Credit Card Update March 4
CAN A MERCHANT REQUIRE ID FOR A CREDIT OR DEBIT CARD PURCHASE?
Both Visa and MasterCard prohibit merchants from requiring customer ID as a condition for accepting their credit or debit cards. All you need is a signed card, and of course the signatures must match. American Express says it doesn’t ban merchants from requiring customer ID, though it discourages the practice. But it does ban merchants from treating Amex holders differently than any other cardholder. Discover told us that merchants are free to request ID if they want to. If you’re a Visa cardholder and a merchant presses you for an ID, Visa says you should notify your card issuer. In the case of Amex, notify American Express directly. MasterCard customers should report the violation by visiting the company’s merchant violation web page.
Story by Anthony Giorgianni for Consumer Reports
ONLINE BANKING? SURE, AS LONG AS IT IS FREE
People love online banking. Almost 80 percent of consumers visit their bank’s website daily or weekly, according to a survey by Mintel Comperemedia, a financial services market research company. But don’t ask consumers to pay for it. Mintel asked consumers how much they would be willing to pay for online banking services, such as paying bills electronically. A monthly fee of $5 is enough to scare off most–93%–people surveyed. And not surprisingly, more respondents balk at the idea of online banking the higher the hypothetical fees go. Writing a check is still the most popular method for paying bills. Making payments through the billing company’s website comes in second, followed by credit card. But paying others directly from a personal online banking account comes in fourth, according to Mintel.
Story by Maggie Shader for Consumer Reports
AMEX FACES UP TO $500M IN LEGAL-LOSSES FILING
American Express disclosed Monday that it could face up to $500 million in losses from various lawsuits and federal inquiries beyond what it has already set aside in reserve for such losses. The company’s legal entanglements include a civil antitrust suit brought against it in October by the Justice Department after American Express refused to join an industrywide agreement to allow merchants to steer customers toward cheaper forms of plastic. Last week, Citigroup Inc. disclosed that it could face up to $4 billion in legal losses this year on top of what it has accrued; Bank of America Corp. said its worst-case scenario exceeds what it has already set aside as legal reserves by $1.5 billion; and Wells Fargo & Co.’s estimate is $1.2 billion.
Story by Aparajita Saha-Bubna for the Wall Street Journal
CHANGES IN INTERCHANGE FEE AFFECT
CONSUMERS, RETAILERS AND BANKS
Last December, the Federal Reserve proposed to cap debit card swipe fees at 12 cents per transaction, a surprisingly sharp decrease from the current fee that averages between 1% and 2% of a transaction. Merchants fought hard for this limit on interchange fees, but in the end, it could backfire on retailers and consumers. Even the Federal Reserve governors are now questioning the impact this bill will make on consumers. Banks aren’t accepting this huge cut in revenue without a fight and are trying to delay the deadline.
According to ABC News, some big banks, including Bank of America, Citigroup, and JP Morgan Chase, might limit each debit card purchase to $50 or $100 if Congress accepts the new rules for swipe fees. This could be a scare tactic by banks, but banks have proved again and again that regulations which cost them will eventually be passed on to consumers.
CREDIT CARDS FROM HELL
Here are nine credit cards that industry experts told CNN Money are among the worst in America for their sky-high interest rates and ridiculous fees.
Story by Blake Ellis for CNN Money
CARD DATA TELLS MIXED STORY
While the average debt on credit cards in December decreased by 4 percent compared with the same month a year before, Americans still carried an average of $4,284 on credit card statements in December 2010, according to data released this week by the credit monitoring company Experian. However, the most recent consumer credit report from the Federal Reserve showed that revolving credit, which is mostly credit card debt, increased by 3.5 percent in December at an annual rate, the first such increase in 27 months. (That data included “charge-offs,” or debt that the credit card companies considered essentially uncollectible, while the Experian data, since it was pulled from active credit files, did not.) Card spending (including credit, debit and electronic benefit-transfer cars) was up 6.5 percent in December compared with spending at the same stores a year earlier, according to First Data, which processes merchant transactions.
Story by Stephanie Clifford for The New York Times
NEW SOUTHWEST AIRLINES LOYALTY PROGRAM KICKS IN THIS WEEK
The huge change in Southwest Airlines’ Rapid Rewards loyalty card program began this week. Southwest’s system of awarding a free round-trip ticket after purchasing and traveling on 16 one-way trips goes away. In its place
will be a points system based on how much a customer pays for a ticket. Redemption will be based on points with high-demand flights costing more than low-demand flights. Under the new system, customers will accrue points whenever they buy a ticket on the airline’s website with higher multiples for higher levels of Southwest’s three-tiered pricing. Probably the biggest move for Southwest is that there are no blackout dates for free flights. While it may cost more to acquire tickets on some days–traveling the day before Thanksgiving comes to mind–it’s still possible to fly for free then if you accumulate enough points.
Story by Richard Velotta for the Las Vegas Sun
IS CONGRESS CRIPPLING CONSUMER FINANCE REFORM?
Has Congress found a way to exert its political will on the supposedly independent Federal Reserve Board? And, in the process, murder the infant Consumer Financial Protection Bureau? If so, say goodbye to future actions to save consumers from credit card and other financial abuse, including the enforcement of current laws. Government action against deception could turn out to be even weaker than it was before the financial collapse. The Fed might be weakened, too.