new movement that speaks out against high credit card rates. December 11 has been deemed “Balance Transfer Day” where consumers are encouraged to switch from high interest credit cards to lower or zero rate cards. The Balance Transfer Day’s Manifesto statement on FaceBook encourages consumers to “demand the same 0% interest rate that banks receive from the federal government” and “create our own bail outs by using a balance transfer as a means to bail ourselves out of credit card debt.”

S&P DOWNGRADES TOP U.S. BANKS’ CREDIT RATINGS
Standard & Poor’s Ratings Services has lowered its credit ratings for many of the world’s largest financial institutions, including the biggest banks in the U.S. Bank of America Corp. and its main subsidiaries are among the institutions whose ratings fell at least one notch Tuesday, along with Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley and Wells Fargo & Co. It typically costs companies more to borrow when their credit ratings are cut, the same way a decline in a person’s credit scores drives up the interest rates that banks and credit cards will offer him.

Story by Eileen AJ Connelly for the Associated Press

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CHASE TO END TRIALS OF THREE NEW BANK FEES
In addition to ending the trial of its controversial debit card usage fee this week, Chase will put an end to two other bank account fees that it has been testing in various parts of the country over the past 10 months. Among the fees being pulled, is a $12 monthly checking account fee Chase has been testing in Oklahoma since February, according to a person familiar with the
bank’s plans. The fee, which cannot be waived through direct deposits or online banking requirements, was charged to new customers who set up basic checking accounts. The bank is also dropping a $15 monthly
checking account fee it was testing in Atlanta that can only be waived if a customer maintains a minimum daily balance of at least $1,500. The third, and most controversial, test is the $3 debit card usage fee
that Chase applied to customers in northern Wisconsin to help the bank decide whether to roll it out nationwide. The conclusion of Chase’s fee-testing follows a nationwide, social media-fueled movement earlier this month urging customers to dump big banks and move their money to small community banks and credit unions. The initiative led to more than $5 billion in new deposits being transferred to credit unions according to the industry association.

Story by Blake Ellis for CNNMoney

NEW CREDIT CARD RULES HIT STAY-AT-HOME PARENTS
December and January are the biggest months of the year for credit card applications. This is the time that consumers look for cards with better rewards or cards with lower rates to get their finances in shape. However, new federal regulations that went into effect on October 1 may prevent some people, like stay-at-home parents, from getting their own credit card. The new rule is part of the CARD Act and says credit card issuers must only consider the applicant’s own salary or other income. Any person that applies for a card must be able to make his or her own payments. Household income or
combined income is no longer considered in the approval process. This means a stay-at-home parent who has no outside income will find it very difficult to get approved for a credit card.

http://www.lowcards.com/blog/new-credit-card-rules-may-hurt-stay-at-home-parents-2908/

CREDIT CARD ISSUERS RAISE REWARDS FOR HOLIDAY SHOPPING SEASON
Credit card issuers are bumping up their rewards for the holiday shopping season as they seek to lure consumers away from debit cards and competitors. For shoppers with decent credit scores, this can provide the opportunity to pick up extra cash or miles while they do their gift shopping.

Story by Linda Stern for Reuters

http://www.reuters.com/article/2011/11/11/us-usa-credit-rewards-idUSTRE7AA50J20111111

AMERICAN EXPRESS LOOKS TO EXPAND WITH TARGET PREPAID CARD
American Express, known for its high-end credit and charge cards, is continuing its push into the growing prepaid debit card market through a partnership with Target. The New York lender said Tuesday it is selling the American Express for Target Card, a reloadable prepaid card, in more than 1,000 U.S. Target stores. American Express and the Minneapolis retailer earlier this year announced they were testing the sale of the cards in some stores. Unlike other prepaid cards, which have come under attack from consumer groups for carrying hidden fees, the American Express for Target Card does not carry fees for monthly usage, balance inquiries, alerts or card replacement.

Story by Andrew Johnson for the Wall Street Journal

http://online.wsj.com/article/BT-CO-20111115-711854.html

CREDIT CARD ISSUERS DROPPING SOME FEES
Big banks with their significant fees and high interest rates have become the villain of both Congress and consumers for the past few years. In 2009, politicians made major revisions in credit card practices with the CARD Act. More recently, angry consumers protested the monthly debit card fees with both a “Dump Your Bank Day” and a “Bank Transfer Day”, causing banks to rescind those fees. Now, some banks seem to be trying to polish their tarnished image by dropping fees and increasing rewards. Here are some changes that credit card issuers have made in 2011 that have been good for cardholders.

http://www.lowcards.com/blog/credit-card-issuers-dropping-some-fees-2905/

INTEL WORKS WITH MASTERCARD ON SECURING COMMERCE
A flood of hacking and phishing attacks has shown that passwords are necessary but not sufficient to protect financial transactions. Intel and MasterCard are working together to do more. The chip maker and credit card company on Monday are announcing what they are calling a multi-year strategic collaboration to enhance the security of online shopping.

Story by Don Clark for the Wall Street Journal

http://blogs.wsj.com/digits/2011/11/14/intel-works-with-mastercard-on-securing-commerce/

LITTLE COMFORT SEEN IN CREDIT CARD PROTECTION
Debt protection products are sold on the idea that they suspend or cancel credit card debt for a period after a critical event, such as a lost job, disability or death. But many customers complain they were unknowingly signed up for the insurance, or unfairly denied benefits. A government watchdog has directly asked the new U.S. Consumer Financial Protection Bureau to take a hard look at payment protection, after other attempts to crack down on the products stalled. The Government Accountability Office said in March that the bureau, which was created by last year’s Dodd-Frank financial oversight law, should assess the value of the products. It said cardholders only get 21 cents of benefit for every dollar they spend on debt protection fees. The nine largest credit card issuers collected $2.4 billion in fees for debt protection products in 2009, and only paid out $518 million of that to consumers in benefits.

Story by Alexandra Alper for Reuters

http://www.reuters.com/article/2011/11/16/us-financial-regulation-credit-idUSTRE7AE1SE20111116

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CREDIT UNIONS POACH CLIENTS
Thousands of people flooded into credit unions and small banks over the weekend as part of “Bank Transfer Day,” an effort to prod depositors to abandon giant banks. But at least some of the big banks won’t mind losing those customers. On Saturday, the Boeing Employees’ Credit Union in Seattle signed up a one-day record 659 new members. At the grand opening of a Randolph-Brooks Federal Credit Union branch in Pflugerville, Texas, the parking lot was so full that customers had to leave their cars across the street. Executives at large banks have shown few signs of worry that depositors might walk out the door. One reason: people who gravitate to credit unions tend to be unprofitable for giant banks because of the small balances they keep on deposit, low number of products they buy and the relatively high account-maintenance expenses at big financial firms.

