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Credit card debt hits record high in November

Federal Reserve report shows balances eclipsed those from 2008

New data from the Federal Reserve reveals consumers' credit card balances hit a new record high in November.

On one hand it signals a more confident consumer, but on the other it could be a warning of trouble ahead if consumers put more on their plastic than they can repay.

The Fed report shows that consumer revolving credit -- mostly credit cards -- hit 1.023 trillion in November, an increase of $11.2 billion. The previous record was $1.021 trillion in April 2008, just months before the financial crisis.

'Wake-up call'

"This record should serve as a wake-up call to American consumers to make 2018 the year they get their credit card debt under control," Matt Schulz, senior industry analyst at CreditCards.com, said in an email to ConsumerAffairs.

A bigger credit card balance usually means it will take longer to get out of debt, but the monthly payment can also go up. Credit card companies set the minimum payment based on the amount of the balance.

At the same time, the interest rate on credit cards is at a near record level, and Schultz expects it to continue going up this year as the Fed continues a policy of gradually raising a key interest rate. Schultz worries than consumers may be getting over-extended.

"Simply put, there's only so much credit card debt Americans can absorb without it causing real problems," he said. "Right now, delinquencies are still fairly low, but they're climbing."

Because of low unemployment and gradually rising wages, more consumers may feel they are in a position to take on more debt. But Schultz cautions credit card debt is among the most expensive.

"A mix of increased card debt and higher interest rates means that climb will probably accelerate in 2018," Schultz said. "That could mean big trouble for many Americans."

December balances could be higher

The November numbers from the Fed include some holiday spending numbers but not what consumers put on their credit cards leading up to Christmas. Retailers reported a surge of last minute shopping in December, so it's possible the debt total for the entire year will be significantly higher than the record established in November.

A December survey by COUNTRY Financial showed consumers admitted to going over their holiday spending budgets, with 31 percent saying they expected to go into debt to pay for the holidays.

Paying down that debt will require a plan and some financial discipline. Bruce McClary, vice president for communications at the National Foundation for Credit Counseling, says consumers trying to reduce their debt must take a hard look at their spending habits.

"There's almost an infinite list of options for cost-cutting, it's just a matter of how much time and effort you want to put into finding those opportunities to save," McClary said.

Schultz notes that reducing the interest rate on credit card debt to zero percent can be a big help. You can do that by applying for a balance transfer card that offers an introductory period of zero percent interest. During the entire introductory period, 100 percent of the payment goes to reduce the balance.

You can learn more about balance transfer cards here.

New data from the Federal Reserve reveals consumers' credit card balances hit a new record high in November.On one hand it signals a more confident con...

Most credit card users rack up debt to meet basic expenses

Survey reveals trend that personal finance expert calls 'disturbing'

A new survey of consumers who carry chronic balances on their credit cards shows much of their spending is on basic daily needs–making ends meet.

The research from credit card site CompareCards.com found 42 percent of consumers in the survey group reported their shortage of cash at the end of the month was a significant driver in running up debt.

Aside from gasoline and groceries, consumers reported that emergency expenses such as car repairs and medical care went on credit cards because money was not available.

Bruce McClary, a vice president at the National Foundation for Credit Counseling, which represents non-profit credit counselors, says the survey should raise some warning flags.

'Disturbing'

"What I find disturbing about this survey is that it shows consumers are rolling over more than $5,000 in balances from month to month, coupled with the fact that much of that debt–some 42 percent–is related to simply making ends meet, covering expenses that would ordinarily have been covered using cash," McClary told ConsumerAffairs.

The survey focused on reasons for credit card debt and the stress that it causes among consumers. Millennials are more likely than older consumers to feel stress, yet baby boomers are having a harder time than millennials paying off their debt.

Also disturbing, the survey found about 28 percent of consumers had two or more credit cards with a balance they can't pay off in full.

"We are clearly in a trend where more people are falling behind on their credit card payments and people are carrying larger balances," McClary said. "That combination can be very dangerous."

The survey can be subject to different interpretations. Despite a soaring stock market and improving job market, a sizable group of consumers may still be struggling financially.

At the same time, McClary says some consumers with job security may have become too comfortable with debt over the last few years and are now in over their heads. He says it's easy to do.

Long term costs

"Consumers should think about the long term costs of the things they're buying on credit, he said. "If their credit card is simply charging them the average interest rate, which right now is around 16 percent, you can be adding a lot to the cost of the item you're buying."

