LowCards Weekly Credit Card Update August 10
U.S. Consumers Cut Back on Credit Card Use in June
Americans cut back on credit card use in June, a sign that high unemployment and slow growth have made some more cautious about spending. Still, total consumer borrowing increased as many kept taking out loans to buy cars and attend school. Credit card debt fell $3.7 billion to $865 billion. “We are probably witnessing a shift in consumers’ attitudes towards debt,” said an economist at IHS Global Insight. “Households may be willing to take on debt to pay for cars and education. But other forms of consumption will come increasingly from current incomes.” Story by Christopher S. Rugaber for the Associated Press.
How Divorce Affects Your Credit
Divorce is painful. In addition to the emotional and familial challenges, divorce can also affect your finances. How does divorce affect your credit? Divorce itself does not have a direct effect on your credit, credit history or credit scores. Your marital status is not used to assess your creditworthiness, and that’s true whether you are divorced or not. Now to the not-so-good news. Divorce can indirectly affect your credit in several ways. Because many married couples have some joint financial obligations, the way you handle the financial separation will determine if and how your credit scores change. Understanding the potential impact can help you plan ahead and avoid costly mistakes. Story by Rob Berger for MSN Money.
Libor Scandal Could Rock the Financial World
London is shining in the spotlight as the host of the Olympics, a welcome distraction from the Libor (London Interbank Offered Rate) rate-fixing scandal that threatens to rock the financial world. The Libor scandal is far reaching for both consumers and financial institutions. Regulators are investigating whether banks rigged interest rates to gain more profits or perhaps reported lower interest rates on loans in order to appear more financially stable. Consumers may have had their interest rates on mortgages, student loans and even credit cards affected by this controversy. Story by Bill Hardekopf for LowCards.com.
Google Wallet Now Works With Multiple Credit Cards
You might have heard that Google has an app called Wallet that lets you pay for things by tapping your phone instead of pulling out a credit card–but chances are you haven’t used it. That is because it has worked only for people with Citibank accounts, MasterCards and a certain kind of Sprint phone. Now, Google has changed Wallet so people can use it with any credit card. The catch is that they still need one of just six Sprint or Virgin Mobile phones. Google Wallet uses a technology called near-field communication, or N.F.C., for cellphones and cash registers to communicate wirelessly, so retailers need point-of-sale systems that include N.F.C. About 200,000 stores have it now, according to Google, including those of Whole Foods Market, McDonald’s and Walgreen. Google also has partnerships with 25 retailers, like Macy’s and Jamba Juice, to provide Wallet users with coupons and rewards. Story by Claire Cain Miller for the New York Times.
Libor–Naked and Exposed
Americans who save for the future, use credit cards or borrow money for tuition, cars and homes deserve assurance that the interest rates on their savings and loans are set in a reliable and honest way. That’s why the revelation that the British bank Barclays attempted to manipulate the London interbank offered rate, or Libor–one of the benchmark rates used to determine the cost of borrowing around the world–is so disturbing. But the Barclays case isn’t only about misconduct by large financial institutions. It also raises questions about the reliability and accuracy of these key interest rates, which are largely determined by the private sector, without significant government oversight. Story by Gary Gensler for the New York Times.
American Express Says CFPB May Take Actions Against Two Bank Subsidiaries
American Express, the largest U.S. credit card lender by spending, said the U.S. government’s consumer-finance watchdog may take action against both of the credit card lender’s U.S. banking subsidiaries. The disclosure follows an earlier disclosure that the Consumer Financial Protection Bureau, as well as the Federal Deposit Insurance Corp. and Utah Department of Financial Institutions, were reviewing the company’s practices for potential violations of consumer-protection laws. It said in February that the FDIC notified American Express’ Centurion Bank, one of the subsidiaries that issues the lender’s cards, of plans to issue an enforcement action against it, and it expected the CFPB to follow suit. American Express has changed some of its “card practices and products” in response to discussions with regulators and set aside money for expected customer refunds, the filing said. Story by Andrew R. Johnson for the Wall Street Journal.
Cash, Credit, or Phone? Starbucks Joins Square for Mobile Payments
The increasingly popular mobile payment service and company Square has teamed up with Starbucks, signifying another shift toward what pundits have deemed the “mobile wallet.” The partnership will allow customers to use Pay With Square, an iPhone and Android app that keeps users’ credit card information and photo identification – rendering credit and debit cards superfluous. When a customer wants to order a drink from Starbucks, all he or she has to do is present a bar code on their phone to the clerk. Starbucks will also invest $25 million in Square, suggesting the coffee company is dedicated to expanding the world of mobile payments. About 7,000 Starbucks locations will serve customers via Square. Story by Megan Riesz for the Christian Science Monitor.
As Rich World Falters, Buoyant SE Asia Discovers Credit
More credit is coursing through Southeast Asia than at any time since the region’s 1997 financial crisis, much of it finding its way to an ebullient new middle class in the form of credit cards, car loans and mortgages. That is fuelling strong growth that has helped the region of 600 million people defy a stubborn downturn in the United States, Europe and even Asian powerhouse China, making it a firm investor favorite this year with stock markets in Thailand, the Philippines and Singapore all posting double-digit gains. Economists for the most part welcome the rise of credit-fuelled consumption, as easier access to banking services gives families unprecedented financial options and helps re-balance the global economy as American consumers retreat. Story by Stuart Grudgings for Reuters.
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 14.34 percent, identical to last week. Six months ago, the average was 14.25 percent. One year ago, the average was 14.15 percent.