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Entries in Credit Cards (45)

Thursday
Jan262012

Bank of America’s Deal Service Raises Privacy Concerns

Jin Lee/Bloomberg via Getty Images(CHARLOTTE, N.C.) -- Bank of America began testing a new service on Wednesday to offer personalized deals to its customers based on their previous purchases, and if privacy concerns are overcome, other banks are expected to follow suit. But some say that's a big "if."

Called BankAmeriDeals, the service offers Groupon-like deals to customers who log in to the bank’s website.  Customers will pay full price for purchases related to the deal, but will get cash back in their accounts the following month.

The second-largest bank in the country will reportedly offer the service for free to customers but has yet to announce when the program will launch. The bank is testing the service with employees in North Carolina, South Carolina and Nevada and will roll out the program to more employees in February.

“The goal is to deliver easy, relevant offers to our customers at places where our customers already shop,” Tara Burke, spokeswoman for Bank of America, said.

Burke said the bank does not share customers’ personal information with third-party vendors, and customers’ privacy and security is the most important priority.

Adam Levin, chairman and co-founder of Credit.com and Identity Theft 911, said there are potential privacy concerns about the service.

“Bank of America has our spending data anyway, and has been waiting for a way to monetize it without giving the impression that customers are paying more than usual,” he said.

While most consumers say they are against being tracked by institutions, they tend to be less resistant if it saves them money or provides convenience, Levin said.  Bank of America will not receive payments from customers or merchants.

The bank said customer data will be safeguarded. The matching of customers and offers will take place on software hosted on the bank’s hardware, in its data center behind the bank’s firewall, and without using personal identifiable information, Javelin Strategy and Research reported.

When BankAmeriDeals is offered to customers, Levin said he expects other banks or card networks to simulate the services.

“Those in the banking industry are lemmings.  If one does something and it works, then they all do it,” he said.

Copyright 2012 ABC News Radio

Tuesday
Jan102012

Debt Skyrockets: Americans Borrowed $20.4 Billion in November

iStockphoto/Thinkstock(WASHINGTON) -- Consumer borrowing soared by $20.4 billion in November, the Federal Reserve reported Monday, marking the biggest gain since November 2001 when Americans asked for credit to the tune of $28 billion.

November's surge in borrowing was spurred by more loans to purchase vehicles and a greater willingness to use plastic instead of cash to pay for holiday gifts and other big ticket items. Some economists are concerned consumers leaned increasingly on their credit cards to get them through holiday spending.

The reliance on plastic is apparently linked to the fact Americans are seeing paltry growth in their paychecks, if any at all. After-tax incomes shrank by nearly 2 percent from July to September. As a result, Americans are borrowing more and able to hold onto less of their money: the savings rate fell to the lowest level since the recession began in late 2007.

Copyright 2012 ABC News Radio

Thursday
Jan052012

Credit Card Rates Rise to Four-Year High

Comstock/Thinkstock(NEW YORK) -- If you're looking to take out a new credit card, now might not be the best time: credit card rates have risen to a four-year high. What's worse, an act of Congress meant to protect consumers is making matters worse.

"Rates currently are the highest since we've been tracking them," says Ben Woolsey, director of marketing for CreditCards.com, which has tracked card rates every week for the past four years.

The average rate nationally right now, based on new card offers by 100 of the most popular issuers in the U.S., stands at 15.14 percent, up from 14.75 percent six months ago.

The average includes several different kinds of cards -- airline, cash-back, low-interest, student, and business, for example -- but excludes ones with introductory "teaser" rates.  For cards with variable rates, only the lowest is considered for the average.  Thus, some consumers are paying far more than the average suggests. The current rate for card holders with bad credit, for example, is 25 percent.

While credit card rates remain high, most other interest rates have reached 50-year lows. The prime rate, which banks charge their best customers, stands at just 3.25 percent.  The federal discount rate -- that's what it costs banks to borrow from the Federal Reserve -- is just .75 percent.

Woolsey says the 15.14 percent average credit card rate represents a rise of some 300 basis points, or 3 percentage points, from where the average was in 2009 (12.3 percent) when Congress, in an attempt to reign in "unfair or deceptive" practices, passed the Credit Card Accountability Responsibility and Disclosure (CARD) Act.

Some of that act's unintended consequences, he says, have arguably made life worse for consumers.

The CARD act restricts companies' ability to jack up rates on existing balances without first giving account holders proper notice; it forbids lenders from zinging customers with certain fees and penalties. 

