LowCards.com Weekly Credit Card Update January 4
Consumer Watchdog Readies to Bare Its Teeth
The Consumer Financial Protection Bureau is entering 2013 poised to flex its muscles as it finishes up a list of studies and rules required by the law. They will have wide latitude to focus on other areas of consumer finance. The CFPB has plenty of cash to spend on its work: The bureau left unspent nearly $44 million of its $343 million 2012 budget. Areas in which the agency is expected to act include overdraft fees, student lending, debt collectors and credit-reporting firms. Story by Victoria McGrane at the Wall Street Journal.
Justin Bieber Promotes Prepaid Card
Watch out, teeny-boppers–and the parents paying their bills. Justin Bieber has become the latest celebrity to enter the prepaid debit card market, inking a deal with BillMyParents.com on a new SpendSmart card aimed at teenagers. Bieber is just one of many celebrities to take up the spotlight on plastic. Others include Magic Johnson, the Kardashians, Suze Orman and even cartoon characters. Meanwhile, major issuers such as American Express and a number of big banks have become players in the past year. The prepaid market is growing. But the cards come with shortcomings, such as hidden fees and the fact that they don’t help cardholders build credit. Story by Renee Morad for MSN.
Financial Reform Battle Continues Over Dodd-Frank Law
Congressional leaders on both sides of the aisle are still attempting to modify the Dodd-Frank Act. Since its creation, lawmakers have railed against the law for either not going far enough to reform Wall Street or being too burdensome to the industry. Republicans have sought to dismantle Dodd-Frank through a series of failed bills, but rhetoric has softened and bipartisan alliances have formed to the point where meaningful legislation may be on the agenda next year. Story by Danielle Douglas for the Washington Post.
Discover Pushes the New “It” Card
Discover is now heavily promoting a new credit card that it introduced last summer as a friendlier card with low fees. The “it” card is a good choice for consumers with lower fees, payment flexibility, and rewards that are an improvement over the Discover More card. The card has a 0 percent introductory interest rate for 14 months on both purchases and balance transfers. The Discover it card offers 5 percent cash back on up to $1,500 in purchases in categories that change each quarter. The Discover it card is a better choice than the Discover More card since the initial payout is slightly more lucrative. The it card pays 1 percent on all purchases from the very first transaction where the More card pays a smaller 0.25 percent on the first $3,000 in annual purchases. Story by Lynn Henderson for LowCards.com.
Regulators Cut J.P. Morgan’s Community-Lending Grade
In a rare occurrence, regulators twice in the past six months disclosed downgrades of J.P. Morgan Chase. The Office of the Comptroller of the Currency lowered J.P. Morgan Chase’s primary deposit-taking bank and credit-card-lending unit to “satisfactory” from “outstanding” after examining their performance under a law designed to encourage banks to lend to low- and moderate-income neighborhoods. The OCC levied a $2 million fine in 2011 after finding that J.P. Morgan used high-pressure sales tactics and made false statements in the marketing of a credit-protection product sold by its car-loan division. Story by Dan Fitzpatrick for the Wall Street Journal.
Extra Benefit to Cardholders During Gift Card Weekend
Once again, the most popular gift this past holiday season was a gift card. If you received one, this weekend may be the time to use it. The second annual Gift Card Weekend will take place from January 4 through 6. A number of national retailers are giving cardholders some extra benefits for using their gift cards during this period. Participating retailers include Bass Pro Shops, Cabela’s, Bath & Body Works, AMC Theatres, Regal Entertainment Group, Applebee’s, Olive Garden, Chili’s, California Pizza Kitchen, LongHorn Steakhouse, Subway, Red Robin and Marriott. Story by John Oldshue for LowCards.com.
Debit, Credit Card Hybrids Fall Flat
Hybrid debit and credit cards have yet to live up to their promise to be a replacement after debit card fee caps. Problems the hybrid cards have run into include a lack of appeal among consumers and more technologically sophisticated alternatives that may have caused bankers to balk at investing in them. One reason is that banks have found other ways to soften the blows from debit card fee caps. They include curtailing debit rewards programs, increasing fees associated with checking accounts and promoting credit cards more aggressively via marketing and rewards programs. Story by Kevin Wack in American Banker.
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 14.35 percent, identical to last week. Six months ago, the average was 14.32 percent. One year ago, the average was 14.01 percent.