Weekly Credit Card Update for April 30, 2010
LOWCARDS.COM WEEKLY CREDIT CARD UPDATE
A summary of this week’s top credit card stories.
Contact: Bill Hardekopf, [email protected]
VISA PROFIT CLIMBS 33% AS SPENDING PICKS UP
Visa Inc.’s fiscal second-quarter profit grew by a third, topping analysts’
expectations, as consumers ratcheted up spending and the company processed
more payments. The results offer fresh evidence on the rising optimism of
consumers as the economy stabilizes. Higher spending by borrowers also
bolsters hopes of a turnaround in the broad credit card industry and shifts
the spotlight from consumer defaults and delinquencies. For the second
quarter, payments volume, representing spending on Visa-branded cards,
rose 13% from a year ago to $745 billion. The total number of transactions
processed in the second quarter rose 14% over a year ago to 10.6 billion.
By Aparajita Saha-Bubna and John Kell for the Wall Street Journal.
BRAZIL WILL LIMIT FEES CREDIT CARD
ISSUERS CHARGE CONSUMERS
Brazil’s government will limit the fees credit card companies can charge
consumers, Justice Minister Luiz Paulo Barreto said. The National Monetary
Council, led by Finance Minister Guido Mantega, will be allowed to set rules
on credit card fees under a proposal Barreto revealed to reporters today in
Brasilia. Lawmakers will also be asked to give the council broader authority
to regulate credit cards.
Story by Iuri Dantas and Andre Soliani
MICROPAYMENTS: A FASTER WAY OF
PAYING OFF CREDIT CARD DEBT
Instead of making one large payment on your credit card balance at the end
of a billing cycle, micropayments are smaller payments made toward your
balance throughout the month. Micropayments can have a significant impact on
the amount of interest you pay your issuer. If you carry a balance, credit
card companies charge daily interest. Make your payment at the end of the
billing period, and you will pay interest on the full balance for that
entire billing period. Pay more often and you reduce your balance and hence,
the interest you pay each month.
THE MOST EXPENSIVE CREDIT CARDS
The rich still love their plastic, and banks are ready to soak them for all
they’re worth with an array of elite cards–keys to exclusive and expensive
privileges most working stiffs can only dream about. These cards come with
high annual fees and minimum spending requirements north of $250,000. They
can be used to secure a private jet, rent a yacht at a moment’s notice or
drop in the VIP tent at the Monaco Grand Prix. Even the cards themselves are
different, made with titanium or carbon or embedded with diamond chips. The
top 1% of wealthy Americans account for just 4% of all card spending, But
they stand a much better chance of being profitable for banks and card
companies compared with the mass market.
Story by Liz Moyer for Forbes.
PROTECTING YOURSELF AGAINST FURTHER APR INCREASES
Earlier this week, the Federal Reserve announced that it will keep
short-term interest rates near zero for an “extended period”. This means the
prime rate will remain at 3.25%, its lowest point in decades. Despite this
low rate, most consumers are now paying the highest interest rates in years
on their credit cards. And if the prime rate does start to increase later
this year as some analysts predict, all variable rate credit cards will see
an increase in the APR. What can consumers do now to protect themselves
against these future APR increases?
FEDERAL RESERVE POSTS NEW WEBSITE FOR GIFT CARD RULES
New Federal Reserve rules provide protections when you purchase or use gift
cards. The key changes apply to gift cards sold on or after August 22, 2010.
Key changes include the money on a gift card is good for five years; fees
must be clearly disclosed; and there is a limit on fees that can be charged
on a gift card.
VISA TO CRACK DOWN ON MISLEADING TACTIC
The process goes by an innocuous-sounding name, data pass, but it allowed
something that congressional investigators found disturbingly deceptive:
Online consumers were being billed for goods or services without ever
intentionally providing their credit card numbers. Visa Inc. announced
that it would clamp down on data pass among companies that accept
its credit cards–six months after a report by the U.S. Senate Commerce
Committee estimated that the tactic had cheated 35 million consumers out of
more than $1.4 billion in the last decade. Effective Saturday, Visa said, it
will no longer allow companies to pass credit card information to third
parties. The company now labels this a misleading practice.
A consumer completes an intentional deal on the Web, such as purchasing
movie tickets at Fandango or airline tickets on Priceline. But before
leaving the site, the customer gets an additional lure–and is hooked into
an unintended transaction, consummated without the consumer’s ever having to
retype his or her credit information.
Story by Jeff Gelles 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 this week increased to 13.56%,
up slightly from the 13.55% last week. Six months ago, the average was
12.60%. One year ago, the average was 11.61%.