It does not, however, address card interest rates per se. Prohibited now from raising rates on existing balances -- except under certain circumstances -- lenders are instead slapping higher rates on new accounts.

Copyright 2012 ABC News Radio

Wednesday
Dec212011

Tips for Preventing Credit Card Theft

iStockphoto/Thinkstock(WASHINGTON) – ‘Tis the season to swipe the credit card -- and to be on alert. As shoppers rush home with their treasures, all purchased with just one swipe of a piece of plastic, it comes with one great risk: credit card fraud.

About eight million American were victims of fraud this past year, and almost half of those reports were linked to stolen card information.

“Right now criminal hackers are buying and selling our credit card information on the Internet,” said Robert Siciliano, an identity theft expert and consultant for McAfee, purveyor of antivirus software. “It’s very important that the consumers ultimately check their own statements frequently, especially during the holiday season and refute unauthorized charges to protect themselves.”

But it’s not just credit and debit cards that put consumers at risk. Siciliano said gift cards are often a popular target for thieves to commit common fraud.

“When [thieves] see a gift card on a display...they can skim the information off the back of the magnetic strip,” he said. “Once they do that they have enough information about that card that they can go ahead place an order over the Internet or even over the phone.”

Sicilano offered these tips for keeping your purchases on your plastic safe this holiday season:

  1. Be careful where you buy gift cards
  2. Check your credit card statements regularly
  3. It’s safer to use credit cards online
  4. Look for ‘Https’ websites when shopping online


Tune into Nightline Wednesday at 11:35 p.m. ET to watch ABC’s Cecilia Vega’s report from inside Visa’s security center -- a never-before-seen look at the precautions the company uses to keep consumer transaction information safe.

Copyright 2011 ABC News Radio

Wednesday
Dec142011

CFPB Asks Consumers for Input on New Credit Card Contracts

George Doyle/Thinkstock(WASHINGTON) -- When the Consumer Financial Protection Bureau (CFPB) recently collected consumer complaints about credit cards, one of the overarching themes was confusion over the terms of the cards.  Whether consumers were complaining that their interest rate suddenly went up or that they were charged a penalty fee, it often came down to one thing: they didn't understand the contract.

Now, the CFPB has developed a prototype contract it thinks will simplify the whole mess.

The average credit card contract is about 5,000 words long, while the new CFPB one is a little over a thousand. It doesn't do away with the fine print, necessarily, but instead takes all of the terms of art in the contracts and relegates them to a separate "definitions" page, so the lawyers will still be satisfied.  By shunting that boilerplate elsewhere, the agreement itself can be written in plain language instead of legalese.

Inevitably, though, the new format will not be perfect or perfectly understandable. And that's where consumers come in: the CFPB is asking members of the public to weigh in on the form on its website.

While consumers voice their opinions, the new contract will also be test-piloted by Pentagon Federal Credit Union, an active credit union with credit card customers nationwide. Once smoothed out, however, the model contract is not slated to be mandatory -- credit card companies will have to opt in.

Ira Rheingold of the National Association of Consumer Advocates believes they may balk at first, but he thinks most will eventually get on board, because a credit card agreement that simply states the basics like interest rate, cash advance interest rate, and annual fee will allow consumers to shop and compare and choose the best deals.

Copyright 2011 ABC News Radio

Friday
Dec092011

Supermarket Customers Hit By Debit Card-Skimming Thieves

iStockphoto/Thinkstock(MODESTO, Calif.) -- Thieves who inserted data-skimming devices into card readers at Lucky's supermarket self-checkout counters ripped off as many as 500 of the California chain's customers, officials said.

Lucky's, owned by Save Market Supermarkets, said in a statement that the company has removed tampered credit/debit card readers from 24 stores. The readers have been sent to the Secret Service, which is investigating the scam.

Data-skimming devices inserted into the readers allowed the crooks to steal information like the shoppers' PIN numbers, expiration dates and security codes from the cards wirelessly. Lucky realized something was up, according to its statement, when during a regular review it discovered a reader that "looked suspicious."

Lucky said in its statement that its customer-support team has been fielding up to 2,000 calls a day. It said all the readers that were tampered with were replaced by Nov. 23. The company doesn't know how much money was taken illicitly because of the tampering.

To protect themselves against skimmers, shoppers should consider using credit rather than debit cards, says identity theft expert John Sileo, author of "Stolen Lives, Identity Theft Prevention Made Simple."

