Credit Card Update December 3
MORE THAN 8 MILLION PEOPLE DROP OUT OF CREDIT CARD USE
More than 8 million consumers stopped using credit cards over the past year. The decline stems from a combination of consumer choices and bank actions. An analysis by credit reporting agency TransUnion found that use of general purpose credit cards bearing MasterCard or Visa logos, or issued by Discover or American Express, fell more than 11 percent in the third quarter, compared with the July to September period last year. About 62 million people now have an active card, compared with 70 million a year ago
Story by Eileen AJ Connelly for the AP
CARTOON CHARACTERS NOW PROMOTING
CREDIT CARDS TO TEENAGERS
On Monday, the Kardashian prepaid debit card was abruptly pulled from the market by the issuer due to poor sales, negative publicity and high fees. But the Kardashians were not the only “celebrities” being used to promote prepaid debit cards to young adults. Now we are seeing cartoon characters. This week, Myplash started selling Teen Prepaid MasterCards and this introduction seems to coincide with the holiday season. Launched by Plastic Cash International, there are almost 100 different card designs with cartoon characters, movie characters, athletes, and musicians. These images include So So Happy, Skelanimals, Paul Frank, Emily Strange, Plain White Ts, Rich Boy, Flo Rida, surfer Kassia Meador, and characters from “Twilight Saga: Eclipse.” Myplash gift cards with images of the Twilight characters went on sale in the summer of 2010. The company uses this branded content to connect with teens and young adults “in a cool and relevant way.”
SALVATION ARMY’S NEW KETTLE HAS SLOT FOR CREDIT CARDS
If you’re feeling charitable, but you don’t happen to have any cash when you see a Salvation Army collector with a red kettle, never fear–now there’s the plastic option. Like a gas pump, the new kettle has a slot for credit cards and an opening to spit out two receipts, one for the donor and the other for the charity. MasterCard, Visa and Discover only, please.
Story by By Noreen Marcus for the Sun Sentinel
CONSUMERS FEEL LESS ANGST FROM DEBT
Debt isn’t stressing people as much as it had been, but consumers remain gun-shy about embarking on a big holiday spending spree. An Associated Press-GfK Poll also suggests Americans are more disciplined about using their credit cards. Deep into a stubbornly harsh economic downturn, more people than last year say they pay off their balances right away, and fewer say they make credit card purchases if they lack enough money at the time. Fifty-nine percent said they feel little or no stress from their family’s debt from mortgages, credit cards and other loans. That’s an improvement from when 49 percent said so a year ago, with women and city residents reporting significantly less tension than last year. About 7 in 10 said they have paid off last month’s credit card bill or will when it arrives, up from roughly 6 in 10 expressing such plans last year. More than 8 in 10 planning to use credit cards for holiday gifts said they expect to pay off those bills when they get the statement, up from two-thirds who said so two years ago. Thirteen percent said they buy things with credit cards even when they
lack money to pay for it at that time, down from 21 percent a year ago.
Those in the survey with credit cards typically owed $800, meaning half said they owed more than that and half said less. That compares with $900 last May and $1,000 last year.
Story by Trevor Tompson, Dennis Junius and Jeannine Aversa for the
TAKING DISCONTENT TO THE BANK
Bank of America is among the nation’s larger financial institutions watching dissatisfied customers slip away, lured in by smaller community banks and credit unions offering deals and incentives. A recent poll by the opinion research firm Zogby International found 14 percent of US adults have switched to a community bank or credit union in the last year, with 60 percent of that group saying that they moved their accounts to “protest policies or behavior of large national banks.” Lower service charges and better rates of return ranked second and third. Another 26 percent said they have considered taking their banking elsewhere, despite the headaches involved in moving accounts.
Story by Meghan Woolhouse for The Boston Globe
THINK TWICE BEFORE SIGNING UP FOR THAT MEDICAL CREDIT CARD
If you are like most people, you have probably used a credit card to pay some of your medical bills. With rising health costs and gaps in insurance coverage, it’s almost unavoidable. Patients pay about $45 billion worth of health care costs with plastic, according to a report from McKinsey & Company. By 2015, that number could more than triple to an estimated $150 billion. And big finance companies and medical providers have taken note. The issuers market medical cards not so much to consumers but to doctors, dentists and other health care providers, who in turn offer them to patients as a payment option. Patients like medical credit cards because payments for care can be spread out over many months and the cards can be used at
multiple providers. The providers have embraced them as a way of offloading billing headaches and expenses. If you sense you’re being pushed, that things are moving too quickly, remember that you don’t have to sign up for anything on the spot. Take a day or two to read through materials thoroughly and research your options.
Story by Walecia Konrad for The New York Times
CARD ISSUERS REWARD PURCHASES
Credit card companies and retailers are trying to entice consumers to break out the plastic this holiday shopping season by offering them “gifts” of their own. Fearing consumers might stick to cash, card issuers are rolling out extra points, deeper discounts, free gift cards and even cash for shoppers who pay with their credit and debit cards. And retailers are adding bounties through their own credit card and loyalty programs. Toy retailer Toys “R” Us, for instance, is hoping to win price-war battles against Wal-Mart Stores and Target by tripling its rewards dollars to 10% on purchases made in stores or online. Each time consumers make a purchase with a Citigroup Citi card through Dec. 31, they will be entered to win a prepaid credit card valued at $10 to $10,000. Discover cardholders earn double cash-back bonuses, or 2%, on purchases of up to $1,000 made online through Dec. 31. Purchases after the $1,000 limit earn the usual 1% cash-back bonus. Keep in mind that many of these rewards may have usage deadlines or restricted eligibility.
Story by Jennifer Waters for the Wall Street Journal