LowCards.com Weekly Credit Card Update–October 24, 2014
Staples Investigates Reports of Possible Credit Card Data Breach
The world’s biggest office-supply retailer is investigating reports of a possible data breach of Staples customers’ credit cards after banks detected a pattern of unusual charges concentrating on a group of shoppers. Staples acknowledged on Tuesday that it had launched an investigation and requested assistance from law enforcement officials. Reports of fraudulent charges recently surfaced on an independent security blog, which noted that the bulk of the card data appeared to come from a group of stores clustered in the northeast, including seven in Pennsylvania, three in New York and one in New Jersey. Story by Dan Kedmey for Time.
Apple Pay Suffers Early User Glitches
Scattered reports of double payments and failed transactions have begun to bubble to the surface after what initially looked like a relatively smooth introduction of Apple Pay. Some Bank of America customers reported Tuesday that they were charged twice for purchases made through Apple’s new payment system. Bank of America acknowledged the problem, but said it was limited. Tokenization, part of Apple Pay’s security, made troubleshooting the issue problematic: in the Apple Pay transaction personal customer information is not transmitted, which makes it hard for Apple to track the double payment issue until customers began calling. Story by Colin Wilhelm for Payments Source.
President Obama Tightens Security on Government-Issued Debit Cards
Even the federal government is feeling uneasy about the security of debit and credit cards. Reacting to the incredible number of data breaches at major retail chains, the United States government will now require that all federal benefits issued via debit cards be done so with cards that contain chip technology. President Barack Obama announced today that he is signing an executive order called BuySecure that will tighten security on these government issued debit cards. Story by Bill Hardekopf for LowCards.com.
Citibank to Start Offering Free Credit Scores to Credit Card Customers
Citibank in January will become the second major credit card issuer to provide FICO credit scores to customers every month. The move, coming more than a year after Discover became the first major issuer to include credit scores with customers’ monthly online statements, signals this will become the norm in the near future. Citi is the nation’s third largest card issuer by amount of credit issued, behind Bank of America and Chase. Both banks said they’re considering doing the same. Story by Teresa Dixon Murray for The Plain Dealer.
Apple Pay Threatens a Competing Approach to Simplifying Payments
Apple Pay went live this week, casting a shadow over the future of cash and credit cards–and of two young companies called Coin and Plastc. Buoyed by strong iPhone sales, Apple Pay allows users to make purchases with recent iPhones at more than 220,000 merchant locations across the U.S. The company says the new service will make it safer and easier for consumers to pay, without carrying physical credit cards. This poses a bit of a challenge for Coin and Plastc, which also aim to make payment safer and easier–but by consolidating users’ credit card information on a single, physical smart card. Story by Charlie Wells for The Wall Street Journal.
States Ease Interest Rate Laws That Protected Poor Borrowers
Lenders have come under fire in Washington in recent years. Yet one corner of the financial industry–lending to people with poor credit scores—has found sympathetic audiences in many state capitals. Over the last two years, lawmakers in at least eight states have voted to increase the fees or the interest rates that lenders can charge on certain personal loans used by millions of borrowers with subpar credit. The overhaul of the state lending laws comes after a lobbying push by the consumer loan industry and a wave of campaign donations to state lawmakers. In North Carolina, for example, lenders and their lobbyists overcame unusually dogged opposition from military commanders, who two years earlier had warned that raising rates on loans could harm their troops. Story by Michael Corkery for The New York Times.
Credit Card Issuers Will Earn $159 Billion This Year
According to a new report from R.K. Hammer, U.S. credit card issuers will generate $158.6 billion in revenue this year. That is a 9% increase from the $146 billion in 2013, and only 6% less than the debt peak back in 2008. Credit card debt has been on a decline since 2008, with this being the first increase in six years. Outstanding revolving consumer debt rose 3% in the second quarter to $839.1 billion, and then in July, it went up to $845.3 billion, according to the Federal Reserve. Most of the revolving consumer debt in America is attributed to credit card balances. Story by Lynn Oldshue for LowCards.com.
Consumer Credit Default Rates are on the Rise
Consumer credit default rates are on the rise. According to the S&P/Experian Consumer Credit Default Indices the national composite posted 1.04% in September–up 3 basis points from July 2014’s historical low. The first mortgage default rate rose to 0.93%, the second consecutive monthly increase. The second mortgage default rate rose 1 basis point to 0.52%, the first increase since April. The bank card rate decreased for the third consecutive month, declining by 10 basis points to 2.63%. Story by James Limbach for Consumer Affairs.
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 14.52 percent, slightly below last week’s average of 14.57 percent. Six months ago, the average was 14.47 percent. One year ago, the average was 14.44 percent.