LowCards.com Weekly Credit Card Update–March 7, 2014
Another Day, Another Retailer in a Massive Credit Card Breach
The corporate hacks keep coming. The latest target, according to cybersecurity blogger Brian Krebs, is the beauty supply chain Sally Beauty, a retailer that draws customers from salons and other stylists. A new batch of 282,000 stolen debit and credit cards were posted for sale this week on underground marketplaces, and Krebs believes they have been used at one of Sally Beauty’s 2,600 stores. Story by Karen Weise for Bloomberg Businessweek.
Now May Be a Good Time to Bail Out of Frequent Flier Programs
Fly one mile, get one frequent flier mile in return. For decades, this has been the deal that the biggest airlines made with passengers. But Delta Air Lines became the first among the three biggest airlines in the United States to base rewards on what a passenger pays for a ticket, not the number of miles flown. Starting in 2015, fliers will earn five to 11 miles for every dollar they spend, depending on their elite status level. Delta hopes to reward the people who spend the most and promises to make redeeming the miles for free flights easier for everyone. But a sizable number of its passengers, those who fly longer distances and for cheaper fares, may earn fewer miles under the new system. Story by Ron Lieber for the New York Times.
Losses Mobilize the Bitcoin Police
The recent loss of nearly a half-billion dollars from a major bitcoin exchange is forcing U.S. regulators to confront burgeoning questions about their authority–and responsibility–to oversee the fledgling virtual currency. So far, U.S. financial regulators have avoided stepping into the fray. But they are trying to determine whether their oversight extends to bitcoin. For now, bitcoin and other digital payment systems are operating in a sort of regulatory vacuum, with exchanges and money transmitters free to start up and solicit U.S. customers without the same type of oversight or protections that apply to credit cards, banks or other financial-services businesses. Story by Ryan Tracy and Stephanie Armour for The Wall Street Journal.
Airlines Confront Credit Card Fraud in the Air
It’s a little-known fact that most credit card purchases that take place in the air don’t actually go through to the credit card company in real-time. The flight attendant swipes the card through a point-of-sale device, which stores the information until the plane lands and arrives at the gate. Some passengers intentionally take advantage of this (some without realizing it) and use cards that are expired, over their limit or even fake. Although most credit card purchases on U.S. flights are small, when you take into account the large number of them–now that most carriers don’t take cash–and the expensive, duty-free purchases possible on international flights, it adds up. Story by Amey Stone for CBS News.
The Appeal of Prepaid Debit Cards
Prepaid debit cards have become a popular alternative to checking accounts for more Americans. Consumers loaded $64.5 billion onto prepaid debit cards in 2012, a 13% increase from the $56.8 billion in 2011, and more than double the $28.6 billion in 2009. According to one survey, 12 million people, or 5% of adults, use prepaid cards at least once a month. Consumers are using prepaid cards as a way to stay out of credit card debt, control their spending, make purchases online and avoid overdrafts. Story by Bill Hardekopf for LowCards.com.
The Airport Lounge Arms Race
American Express opening its own lounges at airports for its cardholders, one-upping airline clubs with cool furniture, rich wood paneling, a free celebrity-chef food buffet, showers stocked with L’Occitane products and manicures, facials and massages. It’s the kind of oasis that travelers have come to expect in Singapore, Dubai or London, but can now find in Las Vegas and Dallas. New York and San Francisco are slated to open later this year. Why try to out-fancy fancy airline clubs? Because both United Airlines and American Airlines have cut off access for AmEx Centurion and platinum cardholders. The perk of lounge access at multiple airlines was a major selling point for premium AmEx cards. The cards start at annual fees of $450 a year but come with $200 in refunds of airline fees a year, plus lounge access and other perks. Story by Scott McCartney for The Wall Street Journal.
Target Profits Tumble After Breach
Even though research shows consumers are rather indifferent to the Target breach, the retail giant did experience a significant profit loss in the fourth quarter of 2013. Revenue fell 5.3% during that time, but profits were down 46%. Part of the substantial loss in late 2013 was due to the cost of implementing security measures to avoid similar credit card hacks in the future. Target says the cost of the breach has been $61 million thus far, which has been partially offset by $44 million in insurance payouts. Story by Lynn Oldshue for LowCards.com.
New Lenders Spring Up to Cater to Subprime Sector
A crop of new lenders is jumping into the subprime personal loan market, wooing consumers with flawed credit who have been neglected since the financial crisis. As the economic recovery continues, new entrants see an opportunity to lend at interest rates approaching 10% and sometimes much more. That is a premium above prime loans–those made to borrowers with strong credit scores–but less than what many consumers pay for credit cards and payday loans. Story by Ianthe Jeanne Dugan 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 14.49 percent, slightly lower than last week’s 14.50 percent. Six months ago, the average was 14.39 percent. One year ago, the average was 14.32 percent.