Credit Card Update June 10
ARE SERIOUS ERRORS LURKING IN YOUR CREDIT REPORT?
Previous estimates of credit reports with serious errors vary widely,
anywhere from 3 to 25 percent. But according to a recent study paid for by
the Consumer Data Industry Association, the trade group for the credit
bureaus that assemble and sell credit reports, that rate is much lower.
Consumer advocates, meanwhile, were skeptical of those results. The study,
conducted by the Policy and Economic Research Council, found potential
errors in 19.2 percent of credit reports examined. But once consumers
disputed potentially problematic errors and got the bureaus to fix them,
less than 1 percent of these corrected reports led to meaningful increases
in credit scores. And what is meaningful in the credit score context? Well,
very few of the corrections led to a big enough credit score gain to push
those consumers into a better “credit risk tier,” where they would have
access to cheaper loans and such.
Story by Tara Siegel Bernard for the New York Times
CITI CREDIT CARD BREACH DISCOVERED
Citigroup says it has discovered a security breach in which a hacker
accessed personal information from hundreds of thousands of accounts.
Citigroup said the breach occurred last month and affected about 200,000
customers. The statement went on to say that the customers’ Social Security
numbers, dates of birth, card expiration dates and card security codes “were
not compromised.” Citigroup said it was contacting the affected customers
and had “implemented enhanced procedures to prevent a recurrence of this
type of event.”
Story by Aaron Smith for CNNMoney
SENATE REJECTS DELAY OF DEBIT INTERCHANGE FEE
The Senate struck a blow against big banks by failing to pass a measure that
would have postponed the implementation of reduced debit card interchange
fees. The legislation would have required a delay to study the unintended
consequences of capping the swipe fee. The cap is a new regulation under the
Durbin Amendment. The Federal Reserve Board is now working on final debit
card interchange rules which are expected to be released by the end of the
month. The new fees are scheduled to take effect on July 21.
HOW TO AVOID CREDIT CARD PROBLEMS ABROAD
American travelers will continue to encounter payment issues abroad. The
problem is two-fold. Even though most European cash registers are equipped
to handle American cards, some cashiers simply don’t know how to process
them. And many automated ticket kiosks–like those commonly found at train
stations, gas pumps and parking garages–simply don’t accept cards without
a chip and PIN. (ATM’s typically recognize and accept many cards whether
they have a chip or a magnetic strip.) So what’s a traveler to do? Since the
cards being tested by Chase and Wells Fargo are being offered only to a
limited number of mostly high-end customers, the best option for the rest of
us is to carry a couple of cards in our wallets and politely insist that the
cashier keep trying to swipe each credit card, as the card reader may be
able to recognize the magnetic strip and approve the purchase. For backup,
also consider carrying a preloaded debit MasterCard from Travelex called
Chip and PIN Cash Passport, available in pounds or Euros, which is equipped
with the embedded chip. But use it only when you can’t use other cards.
While it does not cost anything to use the card, the exchange rates you’ll
get when loading it with cash aren’t great. Before you go, also consider
buying tickets and other basic purchases online. And when you return home,
be sure to let your bank know about any payment problems.
Story by Michelle Higgins for the New York Times
REGIONS DIVES BACK INTO CREDIT CARDS
Regions Financial has changed its hands-off approach to credit cards by
re-acquiring a $1 billion credit card portfolio from FIA Card Services, a
Bank of America subsidiary, for an undisclosed amount.
Story by Maria Woehr for The Street
CONSUMER BORROWING INCREASED 3.1% IN APRIL
Consumer borrowing rose by nearly $7.2 billion in April, fueled by greater
demand for school and auto loans, the Federal Reserve said on Tuesday.
The increase, of 3.1 percent, pushed consumer borrowing to a seasonally
adjusted annual level of $2.43 trillion, just above the nearly four-year low
of $2.39 trillion, reached in September. Households began borrowing less
and saving more to cope with the recession that officially ended in June
2009. Credit card use has fallen nearly 19 percent in the last 20 months
and has dropped 5 percent in the last year. High unemployment, steep
gas prices and a weakening housing market have also forced people
to resist reaching for their plastic.
Story by the Associated Press
CHICAGO MAYOR ORDERS CITY AGENCY EMPLOYEES
TO STOP USING GOVERNMENT-ISSUED CREDIT CARDS
Mayor Rahm Emanuel on Friday ordered city sister agency employees
to immediately stop using government-issued credit cards, after his office
learned that some workers used the cards to pay for meals at pricey
restaurants, flowers and city-issued red-light camera tickets. Emanuel also
ordered each sister agency to “terminate any credit card agreements that
provide credit cards to individuals for general use,” and the mayor said he
was “suspending all employee reimbursement plans until reformed policies
for reimbursement are adopted.” The mayor’s office said it uncovered the
abuses during an Emanuel-ordered review of all city departments.
Story by Maudlyne Iherjirika for the Sun Times