Story by Suzanne Kapner for The Wall Street Journal

STUDENT DEBT GROWS TO MORE THAN $25,000 FOR RECENT GRADS
The class of 2010′s college graduates owed an average of $25,250 in student loans, up five percent from 2009, according to a new report from the Project on Student Debt. College seniors who graduated with student loans last May also faced the highest unemployment levels–9.1 percent–in recent history for new college graduates, according to the report. In the report’s survey data, 73 colleges reported that more than 90 percent of their class of 2010 graduated with debt. A total of 98 colleges reported that their graduates actually owed an average of more than $35,000.

Story by Maggie Shader for Consumer Reports

USING REWARD CREDIT CARDS FOR HOLIDAY SEASON
Throughout 2011, credit card issuers have sweetened reward card offers to attract more consumers. Since most consumers spend so much additional money during the holidays, this is a great time to take advantage of these offers and quickly earn some extra cash or miles. Here are six tips for using reward credit cards to maximize your holiday shopping and the best rewards for the holiday season.

DURBIN’S MESSAGE TO BANKS: I WON’T BACK DOWN
U.S. Sen. Dick Durbin called on the nation’s banks Sunday to each publish a one-page listing of the fees and terms of their checking accounts, a move he says will protect consumers from paying hidden fees. Durbin said after the plans of many large banks to charge debit card users monthly fees backfired, banks could start tacking on charges people may never be aware of. Durbin said 650,000 people across the country moved their checking accounts from the big bank chains to community banks or credit unions in response to the proposed monthly fee. “Bank of America thought they could make me the villain, and it blew up in their face,” he said. “I’m ready for this battle.”

Story by Jason Nevel for the State Journal Register

NEXT FRONTIER IN CREDIT SCORES: PREDICTING PERSONAL BEHAVIOR
Fair Isaac, the company that created the FICO credit score, is branching into new territory, assembling disparate data in an effort to better understand a range of human behaviors. Fair Isaac’s partners and
sometimes-rivals at the nation’s credit bureaus also are delving deeper into consumers’ financial histories to generate tailored scores, which influence where a person can live and work and how much they have to pay for insurance. Rival credit reporter Equifax Inc. offers an Ability to Pay Index and a Discretionary Spending Index that purports to indicate whether people have extra money burning a hole in their pocket. Scoring-company executives say their products are fairer and more consistent than the subjective judgments they often replace. Use of credit-related data is regulated by a federal law that gives people the right to see and correct information about them. But those provisions may not apply to some new products.

Story by Scott Thurm for The Wall Street Journal

HIGH BANK FEES GIVE WAL-MART A MONEY AISLE
Americans say they are fed up with banks. They are protesting on Wall Street and raising a ruckus over outsize fees. Now there is a surprising beneficiary: Wal-Mart. Customers can cash work and government checks, pay bills, wire money overseas or load money on to a prepaid debit card. At most Wal-Marts without dedicated Money Centers, the financial services are available at the customer service desks or kiosks. Four years ago, Wal-Mart abandoned its plans to obtain a long-sought federal bank charter amid opposition from the banking industry and lawmakers, who feared the huge retailer would drive small bankers out of business and potentially conflate its banking and retail operations. Ever since, Wal-Mart has been quietly building up à la carte financial services, becoming a force among the unbanked and “unhappily banked,” as one Wal-Mart executive put it.

Story by Stephanie Clifford and Andrew Martin for the New York Times

AMEX LOOKS TO STAKE CLAIM IN PLASTIC-FREE FUTURE
American Express Co., looking to transform beyond a company that mainly lends to consumers via its credit cards and processes transactions into a major player in e-commerce, plans to invest $100 million in early stage start-ups in the digital commerce industry. The multiyear initiative is aimed and pushing new ways for customers to use its cards on mobile devices and online, growing fields being targeted by companies including Google, Visa and MasterCard. The company, which has traditionally lent to affluent customers, said it is looking to invest in companies focused on serving critical parts of the digital commerce experience, including loyalty and rewards, mobile and online payment management, fee-based services, security and fraud detection and data analysis.

Story by Andrew Johnson and Melodie Warner for The Wall Street Journal

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DEBIT FEE RETREAT COMPLETE
The banking industry’s brief experiment with charging customers to use their debit cards appears to be over. The about-face concluded on Tuesday when Bank of America Corp. dropped plans to charge customers $5 a month for using their debit cards to make purchases. Bank of America was the last major bank to back away from the fees, representing a swift retreat in an industry that is at times known for its lumbering decision-making. More fees are expected. Banks have already eliminated the free checking accounts that had been in place since the 1980s and dismantled rewards programs for debit cards. Banks now may raise existing fees on checking accounts, find new places for additional charges and institute more internal cost-cutting.

Story by Robin Sidel and Dan Fitzpatrick for the Wall Street Journal

ECONOMY TOP CONCERN AMONG SHOPPERS AT START OF HOLIDAY SEASON
As we approach the 2011 winter holidays, Americans remain fixated on finances: their own and that of the nation. Four in 10 of those surveyed by Consumer Reports said their biggest concern going into the holidays was the state of the economy and having enough money in their own pockets. Last year, more than half–53 percent–of Americans paid for some or all of their purchases with plastic, charging $433, on average, worth of gifts. That’s slightly higher than the percentage that relied on credit the previous year. However, heavy credit card users have mended their ways at least somewhat. The percentage of shoppers who charged $1,000 or more dropped in 2010 to 16 percent, down from 23 percent in 2009. Unfortunately, too many consumers still carry too much debt for too long. As of this month, 6 percent of Americans–around 14 million people–were still paying off their credit-card purchases from the 2010 holidays.

Story by Tod Marks for Consumer Reports

MASTERCARD PROFIT UP 38% AS CARD USE RISES
MasterCard said Wednesday its third-quarter profit soared 38 percent on a big spike in card use around the world. The payments processor also attributed the strong results to new deals with certain banks to issue debit cards bearing its logo and new transaction processing deals overseas. In the U.S., spending was up 13 percent to $227 billion. Visa and American Express said most of the increased spending in the U.S. they saw last quarter came from affluent card users, a cause for some concern as it reflects broader weakness for the economy. Big increases in purchases in Latin America and the Asia-Pacific-Middle East region led overseas gains. The company’s worldwide footprint has helped to partially insulate it from economic woes in the U.S. and Europe. MasterCard has far fewer debit cards in use than Visa, but its revenue from those cards is growing faster. MasterCard said U.S. purchases with its debit cards rose 23 percent to $97 billion.

Story by Eileen AJ Connelly for the Associated Press

U.S. BANKS TO PUSH PREPAID CREDIT CARDS
U.S. banks that have lost debit card processing revenue due to new caps on fees will likely push customers into prepaid and credit cards and other types of account fees. Executives for regional banks–including
BB&T, SunTrust, Fifth Third Bancorp and Sovereign Bank–said at an industry conference that there is no one solution for recovering as much as $8 billion in lost revenue under new caps on what banks can charge
merchants for processing debit card transactions. But lenders will charge customers fees for their overall banking accounts, rather than just debit card use, and push the use of prepaid and credit cards not covered by new debit card rules.

