LowCards.com Weekly Credit Card Update–August 9, 2013
An $18 Million Lesson in Handling Credit Report Errors
Julie Miller could not get the big credit bureau to remove a host of errors that it inserted into her credit report. So she tried suing and that worked. A jury in Federal District Court in Oregon awarded her $18.4 million in punitive damages, which, according to consumer lawyers, is the largest individual case on record. They say that despite the huge judgment, little is going to change for the millions of Americans who discover errors in their credit reports. Story by Tara Siegel Bernard for The New York Times.
Direct Mail Offers for Credit Cards on the Rise
Credit card issuers have been courting customers with renewed vigor this year, dangling $100 checks, bonus miles and zero percent balance transfer offers as enticements to win new business. After dropping off in 2012 from exceptionally high levels in 2011, credit card direct mail solicitations headed higher again this year, up 22 percent through June compared with the same time last year. Story by Patricia Sabatini for the Pittsburgh Post-Gazette.
The U.S. Has a Really Helpful Student Loan Program and No One is Using It
Many students aren’t taking advantage of the government’s programs for student loans. Just 3 out of 10 borrowers in the repayment plans are getting the kind of help that pegs a borrower’s payment to his or her monthly income. These income-based repayment plans (known as IBR) are generally praised by student advocates for making loans affordable and because they forgive the remaining balance after 10, 20, or 25 years, depending on the program. More students aren’t using the IBR plans because borrowers don’t know about them and enrollment isn’t as easy as it could be. Story by Karen Weise for Bloomberg Businessweek.
Watchdog’s Complaint Tracking Getting Results
The Consumer Financial Protection Bureau’s growing database of financial services complaints could help consumers rule out companies that appear often. Companies are responding quickly when contacted about the complaints because they know the database is “backed by potential supervision and enforcement authority,” says Director Richard Cordray. When the bureau sees “patterns in that data, we won’t hesitate to act.” Story by Jayne O’Donnell for USA Today.
Wells Fargo to Offer Credit Cards That Help Cut Consumer Debt
Wells Fargo is trying to grow its relatively small credit card business with an unusual strategy: appealing to its customers’ distaste for debt. In the coming months, the bank plans to roll out cards that provide similar benefits to customers who have taken out student loans, auto loans and other types of consumer debt from the bank. In adopting the strategy, Wells Fargo is counting on its ability to deepen its relationship with consumers across many different types of products. Story by Peter Rudegeair for Reuters.
U.S. Consumer Borrowing Rose $13.8 Billion in June
Americans were frugal again with their credit cards, indicating many remain wary of taking on high-interest debt but they did borrow more for cars and student loans. Consumers increased their borrowing $13.8 billion in June from May to a seasonally adjusted $2.85 trillion, the Federal Reserve reported. That’s the highest level ever. The category that includes credit card use dropped $2.7 billion in June. Story by Martin Crutsinger for the Associated Press.
Consumers Find Investors Eager to Make Peer to Peer Loans
Lately, there has been even greater interest from lenders in peer to peer loans–mostly individual investors so starved for high yields that they are jumping to fund unsecured, high-interest-rate loans. Even some investment funds are getting into the game, snapping up entire loans before individual investors act. Lenders such as Prosper are working hard to come up with enough borrowers to meet the demand. In June, the company arranged $27.5 million in loans, a bit short of its goal. In July, it originated $30.3 million. Prosper and Lending Club together originated about $871 million in loans last year, more than double the prior year’s total and up tenfold since 2008. Story by Ianthe Jeanne Dugan for the Wall Street Journal.
Reconsideration–Another Chance at Getting a Credit Card
Reconsideration is an unpublished “secret” in the credit card industry. If your credit card application has been rejected, there is a number you can call to explain your side of the story to a real person and appeal for approval. When your credit card application has been declined, the bank or issuer has to tell you why. If you have an explanation or solution to their objection, this reconsideration process could be a good option for you. Story by Bill Hardekopf for LowCards.com.
Wells Fargo and American Express Join Forces on Credit Cards
The nation’s fourth-largest bank by assets is joining forces with AmEx to market a portfolio of credit cards to its consumers as both companies look to expand their businesses. Wells Fargo cards will be marketed to the bank’s 70 million customers, only a third of whom has a Wells Fargo credit card. Story by Andrew Johnson for the Wall Street Journal.
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 14.35 percent, slightly higher than the 14.31 percent average from last week. Six months ago, the average was 14.35 percent. One year ago, the average was 14.34 percent.