LowCards.com Weekly Credit Card Update–October 4, 2013
CFPB Targets Banks’ Campus Deals
The Consumer Financial Protection Bureau is concerned that deals between banks and colleges steer students toward checking accounts and debit cards that come with high fees or other costs. Schools and the banks say any fees and other banking options are clearly explained to students. Story by Alan Zibel for The Wall Street Journal.
An Occupy Wall Street Debit Card?
Prepaid debit cards–it seems just about every celebrity has tied their name to one. Occupy Wall Street is joining in. On the two-year anniversary of the movement, some of the organizers formed an organization called the Occupy Money Cooperative. Their first product: a prepaid debit card. Story by Bill Hardekopf for LowCards.com.
Student Loan Straitjacket
People struggling to pay down student loans and other debt may resort to filing for bankruptcy, which generally offers a fresh start. But they also may owe more on their student borrowing at the end of the process. The federal bankruptcy code makes it almost impossible for consumers to get rid of student loans. This is to prevent people from filing for bankruptcy soon after they leave college in an attempt to get out of their school loans. Chapter 13 of the code generally restricts these borrowers from making full payments on student loans during the three-to-five-year bankruptcy period which allows lenders to add interest, late fees and other
penalties to the student-loan balances during that time. Story by Katy Stech for the Wall Street Journal.
CFPB Report Finds CARD ACT Saved Consumers Money
The Credit CARD Act, which limited credit card companies from changing the rules on consumers mid-game, has resulted in lower credit costs for consumers, the CFPB said in a new report. The total cost of credit declined two percentage points between 2008 and 2012, according to the report. The decrease happened despite an increase in interest rates and annual fees. It seems better price disclosures at the front end have allowed consumers to better predict and control their costs at the outset, rather than being caught off guard after they spend. Story by Sheryl Harris for the Cleveland Plain Dealer.
What are the Most Popular Credit Card Complaints?
Most of the top five complaints from consumers revolve around issues that seem a little less expected. Over the past two years, there have been over 25,000 complaints registered with the CFPB about various credit card companies. The five areas that scored the most complaints in the past two years: billing disputes, APR or interest rate, identity theft/fraud, closing/canceling Account, and credit reporting. Story by the Huffington Post.
CFPB Bars Payment Firm Over Debt-Settlement Fees
The U.S. consumer watchdog fined payment processor Meracord for helping to collect illegal debt-settlement fees, part of a broader crackdown on companies that offer to help borrowers get rid of debt. The bureau filed a complaint that Meracord helped collect upfront fees from borrowers, even though settlement firms are not allowed to charge such fees before actually eliminating or reducing consumers’ debts. Meracord and its chief executive, Linda Remsberg, agreed to pay a $1.376 million penalty and are barred from processing payments for debt-settlement companies. Story by Reuters.
Tighter Mortgage Lending Rules Coming
New rules issued by the CFPB are scheduled to take effect in January that will tighten lending standards and curb loose practices that triggered the real-estate meltdown. Under these new regulations, lenders are encouraged to underwrite only “qualified mortgages” that meet the tougher standards. Rules are specific about the borrower’s debt-to-income ratio, which looks at monthly debts as a percentage of gross monthly income. Borrowers can’t have a debt-to-income ratio above 43%. Story by Anya Martin for Marketwatch.
Bank CEOs Warn of Consequences from Shutdown, Default
Chief executives from major financial institutions met with President Obama on Wednesday and warned of “adverse” consequences if government agencies remain closed and if lawmakers failed to raise the U.S. debt ceiling by mid-October. If Congress fails to raise the $16.7 trillion borrowing cap, the United States would go into default, likely triggering financial market shockwaves around the world. “There’s no debate that the seriousness of the U.S. not paying its debts is the most serious thing we have,” said Brian Moynihan, chief executive of Bank of America. Story by Jeff Mason and Mark Felsenthal for Reuters.
eBay to Buy Braintree for $800 Million
eBay will buy payments service Braintree Payments Solutions LLC for $800 million in cash, making a big bet to secure the pole position in the race to get consumers to pay for goods and services on smartphones. The deal will give eBay’s PayPal unit more extensive customer data as well as the lucrative transaction fees from Braintree’s expanding network. Story by Ben Bensinger for The Wall Street Journal.
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 14.40 percent, slightly higher than last week’s 14.38 percent. Six months ago, the average was 14.29 percent. One year ago, the average was 14.32 percent.