Debit Card Fee Cap Has a Nasty Side Effect
Some merchants and consumers are starting to pay the price for the Dodd-Frank debit card regulations. Many business owners who sell low-priced goods like coffee and candy bars are now paying higher rates, not lower, when their customers use debit cards for transactions that are less than roughly $10. After the regulations placed a cap on the fees, credit card companies dropped discounts on debit card fees that merchants paid on small transactions. Now, merchants are trying to offset their higher rates by raising prices, encouraging customers to pay in cash or dropping card payments altogether. Redbox says it is raising prices by 20% to $1.20 a movie starting next month due to higher costs, including these debit card fees. [Wall Street Journal]
Credit Card Use is on the Rise
Purchases made with credit cards rose 8.2% in the first quarter of 2011, 9% in the second quarter and 10.6% in the third quarter, according to First Data. More holiday shoppers are already using credit cards this season. Payments made with credit cards on Black Friday jumped 7.4% from the same day a year earlier, while debit card use only rose 3.4%. Credit card mailings have surged 85% since the beginning of 2010 to 1.3 billion credit card offers in the third quarter of 2011, according to analysis conducted by research firm Mintel Comperemedia. Javelin Strategy & Research recently projected that online credit card use will surge 63% from 2011 to 2016, compared to a 2% increase in debit card use. [CNN Money]
Credit Report Data Getting More Personal
Credit agencies are finding new ways to collect and assemble data on individual consumers. Credit reports can now reveal evictions, applications for payday loans, even if you are behind on homeowner's association dues. Agencies analyze and sell this data to lenders, employers, insurers and renters who use these reports to make judgments about you. Taking care of what your credit report says about you should be a financial resolution for 2012. [LowCards.com]
For the Families of Some Debtors, Death Offers No Respite
When you die, your debts usually die with you. Surviving family members rarely have a legal obligation to pay unless they co-signed a loan, such as a mortgage or credit card, leaving lenders stuck with the debt. But debt collectors have found a way to help lenders get their money anyway. Working on behalf of financial giants such as Bank of America, Capital One, Discover and Citigroup, collection firms target survivors who might agree to pay at least part of what the dead person owed. Debt collectors say the survivors have a moral obligation to pay, especially in cases where they benefited from purchases rung up by someone else. [Wall Street Journal]
Chase Makes it Easier for Consumers to Overspend
Chase is notifying its Freedom MasterCard holders that their cards are being automatically switched from having credit limits to credit access lines that let users exceed limits without penalties. This can make it easier to get customers to run up balances on their credit cards. [Los Angeles Times]
White House Seeks Simpler Credit Card Terms, Fees
The White House said it wants to make it easier for credit card holders to understand the interest rates and fees they are charged to help the middle class avoid additional financial strain. Previewing an announcement by the new Consumer Financial Protection Bureau, Obama administration officials said simplified agreements on credit cards would help avoid confusion and stress for those struggling to make ends meet. [Reuters]
Citigroup to Lay Off 4,500 Workers
Citigroup's chief executive said that the bank would lay off 4,500 workers in the coming months as it deals with stalling growth prospects. Citi now has roughly 100,000 fewer employees than it did at the end of 2007. Most of the job losses will come from Citi's back-office and investment banking operations, but nearly every part of Citi's sprawling businesses will face cuts. Citigroup's revenue fell 10 percent to about $60 billion in the first nine months of this year, compared with the period a year ago. [New York Times]
War Over Digital Wallet
The war of the "wallets" is escalating over who will control how consumers spend money using their smartphones. Google said it would bow to a demand by Verizon Wireless, the nation's largest cellphone operator, and withhold Google's mobile-payment technology from devices sold by the carrier. The flap between Verizon and Google also shows how carriers have lost control over content on the phones they sell. The iPhone, for instance, has largely cut the carriers' influence over customers and software developers. The "wallet" is seen as seen as a key battleground for carriers reasserting themselves. [Wall Street Journal]
Banks Rely Too Heavily on Social Security Numbers, Report Finds
Banks can do better at protecting their customers from the risk of identity fraud, a new report from Javelin Strategy & Research finds. It found that far too many still rely on customers' Social Security numbers for authentication purposes. All banks in the report used some version of the Social Security number as a means of authenticating the customer. [New York Times]
Americans’ New Year’s Resolution is to Double Annual Savings
Of those Americans considering a financial resolution for the new year, 46 percent say they want to save more in 2012, with a median annual target of $2,400. This doubles last year's resolution to save $1,200, according to an annual survey by Fidelity Investments. Based on this survey, Americans' resolution to pay off their debt is a continuation of a goal many are already working toward, with almost one-third (29 percent) reporting that they are in less debt now when compared to the same time period last year. [Consumer Reports]
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 14.17 percent, a slight increase from 14.16 percent last week. Six months ago, the average was 13.96 percent. One year ago, the average was 13.80 percent. [LowCards.com]
Provided by LowCards.com
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