LowCards.com Weekly Credit Card Update–August 5, 2016
New Security Flaw in Credit Card Chip System Revealed
The chip on these credit cards have been praised for making them nearly impossible to counterfeit. While the cards also contain a magnetic strip, that strip is supposed to tell the payment machine to use the chip. But there’s a relatively easy way to knock down that safeguard. Computer security researchers at the payment technology company NCR demonstrated how credit card thieves can rewrite the magnetic stripe code to make it appear like a chipless card again. This allows them to keep counterfeiting—just like they did before the nationwide switch to chip cards. This claim of a glaring hole in EMV, the chip-based system, is possible because of the way many retailers are upgrading their payment machines: They’re not encrypting the transaction. Story by Jose Pagliery for CNN Money.
Credit Cards Gaining Steam (Again)
Consumers learned a valuable financial lesson in the Great Recession: Many people reeled in their debt, became wary of high-interest loans and returned to spending only the cash they had on hand–until recently. Now, the number of credit-card accounts in the U.S. is rising quickly. And based on current growth rates, the total number will soon be back to prerecession levels. It peaked at just over 496 million in the second quarter of 2008, and fell sharply during the global financial crisis by 24 percent to about 379 million in the third quarter of 2010, according to data from the Federal Reserve Bank of New York. The number of cards in circulation has been rising steadily since, and now stands at more than 435 million. If the trend continues, the number of cards is expected to hit the previous peak by the second quarter of 2018. Story by Jessica Dickler for CNBC.
Credit Card Issuers are Ditching Foreign Transaction Fees to Attract Big Spenders
Some good news for anyone who uses credit cards while traveling abroad—more issuers are ditching foreign transaction fees, potentially saving consumers a lot of money. Right now, 61 of 100 popular credit cards charge foreign transaction fees, down from 77 last year, according to a new analysis. Reducing the foreign transaction fees seems to be a play for wealthy consumers who may be more likely to travel internationally and see the 0% fee as an attractive perk. Story by Maria LaMagna for MarketWatch.
Are Consumers Taking on Too Much Credit Card Debt?
U.S. banks are lending to consumers at the fastest rate since 2007 and the increasing debt is causing concern given the slowing economy. Lenders issued $18 billion in debt debt for card loans and other types of revolving credit within a three-month period. The second quarter results for several banks show an overall increase of credit card loans. Coupled with growing uncertainty from this year’s election and more consumers missing payments, experts think this increased lending could spell trouble for lenders down the road. Synchrony Financial, biggest issuer of retail store credit cards said last month that more and more consumers are missing payments. Story by Donna Tam for Marketplace.org.
The Unique–Often Hidden–Perks Offered by Your Credit Card
Most of us think of cash back or free flights when we consider the benefits of using credit cards. But many of them offer unique, often hidden, benefits outside their traditional rewards programs, perks that can save cardholders money and time. Often, the benefits are offered for simply having the card–no purchase required. Story by Anjali Varma for the Washington Post.
JPMorgan Chase to Pay $446K to Ex-Inmates over Debit Card Program
The largest bank in the United States settled a class-action lawsuit this week that stemmed from outcry over excessive fees the institution charged former prison inmates over the last four years. JPMorgan Chase won a government contract in 2008 to furnish inmates freed from all U.S. federal prisons with debit cards connected to money they were sent or earned while incarcerated. The program started in 2012. According to the complaint, Chase unfairly siphoned exorbitant fees from the accounts that ordinary bank customers did not have to pay. For example, newly freed customers had to pay $10 to get money at a teller window, a service offered at no charge to regular customers. Also, the bank charged nearly $25 to replace a lost card–nearly five times the amount normal customers paid. In fact, former inmates had to pay the bank 45 cents every time they checked their card balance online, the suit said. The lawsuit said Chase’s debit card program was intended to “exploit one of the most vulnerable groups imaginable”–federal prison inmates. Story by Doug G. Ware for UPI.
In Britain, Mobile Banking on the Rise as Payment via Apps Soars by 54% in 2015
Smartphone-addicted Britons are embracing mobile banking, with payments via apps rocketing 54% in 2015 and reaching a value of £347m. The average customer of certain UK banks views their finances on their phone more than once a day – and much of this balance checking and payment making is done while people watch TV, according to a report by the British Bankers’ Association. The average branch in the high street deals with only 71 customer visits a day – a 32% decline since 2011—as consumers switch to online methods of managing money. Story by Rupert Jones for The Guardian.
Chargeoffs Returning to Normal Levels
After several years of historic lows, credit card chargeoff rates are starting to return to normal levels, according to Fitch Ratings latest quarterly Movers & Shakers index. Credit card chargeoffs occur when a bank has written off a debt as uncollectable because the customer has not made the minimum payment for 180 days. Chargeoff rates rose to 2.82%, ending the first half of 2016 about 6.5% higher than year-ago levels. Since delinquencies remain at record lows, though, chargeoffs are unlikely to rise significantly in the near future. In fact, the numbers indicate that most consumers are making their monthly payments on their credit cards. Story by Bill Hardekopf for LowCards.com.
New Mexico Lawmakers Challenge Gas Pump Lottery Purchases
New Mexico lawmakers are questioning a state lottery pilot program that allows people to purchase tickets at the gas pump using a debit card. Some lawmakers from both parties think the program violates a law requiring customers to pay for the tickets with cash or a check. They have also raised concerns that drivers younger than 18 could buy the tickets. The test program began at 13 gas stations on July 25. The system is now installed at about 100 fuel pumps. Story on KRWG.
Barclays Introduces Voice Identification Technology
Barclays has announced the introduction of its voice security technology to all personal banking customers. The technology identifies the caller based on their voice. The identification method removes the need for security questions and passwords, according to the announcement. Barclays first tested the technology in 2013, but has not announced when it will be available for corporate and business customers. Story in Mobile Payments Today.
LowCards.com Weekly Credit Card Rate Report
Based on the 1,000+ cards in the LowCards.com Complete Credit Card Index, the average advertised APR for credit cards is 14.62 percent, identical to last week. Six months ago, the average was 14.85 percent. One year ago, the average was 14.68 percent.