LowCards.com Weekly Credit Card Update November 2
Rise in Household Debt Might Be a Sign of Strengthening Recovery
American households are taking on more debt than they are paying down for the first time since the recession started. Some economists even see an end to the long, hard process of deleveraging–as they refer to the cutting of debt relative to income or the nation’s economic output, which they blame for the extraordinary sluggishness of the recovery. Experts estimated that the overall level of debt would continue to fall for the next one to three years–the earliest prediction for the end of deleveraging coming in mid-2013 and the latest at the end of 2015. According to the Federal Reserve, Americans have paid down outstanding credit card debt from more than $1 trillion in 2008 to $855 billion today. But student debt has continued to rise. Story by Annie Lowry for the New York Times.
Millions of South Carolinians Social Security Numbers Stolen from State Agency
Nearly 77 percent of South Carolina residents social security numbers, credit and debit card numbers have been compromised after a South Carolina Department of Revenue’s website was hacked. Someone in a foreign country gained access to the state’s Department of Revenue website and a server was initially breached in August. A total of 387,000 credit and debit card numbers, as well as 3.6 million social security numbers, all unencrypted, have been exposed. Most of the credit cards were protected by strong encryption. However, approximately 16,000 were unencrypted and exposed. Story by WBTV.
New Peril for Parents: Their Kids’ Student Loans
Empty nest parents are struggling with a new headache because many co-signed student loans. Now, they’re becoming the latest victims of the nation’s mounting problem with student loan debt, which surpassed the $1 trillion mark last year because young graduates that didn’t land high-paying jobs find themselves unable to pay their loans. Co-signers are expected to pick up the tab when primary borrowers stop paying, and the consequences are severe. If they can’t pay, debt collectors start calling. Lenders and regulators do not track student-loan co-signing, but experts say there are a number of signs pointing to this new burden for parents and grandparents. According to the Federal Reserve Bank of New York, some 2.2 million Americans who were 60 or older owed $43 billion in federal and private student loans at the end of the first quarter this year, up from $15 billion in 2007. Story by Kelly Greene for the Wall Street Journal.
Banks Pitch In for Hurricane Sandy Relief
Banks are making donations to help after Hurricane Sandy. Bank of America will donate $500,000 to the Red Cross and an additional $500,000 to other relief efforts in the states hit hardest by the hurricane. Wells Fargo pledged $250,000 to the American Red Cross and $750,000 to other relief efforts. TD Bank Group and the TD Charitable Foundation, funded by the bank, also will donate a combined $500,000 to the Red Cross. Story by Marie Szaniszlo for the Boston Herald.
Plastic Perks Get Added Star Power–but Sometimes Cost Too
If it seems like credit card offers for exclusive gigs like a private show by Alicia Keys have become inescapable, you are correct. Some of the biggest card issuers are ramping up benefits that tout “special access.” They are giving cardholders the first opportunity on tickets to popular events, and offering VIP perks. These can be a more cost-effective way of drawing consumers than cash-back, miles and points programs and generate customer allegiance. Cardholders who pay with reward points may find they have spent more to accumulate those points than the event is worth. In addition, these cards that offer special-event access can have annual membership fees as high as $2,500. Story by AnnaMaria Andriotis for the Wall Street Journal.
Lenders Use Bankruptcy Score to Analyze Your Loan
If you are close to bankruptcy, your lenders probably already know about it. Credit reporting agencies have their own formulas that predict the likelihood of bankruptcy. The general public never sees these bankruptcy scores, but they are sold to lenders, and these lenders use the scores when considering loan applications. This is another example of how credit agencies gather, package and distribute personal data that is then used to make judgments about the consumer. This bankruptcy score is used to decide whether to give you a loan and what your interest rate will be on that loan. Story by Bill Hardekopf for LowCards.com.
American Express Says More Refunds, Penalties Possible
Earlier this month, American Express agreed to refund $85 million to customers over alleged consumer-law violations. Now according to a regulatory filing, the company may face additional refunds and financial penalties over its card practices. American Express said it is engaged in ongoing discussions with regulators and continues to change certain practices and products, “which are likely to result in additional restitution to card members and possible additional regulatory actions, which could include civil money penalties.” The additional payments could stem from regulators’ review of “add-on” products or services such as credit monitoring and debt suspension that have led to enforcement actions against Capital One and Discover. American Express has previously said additional actions tied to those products were possible. Story by Andrew Johnson for the Wall Street Journal.
A New Bank Lets You Choose Charity for Rewards
A new online bank, ableBanking, is hoping to attract new accounts by offering better-than-average savings rates and a donation of $25 to the charity of the customer’s choice. The donation can be made to any 501c(3) organization. On the anniversary of the account’s opening, the bank will donate the equivalent of 0.25 percent annual percentage yield (25 basis points) of the account’s average balance to that charity. A minimum deposit of $1,000 is necessary to open an eligible account. The bank’s money market savings account is currently paying a 0.96 percent annual percentage yield. Story by Ann Carrns for the New York Times.
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 14.27 percent, slightly above last week’s average of 14.28 percent. Six months ago, the average was 14.27 percent. One year ago, the average was 14.16 percent.