LowCards.com Weekly Credit Card Update–May 2, 2014
After Data Breach, Target Plans to Issue More Secure Chip-and-PIN Cards
Still pushing to right itself after an enormous data breach by cybercriminals, Target announced that it would switch its debit and credit cards over to a more secure technology by early next year, most likely making it the first major retailer in the country to do so. The company also said it had hired a new chief information officer to oversee the company’s technology team and data security. Story by Elizabeth A. Harris for the New York Times.
Americans Cutting Up Their Credit Cards, Reducing Debt
Our nation apparently has become more austere when it comes to using credit cards. Americans on average now have 2.6 credit cards, down from 2.9 six years ago, before the financial crisis, according to a Gallup survey of 1,026 adults. The latest figure represents the lowest since Gallup began tracking credit card use in 2001. A total of 29 percent of those polled don’t have a credit card, up from 22 percent in 2008. Meanwhile, only 7 percent say they have seven or more cards, down from 9 percent six years ago. In addition, 48 percent of the credit card holders polled say they pay their balance in full every month, a record high and up from 43 percent in 2008. Story by Dan Weil for MoneyNews.
Apple Primed to Become Mobile Wallet Leader
Apple has been slowly setting the trap to become the leader of e-commerce and mobile payments, and all the pieces are just about in place. First, get everybody’s credit card numbers in a database via a cool product that everybody wants and uses: iTunes. Done. Second, create a device that people carry with them at all times that will hold these credit card numbers: iPhone. Done. Third, create a very secure system so if a thief stole an iPhone, he would not be able to use the phone or the credit card numbers in it, making it much more secure than a regular leather wallet with credit cards. Use something like fingerprints that a thief couldn’t reproduce or fake: TouchID on the iPhone 5S. Done. Fourth, put a Near Field Communication chip in the phone so the consumer simply verifies his ID with his fingerprint and then waves the iPhone at the register. The NFC chip then sends the encoded card number. Almost done. Some industry analysts believe the iPhone 6 may have an NFC chip. After that, it’s simply a matter of getting merchants to install NFC-enabled registers. Story by Bill Hardekopf for LowCards.com.
Health Care May be Hazardous to Your Credit
When a bill is beyond past due, some health care providers sell it to debt collectors, who take a percentage of what they recover. That’s typically when the credit reporting companies have information to act on. Medical debt is treated the same as any consumer debt when calculating your credit score. A debt of more than $100 referred for collection can lower an otherwise unblemished credit profile by more than 80 points. Lenders, employers and landlords use credit information to assess risk and price a wide variety of loans and insurance products. Collections can stay on consumers’ credit reports for up to seven years. But that soon may change. Some industry groups and consumer advocates argue that medical debt is a poor predictor of creditworthiness, and that the tarnished credit that results unnecessarily constrains economic activity. Story by Kristen Gerencher for The Wall Street Journal.
Mobile Wallets Failing to Tear Consumers From Their Cold, Hard Cash—and Credit Cards
Nothing beats good old paper money and credit cards. That seems to be the consensus among most Americans when it comes to preferred ways to pay for goods and services. The impending explosion of mobile wallet use has once again taken a back seat to traditional payment methods. Despite a number of start-ups and established technology firms racing to develop a mobile wallet system–where a purchase can be made by just hitting a button a smartphone–American consumers have yet to embrace the payment option. In 2013, Americans spent about $37 billion through mobile transactions, up from $24 billion in 2012, research firm Gartner reports. However, that number is less than 10% of the $235.4 billion in mobile payments made worldwide in 2013. Story by Ashlee Kieler for Consumerist.com.
The Conundrum with the Banks
Bankers–many of them–still don’t get it. Banks are frustrated that regulators, seared by their failure to head off the worst financial crisis in generations, are being so tough on them. The public is frustrated that the regulators aren’t being tougher, and many members of Congress agree with them. It isn’t hard to understand what’s going on. First, the public really doesn’t trust the banks, and for good reason. The new Wall Street Journal/NBC News poll finds 13% saying that they have a great deal or quite a bit of confidence in the financial industry; 43% have very little or none. The rest can’t make up their minds. In 2000, 36% had confidence and 17% didn’t. Story by David Wessel of The Wall Street Journal.
Why Only One Top Banker Went to Jail for the Financial Crisis
In 2009, the Obama administration appointed Lanny Breuer to lead the Justice Department’s criminal division. Breuer quickly focused on professionalizing the operation, introducing the rigor of a prestigious firm like Covington & Burling, where he had spent much of his career. He recruited elite lawyers from corporate firms and the Breu Crew, as they would later be known, were repeatedly urged by Breuer to “take it to the next level.” But the crackdown never happened. Over the past year, I’ve interviewed Wall Street traders, bank executives, defense lawyers and dozens of current and former prosecutors to understand why the largest man-made economic catastrophe since the Depression resulted in the jailing of a single investment banker–one who happened to be several rungs from the corporate suite at a second-tier financial institution. Many assume that the federal authorities simply lacked the guts to go after powerful Wall Street bankers, but that obscures a far more complicated dynamic. Story by Jesse Eisinger for The New York Times.
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 above last week’s average of 14.47 percent. Six months ago, the average was 14.46 percent. One year ago, the average was 14.24 percent.