Credit Card Update May 20
RECOVERY SEEN IN RISING USE OF CREDIT CARDS
Ever since the United States emerged from the recession, economists have been watching for signs that Americans are spending again. This year, evidence is building that they are–with every swipe of their credit cards. In the most recent quarter, covering January to March, American Express, MasterCard and Visa all reported increases in card spending. Business and
consumer spending in the United States helped propel that growth, along with global growth and an increase in merchants that accept cards. The card industry is a good gauge of how consumers are spending and what they are buying. It also shows how confident they are in reaching for their credit cards again. Consumers are starting to relieve some of the pent-up demand for autos, appliances and other goods that they had put off buying, analysts said.
Story by Christine Hauser for The New York Times
CREDIT ERROR? IT PAYS TO BE ON THE VIP LIST
The credit rating bureaus, whose reports influence everything from credit cards to mortgages to job offers, have a two-tiered system for resolving errors–one for the rich, the well-connected, the well-known and the powerful, and the other for everyone else. The three major agencies, Equifax, Experian and TransUnion, keep a VIP list of sorts, according to consumer lawyers and legal documents, consisting of celebrities, politicians, judges and other influential people. Those on the list–and they may not even realize they are on it–get special help from workers in the United States in fixing mistakes on their credit reports. Any errors are usually corrected immediately, one lawyer said. For everyone else, disputes are herded into a largely automated system. Their complaints are often electronically ferried to a subcontractor overseas.
Story by Tara Siegel Bernard for the New York Times
CREDIT CARD LATE PAYMENTS AND DEFAULTS DROP AGAIN
Credit card defaults and late payments dropped again in April, falling to levels last seen in 2008. Five of the six top credit card companies reported both delinquencies and defaults dropped in April to multi-year lows. This is another sign of recovery for credit card issuers. After the economic downturn began in 2008, lenders drastically cut credit limits on millions of cardholders, cancelled accounts on their riskiest borrowers and tightened approval requirements for new customers. Many cardholders have also steadily paid down credit card balances. These changes are all playing a factor in these declining default and late payment figures.
PAY-AS-YOU GO OVERDRAFT MAY BE BANK’S NEXT FEE
In what would be one of the more unusual pilot tests, Bank of America is considering trying to buzz some customers with a text message to say they can make a payment after all with that debit card–if they agree on the spot to pay a $35 overdraft fee. Or you could avoid that $35 fee if you remember to put more money in your account by the end of the banking day at 8 p.m. at Bank of America ATMs. Under the Bank of America text test, advance authorization paperwork would be necessary before you’d be sent that text message.
Story by Susan Tompor for Detroit Free Press
GETTING CREDIT IF AIRFARES FALL AFTER YOU BUY
Most everyone has had the experience of searching carefully for the best airfare and booking a flight, only to see the ticket price later drop. The flier first has to know the fare has dropped, and then must call the airline in time to request the credit before the price goes up again. For that reason, a lot of travelers don’t take advantage of the credit. A recent survey by MasterCard found that 71 percent of people searching for airfares weren’t aware of the availability of such credits and that 10 percent knew they existed but didn’t know how to take advantage of them. So MasterCard has teamed with the travel site Yapta to offer a service aimed at making it easier for travelers to claim the credit. Called MasterCard PriceAssure, it works like this: You go to the service’s Web site and enroll your MasterCard. Then, you use your card to buy your ticket directly from an airline and elect to have PriceAssure track your itinerary. If the price drops before your flight departs and you’re eligible for a credit, you get an e-mail telling you so. You can call the airline’s customer service line yourself, and pay no charge. Or, for a fee–$19.95 per itinerary, regardless of the number of people traveling–you can have MasterCard’s PriceAssure do the work for you and notify you of the credit.
Story by Ann Carrns for the New York Times
WHAT IMPACT WILL USERS FEEL FROM PLAN TO CUT DEBIT CARD FEES?
The battle about a plan to slash the fees retailers pay banks every time a shopper uses a debit card has reached epic proportions, with both sides spending millions of dollars to convince lawmakers that they’re looking out for average Americans. Amid the controversy, this much is clear: The Fed rule, scheduled to take effect July 21, could have far-reaching effects on how consumers spend and save, in ways that will be both welcome and distasteful. Here are five ways a reduction in swipe fees could affect you…
Story by Sandra Block and Jayne O’Donnell for USA Today
FREQUENT FLIER MILES, 30 YEARS LATER
Airline marketers realize that they can say “No” only so often before their best customers disengage from the programs, pinching off an especially lucrative revenue source. Airline accountants point out that the programs are under no legal obligation to issue a single restricted award ticket. Caught in the middle are consumers, who face frustration and uncertainty when it comes time to cash in their miles, and have been left to wonder whether they wouldn’t simply be better off flying on the airline with the cheapest fare. Miles are miles, and money is money. But the line between them gets blurrier every day as loyalty currencies come ever-closer to mimicking if not replacing cash. Further blurring the line, Points.com in February took another step toward bridging the gap between loyalty currencies and traditional currencies by allowing members of the American Advantage, US Airways Dividend Miles, and Aeroplan programs to redeem their miles for PayPal credits, which in turn can be transferred to a linked bank account as cash.