LowCards Weekly Credit Card Update October 12
Wal-Mart and AmEx in Prepaid Card Deal
Wal-Mart Stores is taking another leap into the banking world, announcing on Monday a prepaid card and debit account with American Express that will give low-income consumers access to features like smartphone deposits. It is a surprising alliance between the discounter Wal-Mart and American Express, which until recently has been focused on high-end consumers. The move is intended to strengthen both companies’ position in the prepaid card market–which, unlike credit and debit cards, is largely unregulated and has far fewer consumer protections. The account, called Bluebird, will be available next week. The companies are positioning it as an option for people turned off by bank fees. “The only fees consumers will ever pay are clear, transparent and within their control,” such as out-of-network A.T.M. fees, the companies said in a release. Story by Stephanie Clifford and Jessica-Silver Greenberg for the New York Times.
The Movement to Put Utility Payments on Credit Reports
It sounds like a good way to help consumers who lack full credit reports, or any credit report at all: report their utility payments to credit bureaus, to help them develop credit files. Currently, most gas and electric utilities don’t report most consumer payments to credit bureau. They typically report only extremely delinquent accounts that they have written off as uncollectable, rather than those that are merely late or those that are paid on time. But proponents of full utility reporting argue that giving consumers credit for on-time payments can help them develop a credit file and a credit score, which can be key to economic advancement. The problem, a group of consumer advocates say, is that broader reporting of utility payments to credit bureaus may actually hurt the records of lower-income consumers, who are more likely to pay bills like those for gas and electric service late as they struggle to make ends meet. Story by Ann Carrns for the New York Times.
Balance Transfers a Boon to Cardholders
Nobody wants to carry a big balance on their credit cards. Those interest payments can really eat into the family budget. If you have good credit, you might want to move that balance to a better card–one that won’t charge interest on that old debt or on new purchases for between six and 15 months. Why are credit card companies making such super offers? They want new customers who won’t default on their payments. The caution with any balance transfer card is to read the terms and conditions. Make sure you understand the entire offer. A balance transfer may be the way to dig yourself out of debt. That old balance isn’t costing you anything during the interest-free grace period. You goal should be to pay it off before the regular interest rate kicks in and not to run up a new balance you can’t handle. Story by Herb Weisbaum for MSNBC.
Stores Once Again Pushing Layaway Plans
Retailers have returned to enthusiastically promoting layaway plans in order to bring in holiday shoppers and encourage additional spending. Merchants are cutting service fees, adding more popular items, extending the layaway period, and even shipping the layaway items to your home. Layaway programs began during the Great Depression, but were all but eliminated with the advent of credit cards. But they made a comeback a few years ago after the economic downturn. Kmart resurrected layaway in 2008 and other retailers followed. Story by Bill Hardekopf for LowCards.com.
Groupon Adding Point-of-Sale Technology to Its Merchant Offerings
Aiming to create an even deeper connection with its merchants, Groupon is offering restaurants, bars and cafes a point-of-sale solution that it is calling Breadcrumb. Groupon’s entrance in the point-of-sale business was expected. In May, it acquired New York-based Breadcrumb, which developed the core of what the product is today. The national rollout this week closely follows the unveiling of Groupon Payments, which enables merchants to accept credit cards using an iPhone or iPod touch. Breadcrumb is complementary, in that it works on an iPad. Groupon’s goal for both Breadcrumb and Groupon Payments is to cut costs for merchants that are used to paying high prices for low-tech, antiquated systems. In return, Groupon hopes to create a closer bond with merchants that will encourage them–or potentially require them–to run coupons in the future. Story by Tricia Duryee for All Things D.
Google Expands Adwords Credit Card
Last July, Google tested a program with 1,400 small businesses in the United States that allowed them the chance to pay for advertising on Google Adwords with a special Google credit card. Adwords are the text ads appearing adjacent to your search results when you “Google” a certain word or phrase. Google found the test “overwhelmingly positive”: 74 percent of those small businesses now use the Adwords Business Credit Card as their primary method of Adwords payment. Google announced it is expanding the program to the United Kingdom, and expects to expand it to more businesses here in the United States later this month. Story by Natalie Rutledge for LowCards.com.
Equifax, Direct Lending Settle U.S. Case
The credit-reporting company Equifax and a former customer, Direct Lending Source, agreed to pay a combined $1.6 million to settle federal charges they mishandled information about millions of U.S. consumers who were late on their mortgage payments. The Federal Trade Commission on Wednesday said Direct Lending will pay $1.2 million, the bulk of the total fine, with Equifax paying the balance. The FTC enforcement actions said the companies violated the Fair Credit Reporting Act and other laws over a two-year period when Equifax sold Direct Lending lists of consumers who were more than a month behind on their mortgage payments. Direct Lending, a company that buys consumer data, in turn sold the lists to other companies that pitched consumer loan modification and debt relief services. The FTC said Equifax agreed to an agency consent order and will pay a $393,000 fine for selling the lists to firms that used credit reporting data improperly. Equifax also agreed to avoid future violations of restrictions on the sale of consumer list data, including the sale of information to companies that offer debt relief or mortgage assistance services requiring up-front payments for the services. 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 14.29 percent, slightly below last week’s average of 14.32 percent. Six months ago, the average was 14.33 percent. One year ago, the average was 14.29 percent.