LowCards Weekly Update August 25
Bank of America Exits Credit Card Protection
Bank of America and other banks have stopped selling to credit card customers products that suspend borrowers’ minimum monthly payments in the event of a job loss or other hardship as regulatory scrutiny of these offerings rises. Debt-cancellation products, also known as payment or credit protection, have sparked lawsuits against the country’s largest credit card issuers and led to a $210 million settlement last month between Capital One and federal regulators. Capital One has stopped offering payment protection as well as a credit monitoring product. Bank of America’s pullout comes as consumer advocates have argued the products provide little financial benefit to consumers. And customers have alleged in lawsuits that banks’ sales agents have enrolled them in the services without their consent and mischaracterized the services’ costs and features. Story by Andrew R. Johnson for the Wall Street Journal.
The New Credit Card Rewards Program
Credit card issuers are making it easier to use your rewards points to make purchases on the spot. This summer, Citigroup began allowing cardholders to use rewards points to buy concert tickets directly through ticket-seller LiveNation.com. American Express customers can use points for purchases made via Ticketmaster and Telecharge. Discover, Chase and American Express cardholders can use their rewards to shop on Amazon.com. The deals add to the growing array of options available to rewards cardholders–and offer a chance to skirt the clumsy redemption process. But the shopping power of the points varies significantly–from one cent per point to half that amount–and they don’t always provide the best rewards value. That makes it important to figure out how much your points are worth and how that compares to the value of other options before you start shopping. Story by Ruth Simon for the Wall Street Journal.
Study Finds Consumers More Satisfied with Credit Card Issuers
American Express is still the favorite credit card issuer in the 2012 Card Satisfaction Survey by J.D. Power and Associates. For the sixth year in a row, the company has been tops in customer satisfaction. Discover was second. Overall credit card satisfaction is up for all issuers, and is at its highest level in the six-year history of the study. Credit card issuers seem to be improving customer service as fewer cardholders reported problems with credit cards. 11 percent of customers said they had a problem with their credit card, down from 18 percent in 2009. 84 percent of credit card customers had their problem resolved in 2012, up from 82 percent in 2011. Story by Lynn Oldshue for LowCards.com.
Discover And PayPal Join Forces In The War Against Paper Money, Banks
PayPal and Discover Financial Services announced a partnership today that will leverage Discover’s network of credit card payment systems to bring PayPal payments to more than 7 million brick and mortar stores in the United States in 2013. The move is PayPal’s latest intrusion into the world of tangible purchases, and marks an important salvo in the war against paper money. If PayPal (and Discover, apparently) has its way, you won’t need to touch another dirty dollar bill for the rest of your life. That, of course, is a bit of an overstatement. But not as much as you might think. Story by Chris Barth for Forbes.
Big Retailers Urge Rejection of Card Fee Settlement
A trade association representing the country’s largest retailers formally opposed a proposed multibillion-dollar settlement reached by Visa and MasterCard in lawsuits filed by merchants over credit card processing fees. Some retailers also take issue with rule changes that Visa and MasterCard have agreed to under the settlement that allow merchants to charge customers an extra fee for paying with a credit card. Some retail groups have argued the surcharging provision has too many strings attached, effectively making it too difficult for retailers to take advantage of it. The Retail Industry Leaders Association, whose 70 members include Wal-Mart, Target and Home Depot, urged all the plaintiffs in the case to reject the settlement. Referring to the settlement as flawed, the trade group says it objects to terms that prevent retailers from suing credit card companies in the future over processing fees. Story by Ann Zimmerman for the Wall Street Journal.
Bank of America to Keep ‘Zombie’ Checking Accounts Closed in Policy Shift
Bank of America said it will stop zombie checking accounts from coming back to life when they receive an automated electronic transaction. Starting this week, the bank will no longer allow electronic deposits or debits to reopen a closed checking account. The bank wasn’t alone in allowing electronic transactions to reopen old accounts. Complaints about checking accounts rising from the dead have long been a source of contention between customers and banks. The reopening of an old account can be unexpected at best and costly when overdraft fees and other charges pile up if automatic payments
draw from an empty account. Story by Catherine New for the Huffington Post.
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 14.36 percent, slightly higher than the 14.35 percent last week. Six months ago, the average was 14.24 percent. One year ago, the average was 14.11 percent.