Credit Card Update June 17

June 17, 2011, Written By sitemanager

SENATORS SEEK MORE DISCLOSURE FOR BUSINESS CREDIT CARDS
Four Senators called for more disclosure on business credit card offers so
cardholders will understand that business cards are not protected by the
same laws as regular consumer cards that bar practices like retroactive
interest rate hikes. In addition to seeking more disclosure, the Senators
ask the Fed to make business credit card issuers require business tax ID
numbers from applicants to prevent non-business owners from getting the cards.

Story by John Tozzi for Bloomberg Businessweek

CHECKING ACCOUNTS SET FOR UNWELCOME TRANSFORMATION
Free checking accounts may be one step closer to extinction. Regulatory
changes to be issued July 21 are expected to sharply limit the fees that
banks can collect from merchants whenever customers pay with debit cards. An
attempt to delay implementing the rule by a year was narrowly defeated this
week, meaning banks will be looking in earnest for ways to make up an
estimated $14 billion in lost revenue. Customers have already seen the
fallout start to take hold. When customers use another bank’s ATM, they can
be slapped with two fees–one from their bank and one from the bank that
owns the ATM. This is an easy opportunity for banks looking to raise revenue.
In some cases, banks may start imposing out-of-network fees on customers.
Customers may also start seeing never-before-seen fees pop up. Chase,
for example, is testing a $3 monthly fee in northern Wisconsin for checking
account customers who want a debit card.

Story by Candice Choi for the Associated Press

LATE CREDIT CARD PAYMENTS DROP
Late payments on credit cards have dropped to rates seen before the
recession, and defaults are also heading close to normal levels, reports
from the nation’s top six issuers show. A series of regulatory filings
showed that May payment rates for most of the biggest card issuers
were down to rates seen before the economic downturn.

Story by Eileen AJ Connelly for the Associated Press

AMERICAN EXPRESS ROLLING OUT FIRST PREPAID CARD
American Express is rolling out its first prepaid card aimed at the general
market as it moves to stake a claim in the growing industry. The
announcement marks a notable departure for the company, which
is known for catering to a more affluent clientele with its signature green
charge cards. Prepaid cards, which are often sold in drugstores and can be
reloaded with cash, are usually marketed to low-income consumers who don’t
have credit cards or checking accounts. But Amex is betting that its newest
offering will find appeal among a broader swath of consumers. Users can
review transaction histories online and sign up for email or text alerts
when balances dip to a certain level. Cardholders are also given access to
perks associated with other Amex cards, including roadside assistance and
purchase protection against damage and theft.

Story by Candice Choi for the Associated Press

TEN STEPS TO STARTING ADULTHOOD ON THE RIGHT FINANCIAL FOOT
This summer, millions of college graduates are transitioning into life as an
independent adult. Weighed down by credit card debt and student loans, many
young adults are already far behind in their finances before they even get
started. According to a new study, approximately 6 in 10 graduates owed
money after graduation for student loans. Recent college graduates entered
the working world with an average debt of $20,000, almost as much as the
median starting salary ($27,000) for students graduating from four-year
colleges in 2009 and 2010. About half of students who graduated in 2009 or
2010 haven’t paid off any of their debt. Of those students that graduated in
2006 or 2007, 46% have only paid off about one-quarter of their debt, while
another 14% say they have not paid off any of their loans. Now is the time
for young adults to take control of their money. Debt seems overwhelming
now, but it can get much worse and ruin your credit score. The good news is
this the best time of your life to establish good savings and spending habits.

THIEVES FOUND CITIGROUP SITE AN EASY ENTRY
Think of it as a mansion with a high-tech security system–but the front
door wasn’t locked tight. Using the Citigroup customer Web site as a gateway
to bypass traditional safeguards and impersonate actual credit card holders,
a team of sophisticated thieves cracked into the bank’s vast reservoir of
personal financial data, until they were detected in a routine check in
early May. In the Citi breach, the data thieves were able to penetrate the
bank’s defenses by first logging on to the site reserved for its credit card
customers. The expertise behind the attack is a sign of what is likely to be
a wave of more and more sophisticated breaches by high-tech thieves hungry
for credit card numbers and other confidential information. That is because
demand for the data is on the rise. In 2008, the underground market for the
data was flooded with more than 360 million stolen personal records, most
of them credit and debit files. That compared with 3.8 million records stolen
in 2010. As a result, prices for basic credit card information could rise to
several dollars from their current level of only pennies.

Story by Nelson Schwartz and Eric Dash for the New York Times

BANK OF AMERICA CUSTOMERS MAY PAY MORE AS ACCOUNTS ARE REVAMPED
Some Bank of America customers could soon pay higher fees for checking and
other services unless they change their banking habits by maintaining higher
minimum balances, avoiding tellers for routine transactions, or making other
adjustments. Over July and August, the nation’s biggest bank plans to start
phasing out traditional checking products and move 530,000 customers in
three states to a new slate of accounts. By the end of next year, it plans
to move all of its checking customers nationwide to the new offerings. A new
account, called Enhanced checking, requires customers to make deposits
totaling $2,000 a month, maintain at least $5,000 in various accounts, or
use a bank credit card at least once a month to avoid a $15 monthly fee. In
addition, the bank also plans to offer customers an eBanking account that
will allow them to avoid the $12 monthly fee if they sign up for paperless
statements and make all deposits and withdrawals online or through an ATM.

Story by Todd Wallack for the Boston Globe

AVERAGE HOUSEHOLD STILL NEEDS TO TRIM $26,172 IN DEBT
The average U.S. household would need to cut back $26,172 in debt to bring
balance sheets back to 1990s levels. In the first quarter, households owed
$13.3 trillion, an amount equal to 18.4% of total household assets,
including stock portfolios, savings and homes, according to the Federal
Reserve’s flow of funds report. That was down from 21.7% two years earlier
but still well above the 14.4% level that prevailed in the 1990s. That
suggests household balance sheets don’t have nearly enough cushioning
against financial shocks, like job loss and illness, as they should. To get
back to 14.4%, households would have to shed a combined $2.9 trillion of
debt. In other words, either people cut their credit cards up like crazy, or
they keep putting their keys in the mailbox and walking away.

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The information contained within this article was accurate as of June 17, 2011. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.