Story by Joe Rauch for Reuters

http://www.reuters.com/article/2011/11/04/banks-debit-idUSN1E7A22EK20111104

WATCH OUT FOR THESE FIVE CREDIT CARD GOTCHAS
Credit card issuers are back to inundating consumers with offers, many of them featuring low teaser rates, but be sure to read the fine print before signing on. Consumer Reports did just that, analyzing dozens of credit card offers. Here are some typical gotchas to be aware of: seasonal savings, spending tiers, expiration dates, hidden caps, missed payment penalties. More consumers are being approved for new credit cards; only 14 percent were denied a card in 2011, compared with 24 percent last year, according to new survey data from the Consumer Reports National Research Center. But 35 percent of respondents also reported experiencing at least one credit card problem, such as a new annual fee, higher interest rate, lower credit limit, or limits on rewards.

Story by Maggie Shader for Consumer Reports

A PROGRAM THAT REWARDS NOT SPENDING
For years, credit cards have been offering rewards to consumers who spend. Now, a new company does just the opposite: it rewards consumers who save. And the prizes are eye popping: a trip to Hawaii, a Toyota Prius, a $50,000 college scholarship. The catch? Good luck getting them. Launched today, SaveUp rewards consumers who pay down their debt or put more cash into their bank accounts. Here’s how it works: consumers link their debts (including credit cards, car and student loans, mortgages etc.) and bank accounts from pretty much any U.S. bank to their SaveUp account. The site automatically awards 1 credit for every dollar saved or every dollar of debt paid off. Not only is it encouraging healthy financial behavior, but consumers can rack up rewards points much faster than when they swipe their credit card. Most credit cards give just one to three cents back on every dollar a consumer spends. And there’s no cost to using SaveUp–it’s free to all consumers. At SaveUp, on the other hand, all that’s guaranteed is a chance to win the big prizes in a kind of lottery drawing. Consumers can use their points to play games–like scratch offs, drawings and jackpots–for a shot at prizes. Each game, no matter the prize, costs 10 credits, which is equal to $10 that a consumer has saved or paid down in debt.

Story by AnnaMaria Androitis for SmartMoney

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USING CREDIT CARDS TO TARGET WEB ADS

The two largest credit card networks, Visa and MasterCard, are pushing into a new business: using what they know about people’s credit card purchases for targeting them with ads online. Their plans, if implemented, would represent not only a technological feat–tying people’s Internet lives with shopping activities–but also an erosion of the idea of anonymity on the Web. It’s an effort by the two companies to profit by selling access to the insights they gather about people with every credit card transaction. The technology is still evolving. According to ad executives briefed on some of the ideas, a holy grail would be to show, for instance, a weight-loss ad to a person who just swiped their card at a fast-food chain; then track whether that person bought the advertised products. Currently, Web ads generally are based on a person’s online behavior but not information tied to his or her identity or activities in the brick-and-mortar world.

Story by Emily Steel of the Wall Street Journal

VISA PROFIT BEATS ESTIMATES AS CREDIT CARD SPENDING INCREASES

Visa Inc., the world’s biggest payments network, posted a fiscal fourth-quarter profit that exceeded analysts’ estimates as credit card spending climbed faster than debit. Net income for the three months ended September 30 rose 14 percent to $880 million. Spending on Visa credit cards in the U.S. grew faster than debit cards for the first time since at least 2005 as affluent consumers stepped up purchases. New federal caps on fees that banks collect for debit transactions also are prompting lenders to encourage consumers to use credit cards instead. U.S. credit card purchases climbed 10 percent to $228 billion, compared with a 6.4 percent increase in the same period last year, the company said. Spending on debit cards in the U.S. advanced 8.1 percent to $288 billion, slower than the 20 percent growth Visa reported for last year’s fiscal fourth quarter.

Story by Dakin Campbell for Bloomberg Businessweek

OVERDRAFT FEES: THE DOUGH KEEPS ROLLING IN

Banks have spent much of the past year howling about revenue lost after financial reforms limited consumer fees, especially the billions they reaped from charges for covering overdrafts on debit cards. Those programs, though, remain highly profitable. As banks pushed a shift from paper checks to debit cards over the past decade, they began enrolling customers automatically in overdraft protection plans, with charges of as much as $35 for each overdrawn transaction. Banks say that lets the 185 million Americans with debit cards make emergency purchases even if their account is short. Consumers, though, soon discovered that a slice of pizza could cost almost $40 after overdraft fees. Last year, the Federal Reserve barred banks from offering overdraft protection on debit card transactions without prior consent from consumers. Many banks that offer the services have launched aggressive marketing campaigns to get customers to sign up. The banks sent letters and e-mails explaining the changes, at times with alarmist warnings that if they didn’t sign up their card might be rejected when they most need it. Some banks called customers who’d had transactions denied to persuade them to opt in.

Story by Karen Weise of Bloomberg Businessweek

HOW TO STOP THE BANK FEE-FOR-ALL

Wait, we thought Congress rode to our rescue in 2009 and punched out those villainous, mustache-twirling bankers with the Card Act. The legislation freed us from the bankers’ conditions, restrictions and gotcha fees, right? Not by a long shot. Outlaw one bank fee, and they’ll just invent a new one–most recently, a monthly fee on debit-card use. If you want to protect yourself from bankers and their gangs of double-talking lawyers, don’t call Congress. Take matters into your own browser.

Story by Mike Hogan for Barron’s

BANK OF CHINA TO ISSUE AMEX CARDS

Bank of China Ltd. will issue American Express credit cards under an agreement the financial companies announced Wednesday. Bank of China will issue the American Express-branded cards to its private clients. The cards will come with perks including “fast-track” service through immigration and security lines at some airports, discounts on travel and other features. Transaction processors Visa Inc. and MasterCard Inc. have also been trying to tap China’s fast-growing payments industry through agreements with China UnionPay, the only transaction-processing network in China.

by Andrew R. Johnson of the Wall Street Journal

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CARD TRICKS WIN BIG REWARDS FOR SOME TRAVELERS
Want a free trip to Paris? Just sign up. Hard-core collectors of frequent-flier miles are turning credit card sign-up bonus offers into vast stashes of miles, points and expensive trips by opening new card accounts by the dozen. Some practitioners call it travel hacking, and at a time when travelers are frustrated by declining service and growing airline fees and fares, it represents a rare travel bonanza. Most new cards are free since issuers typically waive annual fees for the first year. Sign-up bonuses come with requirements to charge $1,000 or so on the card within the first few months. People who churn cards say it’s important to meet these requirements and pay off balances to avoid hefty finance charges. They also typically check their credit ratings regularly. Credit experts say opening and closing card accounts can hurt your credit score, but the degradation is usually small and recovers within a few months.

Story by Scott McCartney at the Wall Street Journal

BANK OF AMERICA LOSES TITLE AS BIGGEST IN U.S.
For Bank of America, it is the end of an era. With the bank shrinking its balance sheet and selling off assets, the company surrendered its title as the country’s biggest bank Tuesday, another sign of how a money-losing giant assembled over decades is being reshaped into a smaller and, investors hope, more profitable institution. Bank of America, with $2.22 trillion in assets reported Tuesday in its third-quarter earnings, is now second to JPMorgan Chase, which has $2.29 trillion assets. It also ranks second to JPMorgan Chase in terms of branches and total deposits.

