Weekly Credit Card Update for May 14, 2010

May 14, 2010, Written By sitemanager

LOWCARDS.COM WEEKLY CREDIT CARD UPDATE
A summary of this week’s top credit card stories.
Contact: Bill Hardekopf, [email protected]

 

 

SENATE VOTES TO CURB DEBIT CARD FEES
The Senate, voting 64-33, moved Thursday to curtail the “swipe fees” that
financial companies impose on debit transactions, underscoring the
increasingly populist tint of pending legislation that would overhaul
regulation of the financial services sector. Under the amendment
offered by Senator Richard Durbin (D., Ill.), the Federal Reserve
would be authorized to regulate the fees charged to businesses by
financial firms on debit cards, and empower merchants to offer
discounts to customers if they pay with cash, check or a debit card. The
provision wasn’t in the financial regulation bill that passed the House of
Representatives in December, and the issue is likely to be hotly debated in
coming congressional negotiations over the final regulatory overhaul bill.
Senate Democratic leaders hope to pursue next week final passage of the
broader bill, which is designed to address the root causes of the 2008
financial crisis.

Story by Greg Hitt and Michael R. Crittenden for the Wall Street Journal.
http://online.wsj.com/article/SB10001424052748704635204575242501678773926.html?mod=rss_Today’s_Most_Popular

BANKS HEMORRHAGE CASH WITH CARDS
WANTING TO BE AMERICAN EXPRESS

Once interest rates were allowed to rise as high as banks could push them,
credit cards became a ticket to enormous profit. In the ten years that ended
on December 31, 2007, credit card issuers together earned more than
$50 billion. At JPMorgan Chase, cards accounted for 20 percent of both
revenue and profit in 2007. Then the harshest economic decline since the
1930s crushed the job market, and a record number of cardholders
stopped paying their bills. The three biggest card-issuing banks lost at
least $7.3 billion on cards in 2009. Bank of America, after earning
$4.3 billion on cards in 2007–a third of its total profit–sustained
a $5.5 billion loss in 2009. JPMorgan Chase lost $2.2 billion last year
on cards and, in mid-April, reported a $303 million loss for the first
quarter. They’re all chasing American Express, which has long catered
to a wealthier group. The firm made $2.1 billion in 2009, helped by
expense cuts and a default rate that was among the lowest in the big
six. The company’s stock was the top performer in the Dow Jones
Industrial Average in 2009, returning 118 percent.

Story by Lisa Kassenaar for Bloomberg News
http://www.bloomberg.com/apps/news?pid=20601109&sid=alqIrcJYUnP8&pos=11

CREDIT CARD MAIL SOLICITATIONS INCREASE 29%
As the economy recovers, households are receiving substantially more credit
card offers in the mail. During the first quarter of 2010, US households
received 481.3 million credit card offers, a 29% increase from the 372.4
million offers mailed during the same period a year ago, according to the
latest study by Synovate Mail Monitor. Some credit card issuers, such as
Capital One and HSBC, more than doubled their mail offers during this
quarter versus the prior quarter. While the total offers represent a
substantial increase over recent volume, the figures are far below the
record 1.58 billion pieces sent in the third quarter of 2005.
https://www.lowcards.com/blog/category/credit-card-press-releases/

SECURED CREDIT CARD BANK STOPS ISSUING NEW CARDS
A small New Jersey bank that specializes in credit cards for people with
damaged credit histories has shut down its card program because of
regulatory problems. New Millennium Bank, a three-branch bank based in New
Brunswick, said Monday in its first-quarter earnings report that it has
temporarily stopped accepting and processing applications and issuing new
cards as the result of an agreement with the Federal Deposit Insurance Corp.
The bank previously advertised its cards on several credit card Web sites
and issued cards nationwide. The cards offered in this end of the market
have been frequently dubbed “fee harvester” cards for their high fees,
particularly application processing fees and annual fees, which in the past
often ate up most of the credit limit. These dubious practices earned
secured cards a special provision in the federal credit card legislation
that took effect in February, which limits fees in the first year to
25 percent of the account’s opening credit limit.

Story by Eileen AJ Connelly for the AP
http://www.usatoday.com/money/industries/banking/2010-05-10-millennium-bank-credit-cards_N.htm

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 for the
third consecutive week to 13.62%, up from the 13.56% last week. Six
months ago, the average was 12.81%. One year ago, the average was 11.66%.
https://www.lowcards.com/ratereport/credit-card-rate-report.asp

WILL PEOPLE FLOCK TO POST CREDIT CARD
PURCHASES? SWIPELY SAYS SO

The latest “social payments” website to draw strong investor interest is
Swipely Inc., a company that enables people to automatically post
information about their purchases and discuss the purchases with their
friends. Like Blippy, Swipely lets people connect their credit cards to the
service so that they can post their purchases. But unlike Blippy, Swipely
does not post the amount that was spent. With Swipely, people who log in can
see the purchases that were imported and then decide which ones they want to
post to the site. They can also decide to autopost everything if they
prefer. People can also email their receipts to Swipely to be posted or have
Swipely automatically gather information from their email receipts from
selected merchants.

Story by Tomio Geron for the Wall Street Journal
http://blogs.wsj.com/venturecapital/2010/05/11/will-people-really-flock-to-post-their-credit-card-purchases-online/?mod=rss_WSJBlog

CREDIT CARD GLITCH SNARES NEARLY
12,000 CUSTOMERS OF STATE FARM BANK

Nearly 12,000 State Farm Bank customers with Visa-branded credit cards
have seen unauthorized and sometimes huge charges on their accounts
recently, though the bank is working “feverishly” to fix the problem. So
far, nearly 80 percent of the affected customers have had their accounts
corrected, said company spokesman Kip Diggs. The bank’s “glitch” came
to light between Wednesday and Friday of last week. Some credit card
accounts had incorrect payment fees applied. Some check card accounts
showed incorrect debits.


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The information contained within this article was accurate as of May 14, 2010. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.