McClary cites the example of carrying a $1,000 balance and paying the minimum $25 a month at 16 percent APR. At that rate, he says consumers would pay an additional $400 by the time they paid off the balance.

It might be difficult, but McClary says consumers struggling with credit card debt can turn it around.

"In my 20 years of non-profit credit counseling I have always found that there is the possibility of finding room in the budget for savings," McClary said. It's just a matter of where you look and how hard you're willing to work to make those adjustments."

For help, he suggests contacting a non-profit credit counselor. While some consumers may have little or no discretionary spending that can be cut, a credit counselor can suggest tactical moves that can save money on existing financial obligations.

A new survey of consumers who carry chronic balances on their credit cards shows much of their spending is on basic daily needs–making ends meet.The re...

How to pick a cash-back rewards credit card

Choosing the right card all depends on how you'll use it

Just about every credit card issuer offers a cash-back credit card, and choosing the one that’s right for you is largely decided by how you’ll use the card. However, there are some cards that stand out from the rest because they carry certain advantages.

For example, it will pay to look for a card that does not charge an annual fee. If you have to pay $50 or so each year, just for using the card, it's going to cut into any cash-back rewards you might get.

The objective is to earn as much cash on purchases as you can, and in that regard Daniel Ray, editor-in-chief at CreditCards.com, singles out the Citi Double Cash as his favorite. It pays one percent on every purchase, then rewards users with another one percent when they pay for the purchase.

"Unheard of a couple of years ago"

"A card giving two percent cash back was unheard of just a couple years ago," Ray said. "Now, cards are competing to be the best among this new, more generous class of cards. As a consumer, I love the arms race and hope it continues."

There are cards that pay more on certain kinds of purchases -- three percent at gas stations, for example. Getting two percent on everything you buy, Ray says, is a big deal.

Personal finance site NerdWallet also picks the Citi Double Cash as the best "flat rate" credit card. But it suggests there are a couple of drawbacks, including the fact that there is no cash sign-up bonus, and the minimum cash-back redemption is $25.

If you want a cash-back reward, generous sign-up bonus, and no annual fee, NerdWallet suggests the Discover It Cashback Match. The bonus is based on your spending with the card the first year by doubling the cash you've earned, up to $150.

Instead of paying two percent on everything, this credit card pays five percent on different categories you activate each month, on spending up to $1,500 per quarter. If you manage to spend $1,500 on one of those five percent categories, you could earn $75 cash-back during that three-month period.

Amazon Prime Rewards Visa Signature

John Ganotis, founder of Credit Card Insider, likes the features of the Amazon Prime Rewards Visa Signature.

"It has no annual fee, earns five percent back in Amazon credit for all Amazon purchases, and one to two percent back on other purchases," he tells ConsumerAffairs. "If you don't have Amazon Prime, you can get the Amazon Rewards Visa Signature, which earns 3% back in Amazon credit."

Ganotis says consumers who shop on Amazon can profit from having one of these cards, even if it is only used to make Amazon purchases. Since there is no annual fee, it's free to use, as long as you pay your bill on time and in full each month.

Just about every credit card issuer offers a cash-back credit card, and choosing the one that’s right for you is largely decided by how you’ll use the card...

More than 29 million Americans have years-old credit debt

Study finds older consumers are especially prone to carrying debt that is at least two years old

A new study shows 43 percent of U.S. consumers – around 29 million people – are carrying credit card debt that is at least two years old; another 15 million have credit card debt that is at least five years old.

The CreditCards.com report paints a grim picture of consumers’ ability to pay down credit card debt, especially in light of recent findings which showed that consumers racked up $60 billion in new credit card debt in the second quarter.

“Carrying credit card debt is a slippery slope. What may seem inconsequential at first can quickly grow into overwhelming debt,” said CreditCards.com senior analyst Matt Schulz.

Older consumers racking up debt

The findings show that older consumers are especially prone to carrying credit card debt over long periods of time. Older Baby Boomers (aged 63-71) were the most likely group to carry credit card debt for at least two years (63 percent) followed by members of the Silent Generation (aged 72+, 57 percent).

Overall, the report showed that over a quarter (28 percent) of Americans carry a credit card balance from month to month. Gen Xers (aged 37-52) were the most likely group to carry any kind of credit card debt (36 percent), followed by younger Baby Boomers (aged 53-62, 33 percent).

