LowCards Weekly Credit Card Update February 10
CITI GETS APPROVAL TO ISSUE CREDIT CARDS IN CHINA
The China unit of Citigroup Inc said it has received regulatory approval to issue credit cards in China, the first non-Asian bank to receive permission. Citi, which has branches in 13 cities, said it would likely launch credit card operations this year.
Story by Kazunori Takada for Reuters
DEBIT FEES GONE, BUT WHAT’S NEXT?
Three months after banks scrapped plans for debit card fees, it’s becoming clearer how they intend to recoup money lost in the Dodd-Frank financial reform law. Instead of one new fee, prepare to be sold more products, offered new service packages, lose debit rewards and face more fees in general. Banks’ fourth-quarter earnings provided the first definitive look at what they lost after a cap took effect on the fees merchants pay banks when you use your debit card.
Story by Andrew Dunn for the Charlotte Observer
MASTERCARD TAKES $495M CHARGE TO COVER FEE SUIT
MasterCard said it recorded a $495 million charge in its fourth quarter to cover potential losses related to a lawsuit brought by retailers over the fees they pay on credit card transactions. Without the charge, MasterCard’s earnings topped expectations, as shoppers put more purchases on debit and credit cards during the holiday season. The company also repeated strong earnings and revenue guidance for the next two years. Shares rose nearly 7 percent. It said the charge represents the after-tax portion of a potential settlement in the case, and is based on progress seen in mediation. On a pre-tax basis, the charge was $770 million. Wall Street had speculated the pre-tax bill would run about $1.2 billion to $1.8 billion if MasterCard and rival Visa Inc. settle the suit. The suit is set to go to trial in September before the U.S. District Court for the Eastern District of New York, but many analysts and investors expect a settlement before that.
Story by the Associated Press
AMEX PUSHING MORE CARDS WITH ANNUAL FEES
American Express, the largest credit card issuer by spending, is pushing more cards with annual fees as it tries to generate additional revenue and manage expenses. While most of its charge cards and co-branded cards–those that carry the names of airlines, retailers and other partners–have an annual fee, its revolving credit products traditionally have not. American Express said costs tied to cardholder rewards rose 10% in the fourth quarter. Overall expenses were up about 1% in the quarter. American Express’s goal is to broaden its appeal to consumers who may not traditionally qualify for one of its charge or credit cards.
Story by Andrew Johnson for MarketWatch
CHASE AGREES TO SETTLE LAWSUIT IN OVERDRAFT FEES
J.P. Morgan Chase has agreed to pay $110 million to settle a class-action suit challenging the way it charged debit card fees to customers who spent more than what was in their accounts. At issue in the suit is the manner in which banks traditionally processed customer transactions. By processing payments in the order from largest to smallest, banks can maximize the amount of overdraft fees charged, if a customer spends more than is available in the account. The practice resulted in outcry over the so-called “$38 dollar cup of coffee,” in which a customer overdraws his or her account by buying a $3 beverage with a debit card and is hit with a $35 overdraft fee. Chase, like other banks, has moved away from that processing practice and now pays debit transactions in the order in which they occur.
Story by Ann Carrns for the New York Times
10 WAYS TO REDUCE FINANCIAL STRESS IN YOUR RELATIONSHIP
The National Retail Foundation predicts that U.S. shoppers will spend an average of $126 on gifts and treats for loved ones on Valentine’s Day, an 8.5 percent increase from the $17.6 billion spent in 2011. While this spending may be good for retailers and romance, it can add add more debt to a budget that is already under stress. Money management and spending are landmines that can destroy a relationship. Making financial decisions together can be extremely difficult but couples that create an efficient financial plan significantly lower their anxiety levels and have more time and money for long-term romance. Here are 10 tips for couples to help reduce financial stress.
MASTERCARD DOUBLES QUARTERLY DIVIDEND
MasterCard will double its quarterly dividend as the credit card processor comes off a strong year in which it grew profit and revenue despite new regulations and mounting economic pressures. The increased payout, to 30 cents a share from 15 cents, will cost MasterCard about $76.2 million more a year. MasterCard and its larger rival Visa have continued to grow despite tough economic conditions in the U.S. and overseas, where both companies are pushing more consumers to use their credit and debit cards as well as trying to get more merchants to accept them.
Story by Andrew Johnson for the Wall Street Journal
VISA’S PROFIT RISES AS CREDIT CARD USAGE JUMPS
Visa posted a 16% increase in fiscal first-quarter profit as the credit card processor continued to benefit from consumers’ increased use of plastic while grappling with new federal rules that affect debit-card purchases. The company said cardholders ratcheted up their use of Visa’s credit and debit cards, driving up the volume of transactions it processed by 8 percent. Revenue rose 13.8 percent.
Story by Andrew Johnson for the Wall Street Journal
BANK OF AMERICA PULLS SALE OF UK CREDIT CARD BUSINESS
The sale of MBNA Europe, Bank of America’s U.K. and Ireland credit card business, has been abandoned, a person familiar with the matter told Dow Jones Newswires. It is unclear why the sale has been abandoned, although one report said new capital requirements by European regulators had made the credit card business less attractive to potential acquirers. Bank of America had announced it would sell the unit in August when it sold its Canadian consumer card unit. CEO Brian Moynihan has pledged to sell non-core assets and said at the time that consumer credit cards outside of the U.S. were not part of the core strategy.
Story by Jessica Hodgson for the Wall Street Journal
JUDGE HALTS ALLEGED CREDIT CARD SCAM
A federal judge in Illinois temporarily halted an alleged telemarketing scam in Philadelphia and Jenkintown that defrauded financially strapped consumers of $4.82 million, the Federal Trade Commission said Friday. The FTC, which asked for a temporary restraining order Jan. 26, said the scheme involved bogus credit cards, under brand names such as “Platinum Trust Card” and “Express Platinum Card,” with an upfront payment of $69 to $99, and a recurring monthly fee of $19. Many of the thousands of victims had applied online for high-cost pay-day loans shortly before telemarketers contacted them.
Story by Harold Brubaker for the Philadelphia Inquirer
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 14.22 percent, slightly lower than the 14.25% last week. Six months ago, the average was 14.15 percent. One year ago, the average was 14.11 percent.