LowCards Weekly Credit Card Update April 13
Gas Prices Driven Up by Swipe Fees, Convenience Story Owners Say
Ten months after the American retailers won a lobbying victory on Capitol Hill against debit card swipe fees, a trade group representing convenience stores is pushing for the government to crack down on similar fees for credit cards. According to a new report from the National Association of Convenience Stores, swipe fees were adding roughly 7 cents per gallon to the price of gas at the beginning of April, with credit card swipe fees alone costing convenience stores $11.1 billion in 2011. Although financial speculation in the oil futures markets receives far more attention, swipe fees also serve as a way for Wall Street to profit from consumer pain at the pump. In return for the privilege of accepting plastic, banks charge retailers a fee for every card swipe. On credit cards, that fee is a percentage of the total price tag of each purchase. So the more a customer spends on gas, the higher the fee charged to retailers. Retailers pass these costs on to consumers in the form of higher prices.
Story by Zach Carter for the Huffington Post.
Cookie Sales Soar as Girl Scouts Adopt Smart Phones, Credit Cards
Few things can derail a Girl Scout cookie sale quite like the words, “I don’t have any cash.” “Now, when people say that they don’t have any cash on them, the girls say with big smiles, ‘We take Master Card and Visa,’ ” says John Graves, chief financial officer for the Girl Scouts of North East Ohio. “Everyone is pleasantly surprised that Girl Scouts have this technology. It’s easier and more convenient. People are just more enthusiastic about the sale.” That enthusiasm has led to increased sales, not just for the Girl Scouts but also for small businesses nationwide. Mobile-payment companies such as Sage, Square, and Intuit processed billions of dollars in smart-phone credit transactions last year. Square alone is on track to handle $4 billion a year, twice what it expected in October. Story by Chris Gaylord for Christian Science Monitor.
Lenders Again Dealing Credit to Risky Borrowers
As financial institutions recover from the losses on loans made to troubled borrowers, some of the largest lenders to the less than creditworthy, including Capital One and GM Financial, are trying to woo them back, while HSBC and JPMorgan Chase are among those tiptoeing again into subprime lending. Credit card lenders gave out 1.1 million new cards to borrowers with damaged credit in December, up 12.3 percent from the same month a year earlier, according to Equifax’s credit trends report released in March. These borrowers accounted for 23 percent of new auto loans in the fourth quarter of 2011, up from 17 percent in the same period of 2009, Experian, a credit scoring firm, said. The push for subprime borrowers has not extended to the mortgage market, which remains closed to all but the most creditworthy. Story by Jessica Silver-Greenberg and Tara Siegel Bernard for the New York Times.
Study Says Prepaid Card Use Up 18% as Consumers Drop Debit
Prepaid card use rose by about 18 percent in 2011 as consumers dropped traditional banking products such as checking accounts with higher fees, according to a study by Javelin Strategy & Research. About 13 percent of U.S. adults had prepaid cards in 2011 compared with 11 percent in 2010. About 88 percent of consumers had a checking account in 2011, down from 92 percent in 2010, the study found. Consumers with credit cards fell to 67 percent from 74 percent, and those with debit cards dropped to
66 percent from 78 percent. At the same time, those who hold credit and debit cards are using them more. Consumers spent about 5.7 percent more on their credit cards in March than they did the year before, according to a report from payment processor First Data Corp. Spending on debit transactions in which consumers enter their personal identification numbers was up 14.6 percent and rose 8.4 percent for those in which buyers sign for a purchase. Visa and MasterCard, the world’s biggest payments networks, reported higher spending for 2011, compared with the previous year. U.S. credit- and debit-card purchases climbed 9.5 percent to $2.04 trillion at Visa, and 11 percent to $901 billion at MasterCard. American Express, the biggest U.S. credit card issuer by purchases, said spending surged 13 percent last year to $542.8 billion. Story by Elizabeth Ody for Bloomberg.
Financial Tips for Each Stage of Your Life
April is Financial Literacy Month. As you prepare your taxes each year, it is a good opportunity to review your financial health and make changes in the way you manage your money. Financial management can significantly impact the quality of our life, but it usually doesn’t receive enough of our attention. 56 percent of U.S. adults admit that they don’t have a budget, and more than 77 million Americans (one-third) do not pay all of their bills on time, according to the 2012 Financial Literacy Survey. Here are tips for managing money at different stages of life. Story by LowCards.com.
Consumer Credit in U.S. Rose Less Than Expected in February
U.S. consumer borrowing rose less than forecast in February, restrained by a drop in credit card debt, according to a Federal Reserve report. Credit increased $8.7 billion, the least in four months, after a revised $18.6 billion gain in January that was more than initially estimated. Smaller gains in borrowing indicate American households are continuing to pay down debt or are less optimistic about their finances. Another report today showed the economy created fewer jobs than forecast in March, a sign it may take time before consumers become more comfortable taking on debt. The Fed’s statistics showed revolving debt, which comprises credit cards, fell $2.2 billion in February after a $3 billion drop a month earlier. Story by Alex Kowalski for Bloomberg
High Household Debt Makes Recession, Recoveries Worse, Says IMF
What happens when, in boom times, households run up substantial debt through mortgages, personal loans and credit cards? When the economy starts to slump, the recession is deeper and the eventual recovery is much weaker, according to the International Monetary Fund. In its new World Economic Outlook report, the IMF found that declines in economic activity aren’t only caused by falling home prices and the resulting crunch on household wealth. Prerecession indebtedness often makes contractions “more severe and protracted.” Story by Tiffany Hsu for the Los Angeles 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 14.33 percent, identical to last week. Six months ago, the average was 14.29 percent. One year ago, the average was 14.16 percent. Story by LowCards.com.