Story by Nelson D. Schwartz for the New York Times

U.S. TO REQUIRE TRAVEL DECLARATIONS OF VALUE CARDS
International travelers would have to file reports when carrying prepaid access cards and devices loaded with large amounts of money in or out of the United States, under a U.S. Treasury proposal made under pressure from Congress. The rule, unveiled on Wednesday, is not expected to have a substantial impact on ordinary travelers, many of whom use debit or credit cards when overseas. The rule represents an effort to get ahead of what law enforcement officials and others fear could be significant new digital tactics in international money laundering by drug dealers, militant groups and others. The proposal would add prepaid devices–such as prepaid cards, gift cards, and potentially cell phones–to the list of “monetary instruments” whose value must be aggregated. When the total exceeds $10,000, the traveler would have to file a Currency and Monetary Instrument Report CMIR.L under the Bank Secrecy Act, a U.S. law aimed at combating money laundering and tax evasion.

Story by Brett Wolf for Reuters

ATM SUIT AGAINST VISA, MASTERCARD LATEST TUSSLE OVER CARD FEES
The National ATM Council Inc., a group that represents independent operators of automated teller machines, on Wednesday filed a suit in U.S. District Court for the District of Columbia seeking national class-action status accusing Visa and MasterCard of anticompetitive practices. The group argues that rules by Visa and MasterCard requiring ATM operators to charge equal fees to access the credit card companies’ processing networks amount to price-fixing. The group’s members want the ability to charge consumers lower fees if their ATM transactions are completed over smaller processing networks that compete with Visa and MasterCard. Many banks that issue Visa- and MasterCard-branded debit cards also equip their cards with other networks. The inability to charge different prices results in “fees that inflate the retail price of ATM services and discourage consumers from consuming them,” the suit said.

Story by Andrew R. Johnson of the Wall Street Journal

MAJOR CREDIT CARD ISSUERS REPORT GROWTH IN DELINQUENCIES
Credit card delinquencies, defined as payments late by at least 30 days, increased slightly for five of the top six card issuers in September. While these increases were relatively small, it broke the trend of
declining delinquency rates that the industry had recently experienced. It could be a signal that consumers are again struggling to pay down credit card debt and are a higher risk for default in the future. The growth in late payments may lead banks to set aside more money to prepare for future losses. On a positive note, all six major credit card issuers reported further declines in the default or charge-off rates.

CITI’S MOVE TO KEEP CREDIT PORTFOLIO LATEST BOOST FOR CARD INDUSTRY
Citigroup Inc.’s decision to retain rather than sell a portfolio of retail credit cards is the latest boost of confidence for the card industry. Citi’s portfolio includes credit cards issued on behalf of merchants including Sears, Home Depot and Zale. Besieged by high loan-loss rates and a stagnant economy, many lenders that specialized in so-called partnership cards turned their backs on such programs during the recession to get their portfolios in order. But store cards have experienced a resurgence of sorts in the last year as the performance of many lenders has improved, with Citi’s announcement Monday the latest sign of a comeback. Since putting the retail card portfolios in Citi Holdings, the bank has worked to improve its marketing of the programs to ensure it and its partners are targeting the most ideal borrowers.

Story by Andrew R. Johnson for the Wall Street Journal

IN BATTLING MERCHANTS, BANKS STILL HOPE TO OVERTURN DURBIN RULES
The Durbin Amendment–the legislation that limits the fees banks can earn for debit card transactions to a scale that is “reasonable and proportional”–was signed into law more than a year ago. It survived the
financial sector’s strong objections to the Federal Reserve’s aggressive first swing at regulating those fees, as well as subsequent efforts in Congress to delay adoption of the new rules. Those new rules, which were eventually watered down in a compromise that left advocates fuming, took effect October 1. Even so, opponents persist. Last week they rallied behind
a pair of junior representatives, one Republican and one Democrat, who on Tuesday introduced a bill to turn the clock back on interchange fees.

Read the rest of this entry »

LAWMAKERS SEEK PROBE ON BANKS’ NEW DEBIT CARD FEES
Members of Congress are asking the Justice Department to investigate whether
Bank of America and other major banks improperly worked together to charge
customers new monthly fees for using their debit cards. Rep. Peter Welch,
D-Vt., and four other Democrats said Thursday that they’ve asked Attorney
General Eric Holder to open a probe into possible collusion by the banks.
Welch said the lawmakers had no evidence of collusion. But he said the
timing of the fees merit an investigation. “You don’t have a competitive
marketplace,” Welch said.

Story by Marcy Gordon for the Associated Press

CASH BACK REWARDS STAND OUT IN LATEST CARD OFFERS
Cash is king when it comes to credit card rewards these days. More banks are
venturing where once only Discover tread, by offering credit cards with cash
back as a reward. The trend reflects fierce competition for customers with
high credit scores, and an effort by banks to push existing customers back
to using credit cards instead of debit cards in the face of new regulations.
But the banks aren’t targeting everyone with these offers. Cash back
rewards, especially the cards with the richest programs like the recent
Capital One card, are available mainly to those with excellent credit
histories.

Story by Eileen AJ Connelly for the Associated Press

CREDIT CARD ISSUERS CIRCLING SUBPRIME BORROWERS AGAIN
Credit card issuers are knocking on the doors of subprime borrowers again as
they look for ways to grow their business amid stiff competition. The move
is part of a broader effort by banks to lure more credit card customers
after many lenders retrenched from the subprime market. A surge in losses
from soured loans during the recession and a regulatory overhaul prompted
many of the largest credit card issuers to focus exclusively on borrowers
with the best credit. To be sure, banks’ return to subprime credit cards
represents more of a baby step than a full-on race. By and large, issuers
are still approaching the market with caution, offering those customers
small credit lines and charging higher rates, analysts said. But experts
anticipate the trend will accelerate, barring a double-dip recession. And
the latest industry data bear this out. Banks issued 5.4 million new credit
cards to subprime borrowers through June, up 64% from a year earlier,
according to the most recent data from credit bureau Equifax. The company
defines a subprime borrower as having an origination risk score–a
proprietary definition–of less than 660.

Story by Andrew Johnson for the Wall Street Journal

SEVEN TIPS TO AVOID NASTY DEBIT CARD FEES
Debit card consumers are angry and looking to find ways to avoid the new
monthly fees being imposed on this popular payment option. In 2009, debit
cards surpassed credit cards as the most popular form of payment. Debit
cards were easy to use, payments were simple to track, there were no fees
or interest charges, and some debit cards even offered rewards. But now
some of the country’s major banks are charging monthly fees on debit card
usage, sending some consumers scrambling for another option. No one wants
to pay a monthly for using their own money, and if your bank has added a
debit card charge, you have many other options. This is a good time to
research and shop around for the best alternative for your particular need.
Here are seven tips to avoid those very unpopular debit card usage fees.