A common misconception is that consumers are accruing credit card debt by splurging on big ticket items, but the report finds that most people are falling behind by using plastic to meet day-to-day expenses.

“What’s driving people into credit card debt? Life. For millions of Americans, it isn’t about splurging,” said Schulz. “They are going into credit card debt because they have to buy groceries, put the kids in daycare, or even just to keep the lights on.”

Avoiding credit card debt

Schulz points out that the best way to avoid longstanding credit card debt is to not let things get out of control in the first place. “Bottom line: stick to your budget and only charge what you know you can pay off each month,” he said.

However, there are safe ways that consumers can cut their credit card debt and rebuild their credit scores. A good first step is to seek help and advice from a non-profit credit counselor, who will help review your income, expenses, and debt so you can establish a household budget.

Consumers should also get into the habit of paying off their credit card bills in full each month. If you have accrued a large amount of debt over time, you should also make a small payment against the balance in order to gradually reduce it.

A new study shows 43 percent of U.S. consumers – around 29 million people – are carrying credit card debt that is at least two years old; another 15 millio...

Consumers piled on credit card debt in second quarter

WalletHub study projects $60 billion in new debt by the end of the year

Consumers are putting more spending on credit cards, which is fine if it's paid off in a reasonable timeframe. But when the balances are allowed to grow, that can be trouble.

The folks at personal finance site WalletHub keep track of consumers' credit card habits and report we all did a pretty good job of paying down balances during the first three months of the year. After a record-setting year debt-wise, we paid off more than $30 billion in the first quarter.

But in the second quarter, the plastic came out of our wallets again. WalletHub reports consumers charged $33 billion in new debt.

"So it’s not a question of whether consumers are weakening financially, but rather how long this trend toward pre-recession habits will last and just how bad it will get," the authors write.

$60 billion in new debt

The report projects consumers will end up adding more than $60 billion in new credit card debt by the end of the year, pushing the total well past the $1 trillion level. This is a problem for three reasons.

First, a lot of credit card purchases are for things that aren't lasting -- things like meals in restaurants or vacations. When these bills are not paid off completely and allowed to build up, you're spending today's and tomorrow's money for things you consumed yesterday.

Second, debt cuts into your monthly cash flow so that you don't have as much money in your budget. If you are making $250 minimum payments on your credit card bill, you can't spend that $250 on things you need this month and you aren't making much progress on paying off your balance.

That brings us to the third problem: the interest rate is-sky high. The average interest rate is over 16% and will go even higher if the Federal Reserve continues to hike interest rates.

Staying out of trouble

The best way not to get in trouble with your credit card is to pay off the balance in full when the bill arrives. That way you aren't adding to your total. If you don't think you can pay for everything in one month, don't charge as much.

From time to time you might take two or three months to pay for a major purchase, like a new water heater, but make sure you pay for all the smaller purchases, plus a portion of your major expenses, with your monthly payments until the balance is back at zero.

If you are already in trouble and struggling to pay off your credit card balance, apply for a balance transfer credit card with a generous introductory period in which you pay 0% interest. If you can avoid double-digit interest for a year or more, then 100% of your monthly payment goes against the balance.

Just make sure you continue to pay for all your monthly purchases -- plus a payment on the balance -- each month.

Consumers are putting more spending on credit cards, which is fine if it's paid off in a reasonable timeframe. But when the balances are allowed to grow, t...

New credit accounts growing faster than consumers' incomes

Report warns growth in premium travel cards isn't sustainable

A new report from Research and Markets finds consumers continue to sign up for new credit cards -- many offering generous rewards -- even though they already have very high levels of debt.

The report is meant to be a warning to the credit card industry, but consumers should perhaps pay attention as well. Any purchases charged to the credit cards carry high interest and will have to be repaid at some point, along with other existing debt like auto and student loans.

"Winning new customers and coming up with new payment tools is exciting, but issuers need to keep their eye on the ball particularly since the lending growth is outpacing household income growth," the authors warn the industry.

Growth in prime accounts

Much of the growth in new credit card accounts has occurred among consumers who, on paper at least, have the strongest ability to handle it. The report notes that many of the new accounts are for premium credit cards, with many offering rewards for travel spending.

The report suggests the growth in new credit card accounts isn't sustainable, especially on the high end, when consumers find the rewards are less and the fees are more after the first year.