"It's much more attractive to a thief to get a debit card, and it's much harder on a victim," Sileo says.

The reason: with a debit card, consumers often have only a couple of days to notify the bank that they were victims of fraud, whereas credit-card companies generally allow 60 to 90 days and do the investigation themselves.

Sileo recommends checking out the reader you are about to use and making sure it looks just like the one in the other aisles--with nothing loose, sticking out and with no sign of a camera attached.

He also suggests setting up debit and credit card alerts via text message or email. "If you're home watching the football game and you just spent $5 in Starbucks, you know you've got a problem," he said.

Self-checkout makes fraud easier, he said. "There's nobody watching. It does make it easier to slip on a skimmer or put in a camera that records people's PIN numbers," he said. But he doesn't think shoppers need to stop using self-checkout. They just need to be vigilant.

Copyright 2011 ABC News Radio

Thursday
Dec082011

Americans Step Up Borrowing; Fewer Behind on Credit Card Payments

Comstock/Thinkstock(WASHINGTON) -- American consumers stepped up their borrowing in October, according to the Federal Reserve, charging slightly more on credit cards and reversing a recent trend.

The credit reporting firm TransUnion notes that people are still cautious; less than 1 percent of credit card customers are 90 days behind on payments.

“Credit card delinquency rates have been near all-time lows and continue to hover in that area,” says Steve Chaouki, vice president of financial services at TransUnion.

“In the past, consumers used to pay their mortgages first,” Chaouki said. “Now we’re seeing them paying their credit cards first.”

Copyright 2011 ABC News Radio

Wednesday
Dec072011

Will Simpler Credit Card Agreements Help Consumers?

George Doyle/Thinkstock(WASHINGTON) -- The Obama administration announced a proposal Wednesday aimed at simplifying credit card agreements for consumers, but it remains to be seen whether the plan has a long-term impact.

The Consumer Financial Protection Bureau (CFPB) launched a prototype credit card agreement Wednesday that lists the various charges associated with the card and features boxes explaining the different terms and agreements.

The prototype is designed to be understood by a seventh grader.

Current credit card agreements are written for people at an eleventh grade reading level, but are often incomprehensible even by adults, and one of their main purposes is to protect banks from legal complaints.

The prototype will be tested at the Pentagon Federal Credit Union, which has about 350,000 cardholders.

But whether it has a far-reaching impact remains to be seen. The proposal is simply that -- not a mandatory rule the card companies have to follow. The agency is soliciting public feedback for the proposal and will determine the next steps after that and the initial test run at the Pentagon credit union.

“If this can go into effect and doesn’t get squashed in the meantime, it will be a meaningful thing for consumers to have simple credit card agreements that are truly meant to communicate the terms of the account. Because in reality, credit card agreements in today’s world are strictly written to protect the banks from litigation and really make a cursory effect to communicate,” said Ben Woolsey, director of marketing and consumer research at CreditCards.com.

But the outcome will depend in a large part on the agency’s political future.

Republicans are threatening to block the nomination of Richard Cordray as CFPB head because they want to force structural changes to the bureau, including more Congressional oversight.

The bureau, which was created in July as part of the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, has already taken on several consumer-related actions, but it’s not yet clear how much influence it can wield in the powerful credit card industry.

“It still remains to be seen if the Consumer Financial Protection Bureau is going to have any teeth… considering how much trouble they’re facing just getting a permanent director put into place,” Woolsey said. “The agency was created during a time of unusual Democratic power in the House and Senate and obviously the balance of power has shifted.”

The American Banking Association released a statement cautiously praising CFPB’s proposal as a, “good first step” but hinted that more protections would be needed to protect banks against lawsuits.

Simplifying credit card agreements and providing more transparency has been a top agenda item of consumer groups.

Two-thirds of the millions of cardholders don’t completely understand how their cards work, a recent study by J.D. Power found. And difficulty understanding the terms of their cards is a big factor behind many consumer complaints, according to the CFPB.

Credit cards are a significant part of Americans’ lives. There were nearly 514 million credit cards in circulation as of Dec. 31, 2010 and the market represented $700 billion in outstanding household debt, according to the Nilson Report.

The proposal unveiled Wednesday is part of a broader effort by the administration to regulate the credit card industry. The first step was the Credit Card Accountability, Responsibility, and Disclosure Act signed by Obama in 2009.

The first consumer-protection law for credit card in decades, the act set guiding principles for long-term reform, banned fee traps, protected consumers against arbitrary interest rate increases, and called for more accountability.