TWO AIRLINES BATTLE MILEAGE TRACKING WEBSITES
Two carriers have sent “cease and desist” letters in the past year to
several websites that track travelers’ loyalty programs. Southwest argues
the third-party sites threaten security of passenger information; American
doesn’t want outsiders “scraping” data off its website. Sites like
AwardWallet, MileWise and GoMiles have been growing in popularity.
You give the mileage manager account information for all your loyalty
programs, usually airlines, hotels and car rentals to see, in one place,
when miles are about to expire or which program is close to an award
or elite-status level. At the heart of the dispute is a little-known aspect
of programs that will surprise most anyone accumulating frequent-flier
miles: Most airlines claim they–not the travelers–own the miles and
even account passwords. The claim that airlines own the miles has
far-reaching implications. It means consumers can’t sell or barter their
frequent-flier miles or awards, and programs can simply cancel your
miles if you violate rules or don’t meet activity requirements.

Story by Scott McCartney for The Wall Street Journal

IDENTITY THEFT BUST EXPOSES NEED FOR ‘SMART’ CREDIT CARDS
When authorities announced Friday that they had charged more than 100
people in a massive identity fraud operation, they did not just blame the
alleged thieves. They also blamed the credit card companies. At a press
conference, Queens district attorney, Richard A. Brown, accused U.S.
credit card companies of “putting too much money into marketing and
not enough into security” and claimed they “would rather take the losses”
than invest in proven security measures, according to The New York
Times. Deputy Inspector Gregory T. Antonsen, the commander of the New
York Police Department’s Identity Theft Squad, told reporters the bust
showed the need for computer chips implanted in credit cards to deter fraud.
Experts say the United States is far behind Europe in adopting smart cards,
which require cardholders to enter a personal identification number on a
keypad, similar to a debit card transaction. Smart cards deter fraud because
they contain computer chips that encrypt transaction information and require
thieves to not only steal card data but also know the cardholder’s PIN,
experts say. The card’s computer chip also has the potential to generate
one-time-only passwords for more secure online commerce, experts say.

Story by Gerry Smith for the Huffington Post

AN INTERVIEW WITH VISA’S CEO JOSEPH SAUNDERS
Around the world, people use Visa cards to pay for, on average, $643 million
worth of stuff each hour, and Visa, of course, gets a small piece of every
one of those transactions. Rather pay with cash? Visa often gets a cut
there, too, since the company has a growing ATM business. It’s hard to
imagine a business model less “broke” than being the world’s middleman.
“People are using debit and credit cards more. That has counteracted the
weaker spending, and our revenues are growing faster outside the country.
Our goal is to generate more than half of our revenues outside the United
States by 2015. But in order to build a debit card business in a society,
you have to promote them to customers. In order to do that, you need to have
merchants who accept them. It is a chicken-and-egg question. We have
accelerated our investment in Brazil, Mexico, Japan and Australia.”

Story by J. Alex Torquino for SmartMoney

Read the rest of this entry »

BANKS HOPE CREDIT CARD USAGE INCREASES DUE TO NEW DEBIT CARD FEES
Consumers are outraged that banks are now charging monthly fees if they use their debit cards. Regions and SunTrust have already levied this monthly fee; Bank of America will begin charging a fee in 2012; and Chase (one state) and Wells Fargo (five states) are testing this fee in various areas. The common explanation from banks is that they are losing billions of dollars in revenue from the Durbin Amendment which basically cut the interchange fee on debit card transactions in half. Banks feel they need to make up for this loss of revenue, and charging customers to use their debit card is one way to generate revenue. But could there be another reason for a monthly charge on debit cards? Are banks trying to indirectly force consumers to use credit cards because credit cards are much more profitable to these financial institutions? If consumers choose to now go without a debit card in order to avoid these monthly fees, consumers will turn to other forms of payment, and credit card usage could increase dramatically.
That would be great news for banks because credit cards are a much greater profit center for two reasons.

THE MATH BEHIND BANK OF AMERICA’S $5 FEE
Why $5 a month? Because that’s a reasonable amount to assume the bank will lose per customer under the new fee structure. The old fee was 44 cents per transaction and the new maximum fee is 24 cents, making for a loss of 20 cents per transaction per customer. Assuming the average customer makes 25 debit card transactions each month, that’s $5 per customer that Bank of America is losing under the new swipe fee. Charging each customer who uses a debit card to make a purchase an extra $5 a month, the bank makes up for the lost revenue. Interestingly, the $5 fee will not be charged to consumers who have a debit card and use it only at ATMs. ATMs have their own set of fees, not affected by the new swipe fee rule.

Story by Mark Huffman for ConsumerAffairs.com

THE DICK DURBIN BANK FEES
Conceived of as a narrow special-interest giveaway to large retailers, the Durbin amendment will have long-term consequences for the consumer banking system. Wealthier consumers will be able to avoid the pinch of higher banking fees by increasing their use of credit cards. Many low-income consumers will not. Banking will become less innovative and consumer-friendly. As many as one million individuals will drop out of the
mainstream banking system and turn to check cashers, pawn shops and high-fee prepaid cards. Consumers will also be encouraged to shift from debit cards to more profitable alternatives such as credit cards, which remain outside the Durbin amendment’s price controls. Prepaid cards, also exempt from the Durbin amendment’s price controls, may also become a more attractive alternative to debit cards for many consumers. These cards were once the province of low-income consumers without bank accounts, but over the summer American Express rolled out a new prepaid card aimed at higher-income consumers looking for alternatives to debit cards.

Article by Todd Zywicki for the Wall Street Journal

http://online.wsj.com/article/SB10001424052970204831304576597173130633798.html?KEYWORDS=%22credit+cards%22

BANKING ON A NEW GENERATION OF CREDIT ALTERNATIVES
Financial institutions, which tend to ratchet up their fees across a wide swath of their customer base to make up for lost income, have always banked on the “stickiness” of their customers. While customers may have been “stuck” several years ago, that is no longer the case. Companies such as Google, PayPal and Square are now offering a wide range of alternative payment mechanisms that could finally mean lower transaction costs for consumers. Instead of competing with smaller community banks, the largest financial institutions will be forced to contend with new technology options that enable consumers to make payments at the point of sale, often without the need for a debit or credit card. (Google Wallet enables prepaid cards) This is exciting stuff if you’re a customer, and downright frightening if you’re a financial institution. It’s one thing to compete with a sleepy community bank for your business, it’s another thing entirely to compete with Google. When customers feel at home using tablets and smart phones to make payments, they have less inclination to pull a piece of plastic out of a leather wallet. For now, these payment alternatives have a significant amount of ground to make up before they truly represent a threat to
financial institutions and the old way of doing business. It may be too early now to talk about the Law of Unintended Consequences, but years from now, we may owe a debt to reforms like Dodd-Frank for finally
weaning us off the physical wallet and encouraging us to experiment with the new technologies helping to create the Digital Wallet. Why carry around a wallet full of plastic when your smart phone or tablet
can do the same thing? Better yet, why pay higher fees for financial services when technology will soon make it possible to get a similar service at a cheaper rate?

