Credit Card Update February 18
FED MAY RECONSIDER PLAN TO LIMIT DEBIT CARD FEES
The Federal Reserve told Congress on Thursday that it may reconsider its proposal to limit the fee that banks charge merchants for debit card transactions to 12 cents per swipe, the latest twist in a battle over billions of dollars. Fed Governor Sarah Bloom Raskin made the remark at a House hearing at which lawmakers of both parties attacked the Fed’s plan and asked her to reconsider, saying it would batter banks still reeling from the 2008 financial crisis.
Story by the Associated Press
BANK OF AMERICA ADDS $59 ANNUAL FEE TO SELECT ACCOUNTS
Bank of America is assessing a new $59 annual fee on select credit card holders. According to a spokesperson, the fee will be assessed on May statements and will affect about 5 percent of the bank’s credit card customers. The fee isn’t tied to a specific type of card and is based strictly on the customer’s risk profile. They likely don’t have any other relationship–such as a checking account or mortgage–with the bank. On average, the customers who are being assessed the fee are being charged a 14 percent interest rate. Bank of America said these customers generally would not be approved for a no-fee new account today at their current rates.
CREDIT CARD USERS DIDN’T SUFFER A HOLIDAY HANGOVER THIS YEAR
The top six U.S. credit card issuers posted the lowest rates of default and late payments in two years on Tuesday, a strong sign that consumers had a handle on paying their bills in January. The improvements followed a return to credit card use during the holiday season, after consumers pocketed their plastic throughout the recession. Card networks all reported higher usage for the fourth quarter after two years of declines, and Federal Reserve figures show balances moved up slightly in December.
Story by Eileen AJ Connelly for the Associated Press
ON-TIME RENT PAYMENTS MAY NOW IMPROVE CREDIT SCORE
Paying rent on time may soon improve your credit score. For the first time, landlords have incentives to report rental payment history to credit bureaus. This can be good news for many renters who need ways to boost their score. Experian recently purchased RentBureau, a credit bureau that allows apartment owners and managers to share rental payment history. Rental payment histories are now factored into Experian’s consumer credit reports, and are one more thing that lenders, landlords, insurance agents, and even employers can learn about you.
CHASE WAIVES FOREIGN EXCHANGE FEE ON CONTINENTAL AND UNITED CARDS
Chase announced it would no longer levy these currency conversion fees on its United Mileage Plus Club Visa and the Continental Presidential Plus card. If you have a Chase United or Continental card with a different name, you will probably continue to pay the fee for non-United States transactions, though you should call the company to clarify this. Chase has already dropped the fees on British Airways, Priority Club and Hyatt co-branded credit cards. Citigroup has done so on select cards, and American Express plans a similar move.
Story by Ron Lieber for The New York Times
SWIPE FEES MAY FORCE FEES, JOB CUTS, BANKERS SAY
U.S. community banks may eliminate free products, fire workers and shelve expansion plans if the Federal Reserve imposes proposed debit-card “swipe” fee caps, according to a survey conducted by a trade group. To back up its case, the group released results of a survey highlighting steps it says bankers would have to take in response to the new rule. Of the bankers surveyed, 93 percent said they would be required to charge customers for services that are currently free. Another 50 percent said they would charge customers a fee each time they use a debit card.
Story by Phil Mattingly and Justin Doom for Bloomberg
CREDIT SCORES: WHY THE LATEST FIXES FALL SHORT
More consumers than ever this year will see how their credit scores are used to determine their interest rates and loan terms. But the effort to provide more clarity may instead lead to more confusion. Under a provision of the Dodd-Frank financial-overhaul law that takes effect in July, all consumers who are turned down or don’t get the best terms because of a credit score will get a copy of the credit score used, as well as information about where their scores fall among all consumers. While the new disclosure requirements are a huge improvement, they are akin to having only one team’s score in an athletic event. Here are some reasons why credit scores are likely to remain as opaque as ever.
Story by Karen Blumenthal for the Wall Street Journal
BANK OF AMERICA TO CLOSE SOME BRANCHES, TEST REMOTE WEALTH ADVISERS
Bank of America, the biggest U.S. lender by assets, will close some retail
branches this year and try to boost revenue from remaining locations by offering investment advice by videoconference, a company manager said. The bank typically closes underperforming branches and will be “more
conservative” about opening new ones. The bank plans trials this month of video conference rooms where Merrill Lynch associates dispense advice to customers at other locations. New branches are more likely to be smaller with an area dedicated to automated teller machines. There will also be more ATM-only shops.
Story by Hugh Son for Bloomberg