Copyright 2011 ABC News Radio

Tuesday
Dec062011

Save Money by Paying Less for Credit; Negotiate with Your Bank

Brand X Pictures/Thinkstock(NEW YORK) -- After successfully shaming banks into giving up debit card fees, now grass roots groups are urging consumers to switch out of high-interest credit cards.  They're calling Dec. 11 "Balance Transfer Day."

As ABC News' consumer correspondent Elisabeth Leamy notes in her book Save Big, there are two ways to save on credit: to use less of it or to get it for less.  Switching to a card with a lower interest rate is an example of getting credit for less.

However, Bill Hardekopf, the CEO of LowCards.com, warns, "Getting a lower credit card rate may not be as easy as transferring your account to another bank.  The rates you receive are based on your credit score.  If your score is low, then your interest rates are going to be higher and you are going to have fewer options."

If you do have a balance transfer offer in hand that gives you a lower interest rate, go for it.  Just be wary of high balance-transfer fees.  Sometimes these fees are substantial enough that they negate the benefit of the lower rate you just snagged.

But there is one other option: You can often negotiate for a lower interest rate with your current bank.  All you have to do is call up your credit card company and ask them to lower your interest rate.  As an incentive for them to comply, you should also mention that other card companies have offered you a lower rate, so if this company doesn't help you, you will take your business elsewhere.

Those simple phone calls can make a big difference in how much and how long it takes to pay off your credit cards.  In this post-recession economy, you may not be able to achieve as big an interest rate cut, but the fact remains that it is easier for a bank to keep a current customer than to get a new one, so it's quite possible the bank will work with you.

Copyright 2011 ABC News Radio

Thursday
Nov172011

Select Salvation Army Bellringers to Accept Credit Cards This Year

Scott Olson/Getty Images(SAN FRANCISCO) -- The image is familiar: a bright red bucket and a Salvation Army volunteer ringing a powerful bell with a wooden handle, and coins clinking into the bucket.

From classic movies like Miracle on 34th Street and It's a Wonderful Life to modern favorites like TV's Friends, the red kettle is a symbol of giving during the holiday season.

The Salvation Army bellringer is now moving into the digital age with a new feature: Square.

Square is both the name of a product and the San Francisco-based company that produces it, co-founded by Jack Dorsey, the co-founder of Twitter. The postage-stamp-sized device connects to iPhones, iPad and Androids through the headphone jack and turns the gadget into a cashier with the ability to swipe credit cards and make secure payments through a free downloadable app.

The increasingly popular gadet is already being used around the country in food trucks, salons, pumpkin patches and even lawyers' offices.

And starting around Thanksgiving, 10 Salvation Army kettle volunteers in San Francisco, Dallas, Chicago and New York will be equipped with a Square in addition to their bell and kettle.

"We have to be aware of where consumers make transactions. Many people don't want to keep cash in their pockets and are working from credit or debit cards to make donations," Major George Hood, the National Community Relations and Development Secretary for the Salvation Army, told ABC News. "We think it's a way to stay in touch with the consumer who doesn't carry money in their pockets."

The Red Kettle Campaign began on a San Francisco wharf in 1891 when a Salvation Army officer was trying to find a unique way collect food for the needy during the holiday season. He put out a big pot and asked people to donate food, which they did, but he also noticed that people were throwing money in.

"It worked. And from that, it spread all across the country, from West to East," said Hood, who even recalls his own days as a 12-year-old schoolboy volunteering for the Salvation Army and collecting money outside of his local Sears.

Over the past 120 years, the practice has become a tradition and a pop culture standard. Now, the bellringer force is made up of more than 25,000 people each year.

In 2010, people tossed more than $142 million into the kettles, helping buy food, toys and other holiday necessitates for the needy. All of the money donated to local kettles stays in the community.

But Hood said that over the past decade, he began to notice "a transition from a traditional fundraising model to an electronic world and a digital model taking over."

The organization tried credit card terminals at the kettle stands, but found that people did not want to stand around, often in the cold, waiting for the process. But, last summer, Hood was introduced to Square and was instantly interested.

"We just said, 'This is so simple, we've got to try it at the kettle,'" he said. "We've gone from collecting from an old pot to state-of-the-art credit card reading technology."

Hood said he already has Salvation Army members all over the country calling and asking to be part of the move into the digital age, and he said there's a good chance expansion of the technique is in the organization's future.

Copyright 2011 ABC News Radio







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