Story by Dominic Basulto for the Washington Post

http://www.washingtonpost.com/blogs/innovations/post/banking-on-a-new-generation-of-payment-alternatives/2010/12/20/gIQArTifJL_blog.html

CREDIT CARD BILLS PAID LATE DECREASED IN SECOND QUARTER
The number of credit card bills paid late decreased in the second quarter, according to the American Bankers Association. The number of credit cards bills paid late fell to 3.22 percent from 3.4 percent in the first quarter. The average bank card delinquency rate over the last two years is 3.78 percent. The ABA’s composite ratio, which tracks eight types of closed-end consumer installment loans, was up to 2.88 percent.

Story by Alex Tanzi for Bloomberg

http://www.bloomberg.com/news/2011-10-05/u-s-second-quarter-consumer-credit-delinquency-rates-table-.html

CHASE’S CARD CHIEF REBUILDS BUSINESS PART BY PART
Gordon Smith, credit card chief of JPMorgan Chase, is applying several lessons taken from the consumer finance industry’s playbook: improving customer service, combining many rewards programs into one and shedding cards that are not profitable enough. Along the way, he is spending hundreds of millions of dollars mailing card offers. Step back and look at what Smith is building, and it looks a lot like American Express: a business that caters to rich clients and relies increasingly on processing fees to make money. Chase starts with some big disadvantages. Although its Paymentech processes transactions for merchants, it does not run the Visa or MasterCard global networks that accept its cards and influence how much it can charge for credit card transactions. Chase’s credit card business is second in size only to American Express, and contributed 12 percent of JPMorgan’s $17.4 billion of profits last year. If Smith pulls off the transformation, the rewards could be handsome. Smith is making progress. Profits have recovered under his watch. He’s improved the bank’s customer service rankings for credit cards, and he is getting ahead of competitors who also issue MasterCard and Visa cards.

Story by David Henry and David Wilchins for Reuters

http://www.reuters.com/article/2011/10/04/us-jpmorgan-smith-idUSTRE79345E20111004

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BANK OF AMERICA TO CHARGE $5 MONTHLY FEE FOR DEBIT CARD PURCHASES
Soon, it’s going to cost more money to spend money. Bank of America will begin charging debit card customers a $5 monthly fee for using their plastic to make purchases starting next year. The move follows tests by other major banks, including Wells Fargo and J.P. Morgan Chase, to tack monthly fees onto debit cards. Banks are making the change because revenue from lucrative interchange fees paid by merchants–so-called swipe fees–is drying up. The Federal Reserve Board issued rules in June that essentially cut swipe fees in half, from an average of 44 cents to 24 cents per transaction. The new rule takes effect Oct. 1, and Bank of America has said it will lose $2 billion annually because of the change.

WHY U.S. CREDIT CARDS FAIL OVERSEAS
Having a credit card when you were traveling outside the U.S. used to mean you’d be able to get something you needed, no matter where you were. Sure, you might face steep transaction fees, or find a mysterious exchange rate. Now it’s a crapshoot whether your card will get accepted. That’s because the rest of the world has moved away from the magnetic strip which provides the guts of most U.S. cards to a technology dubbed chip-and-PIN. Those magnetic strips rely on the information carried through a network to authorize the sale. Not so with the chip-and-PIN smart cards, which uses a microchip embedded in the card containing all the relevant information for a purchase and are generally used with a PIN, which has reduced fraud significantly. Magnetic stripe cardholders have the biggest problems when they are traveling outside major cities and when there is an automated machine to accept payments, rather than a person who can use one of the older processors, the credit card industry backed Smart Card Alliance says.

CONSUMERS FEEL PAINFUL CONSEQUENCES OF REDUCED INTERCHANGE FEE
New interchange fee regulations go into effect October 1, but many consumers are already experiencing some painful consequences. New rules that will cut the cost of the interchange fee for merchants have already helped trigger more fees for debit card use, some monthly charges on checking accounts, eliminated most debit card reward programs, and may end the convenience of using a debit card for small purchases.

DON’T LIKE THE GIFT CARD YOU GOT? TRY AN ONLINE EXCHANGE
So the good news is that Aunt Lula finally remembered your birthday. The bad news is that she sent you a gift card to her favorite store, and you’d rather eat bees than shop there. What to do? A burgeoning number of online card exchanges are making it possible to turn unwanted cards into cash, cards from other retailers or even playing time on online games. And because sellers of unused cards typically have to sell them at a discount, people are buying from the exchange sites to cut costs. Websites like GiftCardRescue.com and PlasticJungle.com buy gift cards for 80% to 85% of their face value and sell them for 85% to 90% face value. The exchanges make money by pocketing the difference.

HOW ABOUT A SAVINGS ACCOUNT THAT EARNS 5.1 PERCENT
Here’s an eye-popping interest rate: 5.1 percent. You can earn that much in a plain old savings account, if you are willing to jump through some hoops. Union Plus has launched a low-fee prepaid Visa card tied to a high-yield savings account. The prepaid card offers an alternative to traditional checking accounts and to high fee check-cashing establishments frequented by the unbanked. As I’ve written in the past, prepaid cards have been growing in popularity, but they can be riddled with fees for everything from depositing money to taking money out. However, some institutions have listened to consumer outcry about excessive fees. Union Plus is one of them. There are several ways to add money to the card without a fee. Plus there are no monthly maintenance fees so long as you deposit $500 per month on the card (otherwise it’s $2/month), and no fees for activation, statements or customer service. The main fees are for ATM withdrawals ($1.50) and bill pay ($1).

CONSUMER TIPS FOR THE ELDERLY IN MANAGING DEBT
The economy has taken its toll on many Americans, especially senior citizens who live on a fixed income. Social Security has not had a cost-of-living adjustment since 2008. Retirement funds are shrinking as stocks drop, and interest rates for CDs and savings accounts are at record lows. A greater number of senior citizens are overwhelmed with debt, especially on credit cards and mortgages. According to the Strategic Business Insights’ MacroMonitor, 39% of the homes where the head of the household was between 60 and 64 years old had primary mortgages, and 20% had secondary mortgages. In 1994, those figures were just 22% and 12% respectively. Mortgage debt claims a large share of their income, and home values still haven’t recovered from the housing collapse three years ago. The golden years of retirement have become a difficult struggle for many seniors.

http://www.lowcards.com/blog/consumer-tips-for-the-elderly-in-managing-debt-2712/

JESSE JACKSON BLASTS CAPITAL ONE’S PLANNED ING DEAL
Rev. Jesse Jackson and other critics took aim at Capital One Financial Corp’s business model on Tuesday, saying that the bank’s credit card business is so risky it would pose a threat to the U.S. financial system.
Rev. Jackson, unmoved by the bank’s fresh pledges to hire new workers and invest in underserved communities, said Capital One has a troubling business pattern of marketing costly credit cards to vulnerable borrowers. He contended that the bank then spreads risk to the American public by packaging that credit card debt into securities. As part of its efforts to sell the deal to regulators and the public, Capital One has promised a host of hiring and lending initiatives. Last week, the company promised to invest $180 billion over 10 years in low and moderate-income communities. This week, the company highlighted another potential benefit of the deal: more jobs. Capital One on Monday announced that if the acquisition is approved, it will add 500 jobs in Delaware, the home of ING Direct USA’s headquarters.

