Weekly Credit Card Update November 18
CHASE TO END TRIALS OF THREE NEW BANK FEES
In addition to ending the trial of its controversial debit card usage fee this week, Chase will put an end to two other bank account fees that it has been testing in various parts of the country over the past 10 months. Among the fees being pulled, is a $12 monthly checking account fee Chase has been testing in Oklahoma since February, according to a person familiar with the
bank’s plans. The fee, which cannot be waived through direct deposits or online banking requirements, was charged to new customers who set up basic checking accounts. The bank is also dropping a $15 monthly
checking account fee it was testing in Atlanta that can only be waived if a customer maintains a minimum daily balance of at least $1,500. The third, and most controversial, test is the $3 debit card usage fee
that Chase applied to customers in northern Wisconsin to help the bank decide whether to roll it out nationwide. The conclusion of Chase’s fee-testing follows a nationwide, social media-fueled movement earlier this month urging customers to dump big banks and move their money to small community banks and credit unions. The initiative led to more than $5 billion in new deposits being transferred to credit unions according to the industry association.
Story by Blake Ellis for CNNMoney
NEW CREDIT CARD RULES HIT STAY-AT-HOME PARENTS
December and January are the biggest months of the year for credit card applications. This is the time that consumers look for cards with better rewards or cards with lower rates to get their finances in shape. However, new federal regulations that went into effect on October 1 may prevent some people, like stay-at-home parents, from getting their own credit card. The new rule is part of the CARD Act and says credit card issuers must only consider the applicant’s own salary or other income. Any person that applies for a card must be able to make his or her own payments. Household income or
combined income is no longer considered in the approval process. This means a stay-at-home parent who has no outside income will find it very difficult to get approved for a credit card.
CREDIT CARD ISSUERS RAISE REWARDS FOR HOLIDAY SHOPPING SEASON
Credit card issuers are bumping up their rewards for the holiday shopping season as they seek to lure consumers away from debit cards and competitors. For shoppers with decent credit scores, this can provide the opportunity to pick up extra cash or miles while they do their gift shopping.
Story by Linda Stern for Reuters
AMERICAN EXPRESS LOOKS TO EXPAND WITH TARGET PREPAID CARD
American Express, known for its high-end credit and charge cards, is continuing its push into the growing prepaid debit card market through a partnership with Target. The New York lender said Tuesday it is selling the American Express for Target Card, a reloadable prepaid card, in more than 1,000 U.S. Target stores. American Express and the Minneapolis retailer earlier this year announced they were testing the sale of the cards in some stores. Unlike other prepaid cards, which have come under attack from consumer groups for carrying hidden fees, the American Express for Target Card does not carry fees for monthly usage, balance inquiries, alerts or card replacement.
Story by Andrew Johnson for the Wall Street Journal
CREDIT CARD ISSUERS DROPPING SOME FEES
Big banks with their significant fees and high interest rates have become the villain of both Congress and consumers for the past few years. In 2009, politicians made major revisions in credit card practices with the CARD Act. More recently, angry consumers protested the monthly debit card fees with both a “Dump Your Bank Day” and a “Bank Transfer Day”, causing banks to rescind those fees. Now, some banks seem to be trying to polish their tarnished image by dropping fees and increasing rewards. Here are some changes that credit card issuers have made in 2011 that have been good for cardholders.
INTEL WORKS WITH MASTERCARD ON SECURING COMMERCE
A flood of hacking and phishing attacks has shown that passwords are necessary but not sufficient to protect financial transactions. Intel and MasterCard are working together to do more. The chip maker and credit card company on Monday are announcing what they are calling a multi-year strategic collaboration to enhance the security of online shopping.
Story by Don Clark for the Wall Street Journal
LITTLE COMFORT SEEN IN CREDIT CARD PROTECTION
Debt protection products are sold on the idea that they suspend or cancel credit card debt for a period after a critical event, such as a lost job, disability or death. But many customers complain they were unknowingly signed up for the insurance, or unfairly denied benefits. A government watchdog has directly asked the new U.S. Consumer Financial Protection Bureau to take a hard look at payment protection, after other attempts to crack down on the products stalled. The Government Accountability Office said in March that the bureau, which was created by last year’s Dodd-Frank financial oversight law, should assess the value of the products. It said cardholders only get 21 cents of benefit for every dollar they spend on debt protection fees. The nine largest credit card issuers collected $2.4 billion in fees for debt protection products in 2009, and only paid out $518 million of that to consumers in benefits.
Story by Alexandra Alper for Reuters