Credit Card Update November 12
NEW WAYS BANKERS ARE SPYING ON YOU
Big Banker is watching you-more closely than ever. With lenders still skittish about making new loans, credit bureaus and others are hawking services that help banks probe deeply into your financial closet. The new offerings include ways to look at your rent and utility payments, figure out your income, gauge your home’s value and even rate your
banking habits based on details like whether your direct deposits have stopped. All of this could influence your financial freedom-not to mention the number of junk-mail solicitations you receive. Your credit record still matters, of course. But there are some newer ways lenders and financial-services companies are sizing up your financial behavior and credit-worthiness.
Story by Karen Blumenthal for The Wall Street Journal
PROTECT YOURSELF FROM SKIMMING DEVICES
The holiday season is on the horizon, and the Better Business Bureau warns consumers to protect their credit and debit cards from skimming devices. Financial institutes report there is a one-in-five chance of becoming a victim of skimming thefts. Skimming is the stealing of information from a debit or credit card’s magnetic strip. As technology improves the devices may be harder and harder to notice with the naked eye. Some devices now allow criminals to download the information stored on skimming devices remotely without having to return to the ATM or gas pump. One of the best protections against continued fraudulent uses of personal information is to check bank statements online regularly to catch any nefarious uses, authorities said. Other ways to protect against identity theft are to protect PIN information by covering the keypad to prevent cameras from catching digits, wiggle cards to loose false panels, avoid ATMs in poorly-lit or low-trafficked areas, watch statements and report fraud to financial institutions.
Story by Chris Segal for the News Herald
CREDIT CARD DEBT AND NUMBER OF ACCOUNTS CONTINUE TO FALL
A new report released from the Federal Reserve of New York shows that the number of open credit card accounts continued to decline during the third quarter of this year. The number of open credit card accounts has dropped 24% from its peak in the second quarter of 2008. In addition, the Federal Reserve’s new monthly report on consumer borrowing shows that revolving credit-the majority of which is credit card debt-dropped for a record 25th consecutive month, falling by an annual rate of $8.3 billion, or 12.1%.
WHAT YOUR SMARTPHONE SAYS ABOUT YOUR SPENDING
Your smartphone might say something about your credit card spending. Users of Apple’s iPhone spend significantly more on their credit cards than Blackberry, Windows Mobile or Android users, according to data from Pageonce Inc., a financial account aggregator. The average monthly credit card bill was $6,872 for iPhone users, compared to $5,693 for BlackBerry users, $5,330 for Android users and $5,076 for Windows Mobile. The study looked at 275,000 randomly selected accounts from Pageonce Inc. from October 1 to November 1,
2010. The credit card bill reflects new charges from that month, not the revolving balance carried over from month to month.
Story by Mary Pilon for The Wall Street Journal
GE PLANS TO STAY IN PRIVATE LABEL CREDIT CARDS
The head of retail finance at General Electric Co. reiterated that the
company plans to hold on to its $28 billion private-label credit card
business, at least in the near term. GE unsuccessfully tried to sell the
business in 2008, but after reducing delinquencies for five-consecutive
quarters it is signing new contracts and making acquisitions. Mark Begor, president and chief executive of GE Capital Retail Finance and Restructuring Operations, indicated that GE’s focus on providing consumer credit cards for retailers such as Gap, J.C. Penney, Lowe’s and Wal-Mart is safer than the market for bank-issued cards. He said interest rates on the GE-operated cards are higher, but average balances are lower; hence GE makes higher margins but has less risk when consumers default.
Story by Paul Glader for The Wall Street Journal
CREDIT CARD TIPS FOR HOLIDAY SHOPPING
It is very easy to get caught up in holiday shopping and pay for everything with a credit card. Credit cards allow the immediate joy of buying and giving but put off the pain of payment. But according to a recent survey by Consumer Reports, 13.6 million Americans are still paying for last year’s holiday shopping. Paying with a credit card can not only add interest to the cost of the item, it also makes it easy to overspend. The same Consumer Reports survey showed consumers who used credit cards for holiday gift purchases in 2009 spent an average of $896 on gifts, 10% more than the average of $811. There are some valuable tips that you can use on your holiday shopping with a credit card.
BANKS EASE LOAN STANDARDS, BUT CRUNCH ISN’T OVER
The credit crunch is easing in the U.S. but it’s far from over. Banks
loosened their lending standards in the third quarter, but loans remained
hard to get by recent historical standards, a trend expected to continue for the foreseeable future, according to the Federal Reserve’s senior loan officer survey. Some lenders are also easing standards for approving credit cards. However, other banks cut the size of credit lines on existing credit card accounts. Most respondents cited the improving economy and increased competition from other lenders as reasons for relaxing loan standards to businesses. The previous survey, covering the second quarter, found that big U.S. banks had started to ease terms on loans to small businesses for the first time since late 2006.
Story by Conor Dougherty and Luca Di Leo for The Wall Street Journal
WARREN TO TARGET CREDIT CARDS, MORTGAGES
Elizabeth Warren, the Harvard professor charged with setting up the new federal consumer-protection agency, said that she will set her initial sights on clearing up ambiguity in credit cards and home mortgages. “We want to focus on the consumer-credit products that families deal with nearly every day,” said.Warren, who is President Barack Obama’s special adviser for the Consumer Financial Protection Agency, which is slated to be up and running by mid-July. She wants to cut down the fine print in credit-card agreements so that there are “no surprises” to consumers. For mortgages, she wants to make it easier for a family to see the costs and risks of a mortgage up front so that “they make a choice that is right for them,” she told reporters on a conference call.