LowCards.com Weekly Credit Card Update–November 14, 2014
New Consumer Protections for Prepaid Cards
The Consumer Financial Protection Bureau is extending many of the financial protections of bank accounts to prepaid cards. New rules proposed Thursday by the federal regulator would require that prepaid card users be protected against fraudulent charges and provided with free monthly billing statements. The rules come as more Americans are using “reloadable” prepaid cards as a substitute for checking accounts. Consumers have gone from loading less than $1 billion onto their cards in 2003 to nearly $100 billion through 2014. Story by Josh Boak for the Associated Press.
Credit Card Thieves Take Gas in ‘Pump and Dump’ Scheme
The man in the white shirt was pumping gas into an ordinary-looking white van. But he was no ordinary customer. For one, it took him a long time at the pump. And then there were the stolen credit cards police say he took out of his wallet. In the 17 minutes he was at the pump, he used two cards to pump 95 gallons of diesel fuel. What happened at this gas station outside Atlanta is part of a crime wave around the country, police say. It’s called “pump and dump.” Thieves use stolen credit cards to get gas and then sell it at cut-rate prices to truckers and gas stations that are part of the scheme. Authorities say it’s a multi-million dollar crime with a quick payoff. Story by By Scott Zamost and Drew Griffin for CNN.
$450 Credit Cards: Should You Pay for Premium Plastic?
Banks are pitching credit cards with annual fees more aggressively this year. Before you sign up, consider whether it makes sense to pay up to $500 a year for the perks that come with premium plastic. The stiff price tags on high-end cards might be worth it if you are a frequent traveler or spend significant sums on dining or entertainment. High-fee cards typically come with spending-based rewards such as help securing tickets to popular concerts and sporting events. But cardholders should be sure that they won’t ramp up their purchases just to justify paying the annual fee—particularly if spending more would increase the odds that they wouldn’t pay the credit card bill in full each month. In that case, interest charges would likely overwhelm the value of any benefits in a hurry. Story by AnnaMaria Andriotis for The Wall Street Journal.
Debit Cards Decline in Popularity
A new report indicates debit cards are dropping in popularity, even though they remain the most common form of payment in America. According to the TSYS’s 2014 Consumer Payment Study, the decline is primarily motivated by security fears from the number of data hacks that retailers have suffered this year. The report found 43% of the respondents said they preferred using debit cards to make payments, compared to 49% last year. This is still higher than the 35% who preferred credit cards, a figure that remained unchanged from a year ago. Story by Bill Hardekopf for LowCards.com.
Costco Weighs Dropping AmEx as U.S. Card Partner
Costco, the retailer that replaced American Express as its credit card issuer in Canada, is considering a similar move with its larger U.S. portfolio, according to two people familiar with the matter. Costco is seeking bids for both an issuer and a payments network for its U.S. cards, the people said, requesting anonymity because the matter hasn’t been made public. New York-based AmEx could be among firms bidding for the contract, the people said. Story by Elizabeth Dexheimer and Matt Townsend for Bloomberg.
Square Rolls Out New Reader for Chip-Based Credit Cards
Square is ready to help out–and cash in on–small businesses preparing for the death of the swipe-and-sign credit card in 2015. Starting today, you can pre-order the Square Reader for chip cards. The new reader, which will ship in spring 2015, is the first Square device to deal with EMV technology, meaning it has the ability to process payments made with credit cards embedded with computer chips. The $29 reader will accept both magnetic-stripe and chip cards, and can be used with iPhones, iPads and Android devices. Story by Kate Taylor for Entrepreneur.
Apple Pay’s Biggest Competitor Could be a Totally New Credit Card
American Express will replace credit card numbers with unique tokens which can be used to complete transactions online, from a mobile app or in-store with a mobile near field communications-enabled device. The card will have an embedded EMV chip that will generate a unique token for each transaction. Then, that token will be passed to a payment terminal via near field communications, much the same way that Apple Pay makes a transaction. In addition, issuers are developing fingerprint identification for credit cards. MasterCard is already working on a fingerprint ID system in their cards. MasterCard is teaming with Zwipe in the development of a credit card that combines biometric authentication and contactless payment technology. The system would be similar to Apple’s TouchID system where your fingerprint would need to be verified by the card before it can be used. If these two security features are incorporated into a credit card, then the argument that Apple Pay is somehow more secure than credit cards will be a moot point. Story by LowCards.com.
5 Holiday Spending Mistakes That Can Kill Your Credit
Now that the holiday shopping season is here (what, you didn’t know Halloween is the new Black Friday?), companies are pulling out all the stops to get us to spend. But watch out: There are some fairly common holiday spending behaviors that can do a number on your credit score. Here’s what the experts say you need to avoid. Story by Martha C. White for Time.
Younger Generation Faces a Savings Deficit
After a flirtation with thrift after the recession, young Americans have stopped saving. Adults under age 35–the so-called millennial generation–currently have a savings rate of negative 2%, meaning they are burning through their assets or going into debt, according to Moody’s Analytics. That compares with a positive savings rate of about 3% for those age 35 to 44, 6% for those 45 to 54, and 13% for those 55 and older. The turnabout in savings tendencies shows how the personal finances of millennials have become increasingly precarious despite five years of economic growth and sustained job creation. A lack of savings increases the vulnerability of young workers in the postrecession economy, leaving many without a financial cushion for unexpected expenses, raising the difficulty of job transitions and leaving them further away from goals like eventual homeownership–let alone retirement. Story by Josh Zumbrun 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 14.50 percent, slightly lower than last week’s average of 14.51 percent. Six months ago, the average was 14.45 percent. One year ago, the average was 14.45 percent.