LowCards.com Weekly Credit Card Update December 7
Credit Card Penalty Payments are Arriving
More than $425 million in refunds and restitution will soon be sent to millions of consumers nationwide, penalties paid for deceptive credit card practices. And another $410 million–from Bank of America–is already landing in pockets of millions who got stuck with excessive debit card fees. Consumers don’t need to do anything to get their money. The companies are required to contact customers, whose refunds will be automatically deposited into an existing account. If they’re not a current customer, they’ll be mailed a check. Story by Claudia Buck for the Sacramento Bee.
Bank of America Backs Down on New Fees
Bank of America has shelved plans for new fees that could have hit at least 10 million customers by the end of this year. This decision is part of a sweeping review of the bank’s retail-banking business to help reduce losses the bank takes on the 20 percent of customers who keep modest balances on deposit and don’t use other products, such as credit cards or mortgages. These customers, who typically have less than $50,000 in annual household income, cost the bank on average a couple hundred dollars a year. The second-largest U.S. bank by assets wants to find ways to encourage those 10 million customers to set up a $250 monthly direct deposit or to sign up for loans or other products–moves that would increase bank income and shield the consumers from fees. Bank of America began pilot programs in Arizona, Georgia and Massachusetts last year, experimenting with charging fees of $6 to $9 a month for an Essentials Account. Story by Shayndi Raice and Robin Sidel for the Wall Street Journal.
Scoring a High Credit Score
With some attention to how you pay your monthly bills and some careful tweaks of your credit portfolio, you might be able to raise your score to a level that qualifies for the very lowest interest rates and even have lenders competing for your business. Fair Isaac is providing some insights into common traits of the more than 50 million people who are in the superstar tier, earning a score of 785 or higher on a scale that ranges from 300 to 850. Here are some keys to joining the credit elite. Story by Karen Blumenthal for the Wall Street Journal.
Proposed Law Would Tighten Rules on Gift Cards
Steep fees and time limits can make gift cards a terrible gift but a new bill in the Senate seeks to change that. Visa, MasterCard, American Express and Discover all issue pre-paid cards that look like credit cards but have far fewer legal protections. The law is sponsored by Sen. Richard Blumenthal, who got a similar law passed in Connecticut when he was serving as the state’s attorney general. The CFPB is also weighing new regulations for pre-paid cards. Story by Constantine Von Hoffman for Moneywatch.
Elizabeth Warren Said to Head to Senate Banking Committee
U.S. Senator-elect Elizabeth Warren is poised to join the Senate Banking Committee after she’s sworn into office in January. A final decision on committee assignments won’t be made until the new session of Congress convenes. Story by Cheyenne Hopkins and Kathleen Hunter for Bloomberg.
Conservative Credit Card Spending Projected for the Holidays
Credit card debt will still be the biggest financial worry for consumers in the new year, according to a new myFICO survey. The survey showed that almost a quarter of respondents said they will need more than three months to pay off their 2012 holiday expenses, compared to 18 percent in a similar survey conducted in 2010. Spending on credit cards is expected to be somewhat conservative as nearly 65 percent of those surveyed will charge less than $500 on their credit cards. In addition, 80 percent of consumers will use less than 25 percent of their credit limit. Story by Lynn Henderson for LowCards.com.
Can Interactive Credit Cards Revive Merchant Co-Branding?
After languishing for several years, credit and debit cards equipped with buttons consumers can use to choose loyalty programs or payment methods seem to be making a comeback of sorts. You could pay with credit or rewards points and choose by pushing a button. The cards cost a bit more to manufacture–sources say at least twice as much as “normal cards”–but offer consumers added flexibility that should play well with higher end and younger demographics. Story by John Adams for American Banker.
LowCards.com Weekly Credit Card Rate Report
Based on the 1000+ cards in the LowCards.com Complete Credit Card Index, the average advertised APR for credit cards is 14.31 percent, identical to last week. Six months ago, the average was 14.33 percent. One year ago, the average was 14.17 percent.