Story by Maya Jackson Randall for the Wall Street Journal

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 is 14.28 percent, an increase from 14.11 percent last week. Six months ago, the average was 14.16 percent. One year ago, the average was 13.66 percent.

VISA & MASTERCARD MAY HIKE DEBIT CARD COSTS
The price of small purchases on debit cards could soon rise sharply–for merchants, that is. Visa and MasterCard are reportedly planning to dramatically raise the fee charged to merchants for small ticket items,
according to Janney Capital Markets analyst Thomas McCrohan. Today, a merchant pays about 8 cents to the card networks to process the purchase of a $2 cup of coffee, but McCrohan said the two companies are planning to spike that to 23 cents. That will “kill the economics for small ticket debit purchases and influence a shift back to credit cards,” he wrote in a note to clients. The fees that merchants pay for credit card
transactions were not addressed in a new regulation limiting debit card fees to roughly 24 cents per transaction, regardless of the total price of the purchase. The new rule takes effect Oct. 1.

Story by the Associated Press

http://www.google.com/hostednews/ap/article/ALeqM5g8dUMYKmVtufwwDF86R2WW9sZ5aQ?docId=287d7f1a1bfb40ecaf4262107f707082

CITI TO RAISE MONTHLY FEES ON CHECKING ACCOUNTS
Citi is raising the monthly fee on its basic checking account. The new fee will be $10, up from the previous $8. At the same time, the bank said Friday that it will waive fees and offer bigger rewards if customers sign up for more services. The changes reflect a broader industry push to deepen relationships with customers and capture more of their business. For example, Citi also said it will no longer give rewards points for debit card purchases. But customers will be able to earn more points each month by opening a Citi savings account or setting up a feature that automatically transfers money into a savings account. Customers will also be able to avoid the monthly fee if they maintain a balance of at least $1,500 or sign up for direct deposit and online bill pay.

Story by Candice Choi for the Associated Press

http://www.google.com/hostednews/ap/article/ALeqM5iaZ0mAGs4-Xj5pZZ2Dcf71SUsi4g?docId=13c0a350c999419299815bcdb00ee7bb

MONEY ISSUES OF SURVIVING SPOUSES
The death of a spouse is a wrenching event. To make the pain and anxiety worse, survivors find themselves grappling with financial and legal questions at a time when many people understandably aren’t thinking clearly. The immediate challenge is handling the logistical issues that crop up in the days and weeks that follow a spouse’s death–especially an unexpected one. At the same time, care needs to be taken to avoid making decisions or missteps that will prove complicated or perhaps impossible to undo years down the road. Before paying bills, it’s important to consult with an
attorney. Some debts, such as a legal judgment or credit cards in the name of the deceased only, may not have to be paid. Other debts will be paid out of the estate.

Story by Tom Lauricella for the Wall Street Journal

http://online.wsj.com/article/SB10001424053111903927204576577170670302708.html?KEYWORDS=%22credit+cards%22

MOBILE WALLET MARKET HEATS UP WITH DEBUT OF GOOGLE WALLET
After years of speculation, mobile payments are finally a payment option for some smartphone users with this week’s debut of Google Wallet. Mobile phones provide daily conveniences for Americans, but flashing a phone at the register may not be any easier than swiping a credit card, and it may provide more risk to the consumer. Consumers won’t save money by paying
with a mobile phone. The same fees and interest rates for consumers and interchange fees for retailers will apply to mobile payments. Retailers are also reluctant to spend the money to buy the equipment necessary to link your cell phone to their cash registers. Google Wallet is the first mobile wallet entry, but it won’t be the last. At least three competing digital
wallets (from Visa, PayPal, and Isis-a joint venture of AT&T Mobility, T-Mobile, and Verizon Wireless) are planned for launch later this year and in 2012.

http://www.lowcards.com/blog/mobile-payment-market-heats-up-with-debut-of-google-wallet-2700/

DEBIT OR CREDIT? CITI PLACES ITS BET
Making an aggressive push to rebuild a flagging business, Citigroup Inc. is stuffing America’s mailboxes with credit card solicitations. Citi mailed an estimated 346 million card offers to North American customers in the third quarter, according to figures to be released later this month by Mail Monitor. That is more than one for every man, woman and child in the U.S. The postal blitz is expected to make Citi the largest mailer of credit card offers, ahead of longtime industry leader Chase, for the first time in eight years. It shows how Citi is trying to regain ground ceded to rivals after losing hundreds of millions of dollars on credit cards following the 2008 financial crisis. Citi said it is being more selective in its marketing, focusing on well-to-do consumers instead of the broader swath of customers targeted in the past. But the solicitations won’t come cheap for Citi. A piece of direct mail can cost upward of 70 cents, including postage, putting Citi’s direct-mail expenditures at more than $240 million in the third quarter, analysts said. Overall card solicitations remain well off their highs of 2005. Response rates for direct mail have been falling, prompting issuers to turn to other avenues such as the Internet for acquiring new customers.

Story by Suzanne Kapner for the Wall Street Journal

http://online.wsj.com/article/SB10001424053111903374004576581084218444302.html?mod=googlenews_wsj

COMMUNITY BANKS CALL FOR HALT ON BIG-BANK MERGERS
A trade group representing U.S. community banks called on Tuesday for a moratorium on mergers involving financial firms with more than $100 billion in assets. The Independent Community Bankers of America made its pitch to regulators at the first in a series of public hearings the Federal Reserve is holding to review Capital One Financial Corp’s proposed takeover of ING Groep NV’s U.S. online banking portfolio.

Story by Alexandra Alper for Reuters

http://www.reuters.com/article/2011/09/20/capitalone-hearing-idUSS1E78J0NN20110920

BANK OF AMERICA STEERS BROKERAGE CLIENTS TO CREDIT CARDS FOR REWARDS
Bank of America is pushing some of its brokerage clients who want to keep their debit rewards to switch to credit cards following U.S. caps on debit card transaction fees. Customers who have the Visa signature rewards debit card linked to their brokerage accounts will no longer earn rewards points after November 15, according to a letter sent to clients last week. They’re invited to apply for a Visa signature credit card and earn a one-time bonus of 25,000 points if they make retail purchases totaling at least $1,000 by February 28. They’ll also get double points for purchases made within 90 days of creating the credit card account if opened by that date. Customers of Merrill Lynch Wealth Management who have earned rewards points on their Visa debit cards and open up credit cards will have those points automatically transferred to the credit cards, the letter said. If they don’t apply for the credit cards, they can redeem their rewards points by visiting card.ml.com by May 18. Rewards points that aren’t redeemed by May will expire.

