LowCards.com Weekly Credit Card Update–April 10, 2015

April 10, 2015, Written By Lynn Oldshue
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Walmart Exec: New Credit Card Design Won’t Solve Fraud
There’s been some hope that improved credit card technology might finally lead to greater security and a reduction of credit card fraud. One idea has been credit cards with embedded chips, which can encrypt data during transactions, according to Bank of America, making the process more secure. But the basic technology, which is widely used throughout the world, is being introduced with a significant flaw in the U.S., as a Walmart executive said at a conference, according to CNNMoney. The cut corner will turn the new implementations into a “joke,” said Mike Cook, assistant treasurer and senior vice president at the company. The problem is banks that enable the chip technology will only require signatures, not the input of a PIN code. Story by Erik Sherman for Daily Finance.

4 Ways to Help Kids Establish Credit
When it comes to the best way to get kids that first card, there’s no definitive answer. Parents have four potential options. They can co-sign for their kid’s card, make the child an authorized user on a parent’s account, help them establish a banking relationship that comes with a low-limit card or suggest that they get a secured card. The best choice is likely to depend on both the student and his or her parents. Here are the options, their benefits and detriments. Story by Kathy Kristof for CBS MoneyWatch.

Exponential Growth Of Online Personal Loans Threatens Credit Card Profits
Because people were willing to build up balances on credit cards without worrying about interest rates, credit cards became (and remain) incredibly profitable for banks. In a world where universal banks are struggling to generate a double-digit Return on Equity, credit card businesses are regularly generating returns above 20%. As a result, many banks have discontinued their personal loan businesses entirely, and steer all consumer borrowing needs to credit cards. But in the last few years, a new crop of startups, mostly in California, have recognized that the borrowers are not getting a good deal. According to the Federal Reserve, there is now $885 billion of outstanding revolving debt. These startups want people to refinance their credit card debt from high, double-digit interest rates to much better rates. The personal loan companies have a simple plan. First, they have created a low-cost operating model. These are digital businesses that have redesigned and automated much of the lending and customer service model. Second, most of these businesses are creating marketplaces. And finally, they have been designed to be the opposite of credit card lending. Story by Nick Clements for Forbes.

Banks Raising Credit Card Borrowing Limits for Subprime Customers
The nation’s major banks are more readily raising borrowing limits for credit card customers—including those with blemished credit histories—and are facing higher risks as a result. With profits pinched by tighter regulation and low interest rates, banks are easing lending standards at a time when loan losses have plunged, labor markets are stabilizing and consumers are spending more, industry analysts said. Consumer advocates, however, worry that banks’ pursuit of profits could result in sticking struggling consumers with more debt than they can handle. Credit card firms approved 61% of the requests from cardholders for higher borrowing limits in an October survey by the Federal Reserve Bank of New York. But that approval rate shot up to 76% in February’s national survey. Story by E. Scott Reckard and Dean Starkman for the Los Angeles Times.

Millennials Give Prepaid Debit Cards a Boost
Millennials, the generation weighed down with student loans that abhors taking on more debt, are embracing a once-derided financial product: Prepaid debit cards. A third of Americans 18-34 years old have used a reloadable prepaid debit card compared with only a quarter of Americans overall, according to a new survey by TD Bank. And 60 percent of millennials would consider using one compared with half of the overall population. One reason: They’ve cleaned up their act. Prepaid debit cards used to be notorious for charging high fees, including several prepaid cards promoted by celebrities, such as Justin Bieber and Kim Kardashian. But criticism from consumer advocates—and cheaper offerings from American Express and Chase in recent years—put pressure on the bad actors to lower fees or leave the market. Story by Tom Anderson for CNBC.

Protecting Your Child Against Identity Theft
Stealing a child’s Social Security number is one of the biggest prizes for an identity thief. Children have no credit files and, since parents rarely suspect anything, these stolen numbers can normally be used for years. Social Security numbers are likely stolen more from medical record breaches. After all, young children usually don’t have credit card accounts or, in most cases, even know their Social Security numbers yet. Almost half of the data breaches in 2014 took place in medical databases. The breach in December of the Anthem insurance database, where over 80 million people had their social security numbers stolen, may well cause a surge in attempts at child identity theft. An expert with Experian has estimated that 24 million children may now be at risk just from the Anthem breach alone. Story by Bill Hardekopf for LowCards.com.

Microsoft Might be Working on its Own Payment System
Apple Pay. Samsung Pay. Android Pay. Pretty soon, there might even be a Microsoft Pay. Or “Microsoft Payments” rather. Some evidence have surfaced pointing to Microsoft’s intention to become a money transmitter in the US as well as the country’s current and former territories. Although it is still in the extremely early stages of preparing the legal foundations of such an enterprise, Microsoft could very well be planning to take on the still nascent and somewhat unproven mobile payment industry, pitting it against Apple, Google, and Samsung who already has a head start. Story by JC Torres for Slash Gear.

How to Get a Low-Fee Prepaid Card That Actually Helps You
Prepaid debit and credit cards take their lumps from consumer advocates, and in many cases, deservedly so. The cards tend to come with high fees and high interest rates. NerdWallet estimates that the average prepaid debit card comes with $300 in “basic” fees attached for every year of ownership—and that’s before activation, cancellation, paper statements and other fees kick in. The prepaid card industry is trying to change that toxic image. A study shows that 26% of cards have no monthly fee and 26% will waive the monthly fee if a certain amount is loaded on the card. Altogether, 52% of the cards either have no monthly fee or will waive it, contributing to a summation that prepaid card monthly service fees, activation fees and fees for calling customer service have declined over the past year. Story by Brian O’Connell for Main Street.

LowCards.com Weekly Credit Card Rate Report
Based on the 1,000+ cards in the LowCards.com Complete Credit Card Index, the average advertised APR for credit cards is 14.45 percent, slightly lower than last week’s average of 14.47 percent. Six months ago, the average was 14.56 percent. One year ago, the average was 14.45 percent.

The information contained within this article was accurate as of April 10, 2015. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.