LowCards Weekly Credit Cards Update February 18
IMPLIED WARRANTY PROVIDES AN EXTRA LEVEL OF PROTECTION
Massachusetts has a special legal provision known as “implied warranty.” If you buy a product that doesn’t do what it’s supposed to do for as long as you would reasonably expect, you have a right to ask for compensation. Edgar Dworsky, former director of consumer education at the state Executive Office of Consumer Affairs and Business Regulation, suggests you also consider how you paid for the product. Certain credit cards, American Express for one, will double the length of a warranty–giving you up to an additional year of coverage. Many other cards, particularly the higher
level one–gold, platinum, etc.–have the same extra coverage.
Story by Mitch Lipka for the Boston Globe
CAP ONE’S $9 BILLION ING DIRECT DEAL IS APPROVED BY THE FED
Capital One’s planned purchase of ING Groep NV’s U.S. online bank won approval from the Federal Reserve, clearing the way for the credit card lender to add about $80 billion in deposits. The ING transaction, announced in June, will add more than 7 million customers. Costs rose 25 percent in the fourth quarter as Capital One spent more to build out infrastructure and technology systems, the company said last month. The bank, which derives more than half its revenue from credit cards, agreed to buy ING Direct USA for $9 billion. The deal will make Capital One the fifth-largest lender by U.S. deposits.
Story by Dakin Campbell for Bloomberg
LEGAL RULINGS HAVE DRAMATICALLY IMPACTED CREDIT CARD INDUSTRY
Over the past four years, Congress and the Federal Reserve have passed and enacted many rules that changed the credit card industry. While the CARD Act and other reforms have received the headlines, the judicial branch has quietly left its mark on the credit card business. These legal rulings have cost banks and credit card issuers hundreds of millions of dollars, and may have indirectly led to higher rates and fees for consumers. Here is a look at some of the recent legal actions that have had a dramatic effect on the credit card industry.
WITH CASH-BACK CREDIT CARDS, WHICH CARD IS BEST FOR YOU?
Over the past year, a lot of banks ditched their debit card rewards programs while continuing to push their cash-back credit cards. All cards are not created equal, but there are resources out there to find the best card for you. To encourage you to use their cash-back card, some banks haven an introductory offer that’s mighty sweet. Reach a certain spending threshold within the first couple of months and you get extra money back. You also need to be careful that you’re not tempted to spend more and bust you budget just to rack up that cash-back reward.
Story by Herb Weisbaum for KOMO News
GOOGLE WALLET SUSPENDS PREPAID CREDIT CARD FUNCTION
Google has suspended prepaid capabilities on credit cards linked to its mobile wallet after a security flaw was exposed. Saturday’s move comes following the airing on the Internet of a flaw in the wallet’s design that could allow an unauthorized user of a phone to tap into an existing balance on a card by reconfiguring the wallet’s settings. The security flaw was revealed last Thursday by a blogger, identified only as “The Smartphone Champ,” who explained that by opening up the settings section on an Android phone and blanking all the settings for a Google Wallet, an unauthorized user could access any balances on a prepaid card previously linked to the wallet.
Story by John P. Mello, Jr. for PCWorld
CFPB EYES OVERDRAFT REGULATIONS
Consumer Financial Protection Bureau Director Richard Cordray said his agency is discussing how best to proceed on additional regulations concerning overdraft protection and other checking account disclosures.
The CFPB could issue proposed rules later this year. He said the CFPB is worried about the practice by some financial institutions of clearing checks in a sequence that causes some consumers to pay higher overdraft charges.
Story by Claude R. Marx for Credit Union Times
SWAMPED BY CREDIT CARD OFFERS IN YOUR MAILBOX?
The volume of mail delivered by the U.S.Postal Service fell nearly 6 percent in fiscal 2011, but credit cards mailings last year jumped 37 percent, according to Mintel Comperemedia. The credit card industry sent out almost five billion direct mail pieces in 2011. That was 16 pieces for every man, woman and child. If you have a good or excellent credit score, you probably had double that number of offers. Direct mail is a proven form of attracting new applications, and issuers are determined to get their offers in front of their target households as many times as possible. Credit card issuers buy names and addresses from businesses and non-profit agencies. This can happen when you secure a mortgage, give money to charity or sign up for a magazine or online subscription.
BANK OF AMERICA REISSUES SOME CARDS AFTER THIRD PARTY BREACH
Bank of America customers in upstate New York were issued new debit and credit cards after a third-party breach possibly compromised their information. Bank of America, like most retail banks, protects its customers against fraud when it is informed of a data breach, said a bank spokesperson.
Story by Sean Sposito for American Banker
CITIBANK CREDIT CARD DEFAULTS INCREASE IN JANUARY
Citibank reported an increase in the rate that its customers defaulted on their credit cards in January, and said late payments also ticked up. The default rate remains at a level last seen in early 2008. Late payments held near a point last seen in mid-2007.
Story by the Associated Press
PREVENTING IDENTITY THEFT WITHOUT PAYING EXTRA FEES
Banks are offering far more services that alert you to potentially criminal activity. Here are some of the situations that some banks and credit card companies offer to alert to you, by e-mail or text message, usually without charge: when there is a withdrawal of cash from an A.T.M; when a charge is entered for more than an amount that you stipulate; when there is a change in the phone number or other information on your account.
Story by Alina Tugend for the New York Times
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 14.24 percent, slightly higher than the 14.22 percent last week. Six months ago, the average was 14.14 percent. One year ago, the average was 14.24 percent.