LowCards Weekly Credit Card Update May 11
Why Are Credit Report Errors So Hard to Fix?
A yearlong investigation by the Columbus Dispatch has uncovered systemic flaws in the data collection and dispute resolution processes used by the credit bureaus. For Americans who find errors in their credit files, this
can mean months of frustration trying to get the mistakes corrected. And during that painful process, many people are denied credit cards, mortgages and car loans, or are forced to pay much higher interest rates because of
errors on their reports–errors consumer advocates say the bureaus could easily fix if they so choose. The Dispatch’s research shows an error rate of around 30%. In many cases, attempts to fix even simple mistakes dragged on for months, according to interviews with some of the people interviewed by the paper. Story by Martha White for Time.
Bill Would Crack Down on Nasty Overdraft Fees
Rep. Carolyn Maloney doesn’t want you to unwittingly fork over $35 for a cup of coffee. Maloney introduced the “Overdraft Protection Act,” a bill that aims to crack down on overdraft fees. The bill aims to limit when and
how banks charge consumers who try to spend more money than they have in their bank account. If approved, the House bill would also: require overdraft fees to be “reasonable and proportional” to the cost of the transaction; limit the quantity of fees that can be charged to one per month and six per year; ban banks from manipulating the order in which transactions are posted. Critics say this is done deliberately to maximize overdraft fees. Story by Herb Weisbaum for MSNBC.
Contactless Payments–Bad News for Consumers?
A study released by MasterCard shows that consumers may spend up to 30 percent more with the new contactless payment methods than they do with credit cards. Contactless payments take place with credit cards or smart phones that have chips implanted with radio frequency identification, commonly referred to as RFID. Consumers simply “wave” the card or smart phone over a payment terminal rather than having to “swipe” the card through the terminal. Contactless payment methods are becoming more common. Visa has recently introduced PayWave; MasterCard has PayPass and American Express has Express Pay. The MasterCard study predicts 150 million mobile devices will be contactless enabled within the next few years. Story by Lynn Oldshue for LowCards.com.
Many Households Have Negative Self Worth, Survey Finds
Feeling like you’re drowning in credit card debt, student loans and medical bills? If you are, you’re likely not alone–and that could explain why everywhere you turn you hear ads offering some quick-fix deal to cope with debt. About one in five U.S. households owe more on credit cards, medical bills, student loans and other debts that aren’t backed by collateral–so not including car loans–than they have in savings, checking accounts and other liquid assets, according to a new University of Michigan report. Credit card debt can turn into a huge burden. About 10 percent of families in 2011 had $30,000 or more in credit card debt and other non collateralized debts. That compares with 8.5 percent in 2009. Story by Susan Tompor for the Detroit Free Press.
American Express Targets College Students With Campus Prepaid Card
American Express, the largest credit-card lender by spending, is expanding its efforts to grow beyond affluent customers with a new reloadable prepaid card being sold at more than 500 Barnes & Noble bookstores on college campuses. The new Campus Edition Prepaid Card is an extension of an existing product the company rolled out last summer in a bid to attract new customers who don’t qualify for one of its credit or charge cards, which are typically offered to consumers with the best credit. The lender is aggressively pushing to reach customers to whom it typically couldn’t offer credit cards because they had insufficient or blemished credit histories. Story by Andrew Johnson for the Wall Street Journal.
Consumer Credit Increases by the Most in Decade
U.S. consumers swiped their credit cards more often in March after cutting back during the previous two months. The increase helped drive overall borrowing up by the most in more than a decade. Total consumer borrowing rose $21.4 billion in March, the Federal Reserve said Monday. That’s the seventh straight monthly increase and the largest since November 2001. A measure of auto and student loans increased $16.2 billion. A separate gauge of mostly credit card debt rose $5.2 billion after declining in January and February. Story by Martin Crutsinger for the Associated Press.
Chase Latest Issuer to Launch Prepaid Cards
Chase announced it will test a reloadable prepaid card called Chase Liquid in approximately 200 branches, and if successful, will roll out the product nationally this summer. Chase, the largest U.S. lender in terms of assets, enters a market that is growing in popularity. According to Javelin Research, prepaid use grew 18% in 2011 compared to 2010. A number of major card issuers are turning to prepaid cards. One reason could be that the interchange fee on prepaid cards is not controlled by the Durbin Amendment. Story by Lynn Oldshue for LowCards.com
U.S. Credit Card Losses Nearing the Bottom
Net charge-offs in the U.S. credit card sector could fall modestly in the second quarter of 2012, given current delinquency trends, according to Fitch Ratings. But Fitch expects loss rates to exit 2012 higher than where they started. Card segment profitability was strong across the sector, with the top seven issuers posting a return on average loans of 4.2% in 1Q12, on average, compared with 4.4% in 1Q11. Story by Reuters.
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 14.26 percent, identical to last week. Six months ago, the average was 14.17 percent. One year ago, the average was 14.01 percent.