Weekly Credit Card Update for May 7, 2010
LOWCARDS.COM WEEKLY CREDIT CARD UPDATE
A summary of this week’s top credit card stories.
Contact: Bill Hardekopf, billh@LowCards.com
FRUGALITY AMONG CONSUMERS IS OUTLIVING THE RECESSION
Even as the economic recovery plods ahead, many American consumers are
refusing to come along. They’re not spending freely–and they have no plans
to. Many of them have steady income. They aren’t saddled by high debts.
They don’t fear losing their jobs. Yet despite recent gains, they’ve lost so
much household wealth that they’re far more cautious about spending than
before the recession. Their behavior suggests that the Great Recession
may have bred a new frugality that will endure well into the recovery.
And because consumers fuel about 70 percent of the economy, their
tightfisted habits means the rebound could stay unusually sluggish.
Story by Jeannine Aversa and Bernard Condon for the AP.
BANKS MAINTAINING STRINGENT LENDING STANDARDS
The Federal Reserve’s quarterly Senior Loan Officer Opinion Survey on
Bank Lending Practices released this week shows that the majority of banks
are in no hurry to ease their lending requirements and are maintaining their
stringent standards for lending. The April survey reveals some banks made
further decreases in credit lines and tightened credit standards on new
credit card applications.
SENATORS TAKE AIM AT $40 BILLION OF CREDIT CARD FEES
Visa and MasterCard faced a renewed threat to one of the credit-card
industry’s biggest revenue sources after Senator Patrick Leahy backed
legislation to help merchants cut the cost of accepting payment cards.
Leahy, a Vermont Democrat and chairman of the Senate Judiciary Committee,
will co-sponsor a measure by Senate majority whip Dick Durbin of Illinois
that lets merchants offer customers discounts for using cash or a particular
card brand. The measure, which is planned as an amendment to the financial
industry overhaul bill, also would allow retailers to set maximum or minimum
transaction amounts for payment cards.
Story by Peter Eichenbaum for Bloomberg.
PLASTIC MAKES A COMEBACK: MASTERCARD PROFITS SURGE
With more shoppers feeling comfortable enough about the economy and their
jobs to reach for the plastic again, MasterCard’s quarterly profits jumped
24% as debit card use soared. An increase in travel-related spending gave an
extra boost to MasterCard, which earns additional fees when consumers use
their cards abroad. The global charge card giant had profits of $455
million, with revenues growing 13% to $1.1 billion. MasterCard said about 5%
of that gain came from raising the prices it charges to merchants for
processing transactions. It also enjoyed an 11% boost in international
DELTA WAIVES FIRST BAG FEE FOR SKYMILES CARDHOLDERS
Starting June 1, Delta SkyMiles credit cardmembers will receive a free first
checked bag on every Delta flight–up to a $50 savings per person on a
round-trip ticket–available for up to nine people in the same reservation.
The new Card benefit applies to up to nine people traveling in the same
reservation including the Cardmember. A family of four could save up to $200
when flying round-trip. Cardmembers receive a first checked bag fee waiver
Story by Kelly Yamanouchi for the Atlanta Journal Constitution
SHOULD STATES IMPOSE USURY LAWS,
LOWER CAPS ON INTEREST RATES?
With the era of cheap credit considered over, lenders are increasing credit
card rates, particularly on customers they deem risky, and borrowers are
finding themselves in a hole that will be tough to dig out of. It has shed
light on a morality play: Americans are struggling with their inner saint
who wants to lend a hand in a time of need and their inner capitalist who
wants to make money. And it has consumer advocates calling on the government
to rein in what they see as lending practices that are so egregious that
consumers can spend their entire lives paying off their debts.
Story by Michael Diamond for Asbury Park Press.
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 13.57%,
up slightly from the 13.56% last week. Six months ago, the average was
12.69%. One year ago, the average was 11.65%.
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