Story by Dakin Campbell and Donal Griffin of Bloomberg Businessweek

http://news.businessweek.com/article.asp?documentKey=1376-LRS3QG1A74E901-26827IIGGCGS6IJIQR983NREFL

VISA SEEKS GROWTH IN DEVELOPING COUNTRIES THROUGH FUNDAMO
Visa is going after the world’s developing regions to grow its payments processing business. Key to the San Francisco-based credit card company’s strategy is Fundamo, a South African-based company focused on mobile payments in emerging markets that Visa acquired in June for $110 million. Fundamo’s technology lets users send and receive money through software that resides on a feature phone or smartphone. So far, Fundamo has been rolled out to 34 developing countries, up from 27 in June. Although the market is in its infancy, a spokesman said payment volume growth is “spectacular” and that it maintains 30% to 50% market share in the countries it does business in. Visa acknowledges the U.S. market is different but says in many developed countries, mobile payments can still fulfill an important need to get money from one person to another.

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AMERICAN EXPRESS SEEKS ACQUISITIONS IN ONLINE, MOBILE
American Express is looking at large international acquisitions that will help it benefit from booming demand for mobile payments and online commerce in emerging markets. American Express wants to gain a bigger foothold in the growing market for Internet commerce and payments over wireless devices, seeking to challenge rivals such as Visa Inc. and Google Inc., which have announced their own mobile-transaction services. Payments made with mobile phones alone will reach $670 billion globally by 2015, up from $240 billion this year, according to consultant Juniper Research. In developing countries such as India and China, a growing number of consumers are acquiring credit cards and smartphones. China will surpass the U.S. as the world’s largest credit card market by 2020, MasterCard Inc. said last year.

Story by Olga Kharif for Bloomberg

RECLAIMING YOUR LIFE FROM IDENTITY THIEVES
You can’t know how big a hassle it is to have your identity stolen until some scammer enters your life and starts taking over. An estimated 10 million Americans fall victim to ID theft every year, with related losses running in the billions of dollars. The Federal Trade Commission warned last month that fraudsters are increasingly snatching the Social Security numbers of children from school forms and using them to open credit card accounts. Each ID theft victim spent an average of 59 hours last year recovering from the incident, up from 41 hours in 2009, according to consulting firm Javelin Strategy & Research.

Story by David Lazarus for the Los Angeles Times

AMERICAN EXPRESS LATE PAYMENTS REACH A NEW LOW
American Express on Wednesday said that its late payment rate, already the lowest in the industry, reached a new low in August. Card holders payments\ late by 30 days or more dropped to just 1.4 percent of balances on an annualized basis, from 1.5 percent in July. That’s more than a full percentage point lower than other card companies have reported in recent months, and less than half the rate for most rivals. Amex’s write-off rate for the month was 2.7 percent. That was down from 2.8 percent in July, and is also substantially lower than any other credit card issuer. The company’s charge-offs peaked at 10.4 percent in April of 2009, and the figure has been below 5 percent since September 2010. Amex’s low default and delinquency rates in part reflect its more affluent customer base and its stricter management of troubled accounts.

Story by the Associated Press

U.S. GETS CHANCE TO CATCH UP ON CREDIT CARD SECURITY
The next time you swipe your credit card at check-out, consider this: it’s a ritual the rest of the world deems outdated and unsafe. The United States is the only developed country still hanging on to credit and debit cards with those black magnetic stripes, the kind you swipe through retail terminals. Last month, Visa announced policies that will give U.S. banks a reason to issue smart cards and stores several reasons to accept them, starting in 2015. Next year, Visa will start dangling this carrot in front of store owners: if they replace most of their terminals with ones that accept smart cards, they will no longer need to have their payment-system security checked every year. U.S. stores spend millions of dollars a year for these audits. In an even more momentous shift, in 2015 Visa is shifting the liability for a certain kind of fraud from the banks to stores. The specific case is this: If a customer presents a smart card in a store that can’t accept it, then it will fall back to using the backup magnetic stripe on the card. If that transaction turns out to be fraudulent, the payment processor will be liable, and in practice, make the store eat the loss.

Story by Peter Svensson for the Associated Press

BANK OF AMERICA CHIEF PROMISES $5 BILLION IN CUTS
Bank of America’s chief executive, Brian T. Moynihan, vowed on Monday to eliminate $5 billion in costs annually by 2013, but did not detail how many job cuts that would mean at the company, which employs 288,000 people and is the largest bank in the United States. While he did not specify the number of jobs that might be involved, the company has indicated it planned to cut at least 30,000 jobs in the next three years. Out of $73 billion in annual expenses, Mr. Moynihan aims to cut at least $5 billion by shutting some of its 63 data centers, eliminating overlapping deposit systems and trimming layers of back-office staff accumulated during the acquisition binge undertaken by his predecessor, Ken Lewis.

Story by Nelson Schwartz for the New York Times

FIVE NEW CREDIT-CARD MANAGEMENT TIPS
Perhaps all the news over the past few months has me scrutinizing credit card statements on behalf of consumers, but I noticed that the language on the American Express statement says “please pay by.” I wondered: was this an actual due date or an effort to get consumers to pay their bills earlier? With that in mind, I decided to ask some questions and find new tricks and tips to help consumers weather their credit cards such as true due date, late fees, and forfeited rewards and points.

Story by Jennifer Openshaw for MarketWatch

BANK OF AMERICA OFFERS TWO NEW REWARD CARDS
There are over 1,000 credit cards available in the United States and, without a doubt, reward cards have become one of the most competitive categories in 2011. Major card issuers are all vying to secure new customers with high credit scores, and the bait they are using are increased rewards. The country’s largest bank, Bank of America, is launching two new reward cards–BankAmericard Cash Rewards and Cash Rewards for Business MasterCard credit cards. The new BankAmericard Cash Rewards credit card pays cardholders 1 percent cash back on all purchases. Customers can also earn 2 percent cash back on grocery store purchases and 3 percent cash back on gas station purchases on the first $1,500 of combined purchases made during each calendar quarter. The card has two other bonuses: a $50 bonus in cash rewards once you spend $100 during the first 60 days of the account; and a 10 percent bonus when customers deposit their cash rewards into their Bank of America checking or savings account ($25 in cash rewards = $27.50 deposit).

CREDIT PROBES GO BEYOND SCORES
The next time you seek out a loan, apply for a store credit card or maybe just sign up for a cellphone, the companies you do business with might take a deeper look at your credit history than you know. More lenders are now probing consumers’ personal financial data in ways they didn’t in the run-up to the Great Recession, industry experts and consumer groups say. And they’ll likely rely on a lot more information than a traditional credit score. The moves, driven largely by regulatory changes, could open up credit opportunities for some borrowers. Consumer groups, though happy about lending reforms, are wary about the way data might be handled. Under new laws such as the Credit CARD Act, lenders are required to verify consumers’ ability to repay loans. Credit agencies are responding to the new demand for personal information by offering it separately from the traditional credit background and score. New-look consumer files may take into consideration job history, net worth and income.

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