LowCards Weekly Credit Card Update July 27
Paper or plastic? That question could soon take on a whole new meaning at your local grocery store. Cincinnati-based Kroger, the nation’s largest grocery chain, is considering offering discounts to shoppers who pay cash instead of charging their groceries to their favorite plastic card. The settlement could mean big savings for companies like $90 billion-a-year Kroger, which says it pays “hundreds of millions of dollars” in fees annually to credit card companies. Supporters of the proposed settlement, which includes Kroger, say the ability to charge customers who use a credit card will not necessarily result in higher costs for consumers. Instead, it could be used as a negotiating tool by merchants with credit card companies to keep fees low. Story by Lisa Bernard-Kuhn for Cincinnati Enquirer.
MasterCard and Visa may have some lawyers’ buy-in for their proposed settlement of a lawsuit over credit card swipe fees, but they don’t have the support of retail heavyweights Walmart and Target. Target announced its opposition first, in a statement issued Friday: Target believes the proposed interchange fee settlement is bad for both retailers and consumers. The proposed settlement would perpetuate a broken system, restrict retailers from any future legal action and offer no long-term relief for retailers or consumers. Walmart joined in opposition on Tuesday: The proposed settlement would not structurally change the broken market or prohibit credit card networks from continually increasing hidden swipe fees, which already cost consumers tens of billions of dollars each year….we encourage all merchants to put consumers first and reject the settlement. Story by David Nicklaus for the St. Louis Post-Dispatch.
Bank of America is throwing its muscle behind a credit card technology aimed at cutting down on hassles U.S. cardholders may encounter when trying to make purchases while traveling abroad. The bank said it is including what are known as EMV chips in many of its consumer credit cards targeted at frequent travelers and high-net-worth customers. About two million of Bank of America’s credit card customers have used their cards overseas in at least two of the last 12 preceding months. Bank of America’s cards will continue to include a magnetic stripe so customers can use them in the U.S. Customers will be able to request chip cards in branches and over the phone starting this week and online later this year. Story by Andrew R. Johnson for the Wall Street Journal.
It’s not your imagination. Bank of America really did get less convenient. The bank has hauled off more than 1,500 ATMs from shopping malls, grocery stores and gas stations this year. That means customers will have to pay at least $2 to use another bank’s automated teller–or take hike to find a Bank of America location to get fee-free cash. The shrinkage comes as the bank focuses on cost-cutting and Americans change how and where they use ATMs. The bank said one-time ATM reduction is part of a drive to slash $8 billion from expenses by 2015. The availability and convenience of a bank’s ATM network plays a significant role in how much a checking account actually costs consumers. Go out of network more than once or twice a month, and the fees can add up quickly. Story by Catherine New for the Huffington Post.
July 21 marked the one year anniversary of the Consumer Financial Protection Bureau. During its first year, the CFPB has proved it is an agency of action and willing to stick up for consumers, particularly credit cardholders. Created to enforce Federal consumer financial laws and to supervise banks, credit unions, and other financial institutions, the CFPB has already issued hundreds of millions of dollars in fines and has set up some systems that are proving beneficial to consumers. Here are some of the major accomplishments of the Bureau’s first year. Story by Bill Hardekopf for LowCards.com.
JPMorgan Chase agreed to pay $100 million to settle a lawsuit filed by customers who said that the nation’s largest bank increased monthly minimum payments due on credit cards to generate more fees. The settlement needs to be approved by a judge. The lawsuit accuses JPMorgan of improperly increasing cardholders’ minimum payments due to five percent of balances, from two percent, in 2008 and 2009. Credit card customers argued that the bank increased payments on borrowers who could not afford to pay more, ultimately creating more income from late fees. Story by Jessica Silver-Greenberg for the New York Times.
Visa posted a loss of $1.8 billion for the April-to-June period on an increase in litigation costs. Excluding that expense, Visa’s results were much better than analysts expected. The company said its revenue grew 10 percent to $2.6 billion, compared to analysts’ expectations of $2.5 billion. In a sign that people aren’t spending as freely as they used to, the total number of transactions Visa processed worldwide in the quarter rose just 1 percent from last year to 13.1 billion. The slowdown was particularly pronounced in the U.S. The volume of transactions on Visa-branded cards fell 1 percent to $618 billion in the U.S. The volume of transactions and payments on debit cards with the Visa logo dropped 7 percent to $362 billion in the quarter compared with the same period last year. It was the first drop in debit card usage in at least two years for Visa. That represents a dramatic shift for a company which has dominated the market for debit cards. Story by Pallavi Gogo for the Associated Press.
Job killer. That’s the label one libertarian analyst of the banking industry slapped on the year-old Consumer Financial Protection Bureau at a congressional hearing Tuesday–a theory quickly dismissed as politically charged by at least one economist. New regulations from the agency, created in the aftermath of the financial crisis to protect consumers from predatory lending and other deceptive practices, have increased the cost of credit, and that translates to about 150,000 fewer jobs, according to Mark Calabria, director of financial regulation studies at the nonprofit Cato Institute. Since it was created under the Dodd-Frank Act, bankers and financiers have been at odds with the agency. Their main beef is that greater regulation has untold costs that will hinder innovation and profits. During Tuesday’s hearing, several financial industry leaders charged that the CFPB’s rule-making on mortgages and other consumer loans is restricting consumers’ access to affordable credit and even hurting job creation. Story by Catherine New for the Huffington Post.
Based on the 1000+ cards in the LowCards.com Complete Credit Card Index, the average advertised APR for credit cards is 14.34 percent, slightly higher than the 14.33 percent last week. Six months ago, the average was 14.17 percent. One year ago, the average was 14.16 percent.