LowCards Weekly Credit Card Update April 20

April 21, 2012, Written By Lynn Oldshue
LowCards Weekly Credit Card Update April 20

Experts: Most Purchases Will Be Made With SmartPhones by 2020
Most Internet users and tech experts think cash and credit cards will become things of the past in the next decade as people turn to their mobile phones to make payments, results from a newly released survey suggest. Nearly two out of three respondents to the survey (65%) told the Pew Internet & American Life Project that they think most people will have fully adopted the “mobile wallet” as their day-to-day means of paying by 2020. In a December report from comScore, 38% of smartphone owners had used their phones to make a purchase of some kind. Pew’s report said those who think mobile payments will dominate in the coming years frequently said the boom in smartphone ownership, convenience and security are key factors that make “these systems an obvious choice to replace established modes of payment in day-to-day commerce.” Story by Doug Gross for CNN.

Banks Pitch Prepaid Cards on College Campuses
More banks are hawking prepaid cards as they try to win over the college crowd, a once lucrative market that analysts say is less profitable because of regulatory restrictions on credit and debit cards. Several lenders have begun offering prepaid cards that double as a student’s campus ID card. Students can use the cards to gain building access, check out library books and pay for printing or even beer. Because the plastic carries the logos of card networks like MasterCard Inc. and American Express Co., students can use them to make purchases at off-campus merchants and online retailers that accept those brands. The prepaid push on campuses comes as new regulations have made it more difficult for banks to market credit cards to young consumers. The Credit Card Accountability, Responsibility and Disclosure Act of 2009 included provisions limiting but not eliminating lender’s ability to market credit cards on campuses and at school-sanctioned events. The regulation also included restrictions for lending to consumers under 21. Story by Andrew Johnson for the Wall Street Journal.

Consumer Watchdog Agency Backs Off on High-Cost Credit Cards
The Obama administration’s consumer financial watchdog wants to undo a limit on some upfront fees on credit cards, prompting criticism that it could hurt borrowers with poor credit. The Consumer Financial Protection Bureau is backing away from restrictions on what the industry calls fee-harvester cards. Issuers of these cards make such customers pay a large fee before they can receive cards with very low credit lines. A credit card law passed by Congress in the aftermath of the financial crisis included a provision saying non-penalty fees could amount to no more than 25% of the credit limit during the first year after an account is opened. This included annual fees and application fees. Story by Scott Reckard for the Los Angeles Times.

College Students are Credit Card Dunces
Even after lawmakers made it harder for banks to give college kids credit cards, credit card debt is still a big problem on U.S. campuses. A new study pinpoints the simple, frustrating reason why: Students don’t know anything about the fundamentals of credit card use. “It is clear the status quo of financial literacy is a failure,” says the study. So, just how dumb are kids these days? Although 70% of undergrads and 96% of graduate students have credit cards, fewer than 10% pay their balance in full every month. Only 15% have any idea how much their interest rate is. Story by Martha White for Time.

The Changing Landscape of Unused Gift Cards
Gift cards are a popular gift to give and receive. However, if they are not used, they may be turned over to your state government as unclaimed property. Escheatment laws have required financial institutions to report and remit abandoned or unclaimed intangible property to the state. This has historically applied to uncashed checks, bank accounts and mutual funds. But in a time of budget cuts, recession, and shortages, it is not surprising that many states have expanded escheatment rulings to include unused gift cards, bringing in millions of dollars each year. According to the Wall Street Journal, New York state took in $9.6 million in unclaimed gift card money in 2008, but only $2,150 was distributed to consumers. Story by

Bank of America to Restructure, Integrate Business Divisions
Bank of America Corp is all set to realign its business divisions to streamline its banking operations with a renewed focus to sell various products to its customers. In a filing with the Securities and Exchange Commission, the second-largest US bank by assets revealed its plan to reduce its divisions to five from six, and to form one consumer-banking division by integrating its credit-card operations into its retail and small-business banking business. Under the cost cutting program ‘Project New BAC’, Bank of America carried out management changes and new organizational structure and also axed 30,000 jobs and reduced expenses by $5 billion. Story in Banking
Business Review.

The Best Credit Cards of 2012
In the battle of the plastics, credit cards have lately emerged as the surprise champs, offering fewer fees and better rewards than the typical debit card. But as banks and credit card companies flood mailboxes with a new round of offerings, experts warn that finding the best deals isn’t getting any easier. Unlike the days of frozen credit following the market meltdown of 2008, consumers have plenty of offers. Card issuers mailed nearly 4.1 billion credit card solicitations last year–a record high and up 44% from the previous year, according to Ipsos Mail Monitor, which tracks credit card mailings. Still, only a select number of cards are truly consumer-friendly. SmartMoney and a team of experts dug through the cards to find the best new ones with relatively low rates, long-lasting promotional offers and generous rewards. Story by AnnaMaria Andriotis
for SmartMoney.

To Pay Off Loans, Grads Put Off Marriage, Children
Total U.S. student loan debt outstanding topped $1 trillion last year, according to the federal Consumer Financial Protection Bureau, and it continues to rise as current students borrow more and past students fall behind on payments. Moody’s Investors Service says borrowers with private student loans are defaulting or falling behind on payments at twice prerecession rates. Most students get little help from colleges in choosing loans or calculating payments. Most pre-loan counseling for government loans is done online, and many students pay only fleeting attention to documents from private lenders. Both private and government loans, however, lack “the most fundamental protections we take for granted with every other type of loan,” says Alan Collinge, founder of StudentLoanJustice.org, an advocacy group. When borrowers default, collection agencies can hound them for life, because unlike other kinds of debt, there is no statute of limitations on collections. And while other kinds of debt can be discharged in bankruptcy, student loans must still be paid barring “undue hardship”. The implications last a lifetime. A recent survey by the National Association of Consumer Bankruptcy Attorneys says members are seeing a big increase in people whose student loans are forcing them to delay major purchases or starting families. Story by Sue Shellenbarger for the Wall Street Journal.

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 14.21 percent, slightly lower than than last week’s average of 14.33 percent. Six months ago, the average was 14.26 percent. One year ago, the average was 14.13 percent. Story by LowCards.com.

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The information contained within this article was accurate as of April 21, 2012. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.

About Lynn Oldshue

Lynn Oldshue has written personal finance stories for LowCards.com for twelve years. She majored in public relations at Mississippi State University.
View all posts by Lynn Oldshue