Consumers who have heard their friends talk about their new rewards credit cards should also exercise some caution, since terms change all the time. It's possible that a a credit card promotion launched a few months ago is no longer valid.

Rewards can change quickly

Research and Markets says the top-tier issuers are already pulling back some of their reward offerings. Points per dollar spent can change from 100,000 to 50,000 quickly.

The report also finds that the benefits in the second year are "nowhere near as attractive" as the benefits provided in the second year. That's another good reason for consumers to read the fine print before signing up.

Signing up for a new credit card doesn't necessarily mean that you are going to increase debt levels, but invariably that's what happens. Credit cards tend to get used and if they are not paid in full each month, the balance, with double-digit interest, accumulates.

The Federal Reserve recently reported that consumer revolving debt -- mostly made up of credit card debt -- hit a record $1.021 trillion in June. Not only does that money have to eventually be repaid, credit card interest is at a record high rate and likely to go even higher as the Fed continues its policy of normalizing interest rates.

A new report from Research and Markets finds consumers continue to sign up for new credit cards -- many offering generous rewards -- even though they alrea...

American Express pays redress to Spanish-language customers

The company discriminated against consumers in Puerto Rico and elsewhere, feds say

American Express is paying $96 million in redress to Spanish-speaking consumers in Puerto Rico, the U.S. Virgin Islands, and elsewhere as part of an agreement with the Consumer Financial Protection Bureau (CFPB).

The bureau said that two American Express banking subsidiaries discriminated against the Spanish-language consumers by providing them with credit and charge card terms that were inferior to those available in the 50 states.

“Consumer financial protections are not confined within the 50 states,” said CFPB Director Richard Cordray. “American Express discriminated against consumers in Puerto Rico and the U.S. territories by providing them with less-favorable financial products and services."

Cordray said that no civil penalties were being assessed because American Express discovered the problem, reported it, and "fully cooperated" with the CFPB's investigation.

Over the course of at least ten years, more than 200,000 consumers were harmed by American Express’ discriminatory practices, which included charging higher interest rates, imposing stricter credit cutoffs, and providing less debt forgiveness, the CFPB said.

American Express has already paid approximately $95 million in consumer redress and today’s order requires it to pay at least another $1 million to fully compensate harmed consumers.

The full text of the CFPB’s consent order is available here.

American Express is paying $96 million in redress to Spanish-speaking consumers in Puerto Rico, the U.S. Virgin Islands, and elsewhere as part of an agreem...

Report finds subprime credit cards not effective at boosting credit scores

There are lots of fees and users tend to max out their accounts

Consumers faced with the task of rebuilding damaged credit are often told to follow a few simple steps.

In addition to paying all their bills on time, they are urged to apply for a credit card as a means toward building a new credit history.

Nerdwallet, a personal finance website, says it works in theory, but its new study suggests consumers who try to rebuild their credit with one of the many subprime credit cards are often disappointed.

"We examined internal and external data to determine the aggregate cost of subprime credit cards, the ways consumers with subprime credit may be held back from improving their credit, and the direction the subprime market is going," the authors write.

$150 a year in fees

What the study found is that cards targeted to consumers with poor credit -- a segment of the market known as subprime specialist issuer (SSI) -- are expensive, costing consumers an estimated $150 a year in mandatory fees.

That might make sense, however, since the cards are unsecured and the consumers using them are considered higher risk. Credit card companies generally charge higher fees and interest rates to compensate them for the added risk.

And that might be okay if using the cards helped a subprime consumer build up a prime credit score. But Nerdwallet says that's not what's happening.

Part of the formula for your credit score is "credit utilization," or how much of the card's spending limit you are using. Using half or less can help improve your score.

94% of available credit

But the report's authors say the average subprime cardholder is using 94% of the allowable credit, meaning they have nearly tapped out the account. The average superprime cardholder -- those with credit scores of 780 and above -- uses only 11% of their allowable credit. So instead of helping their credit score, the average subprime cardholder finds it actually drags the score down.

“Subprime credit cards are the fake metal jewelry of the credit card world: They might look like the real thing, but in the end, they can end up hurting you,” said Kimberly Palmer, NerdWallet’s credit card expert.

What you can do

So what's the alternative? Palmer says there are cheaper, more effective ways to go about creating good credit history. You can apply for a secured credit card. That's less expensive because the card is secured by a deposit the cardholder puts up -- usually the same amount as the credit limit.

You can also become an authorized user on a family member's prime card. They, in effect, are co-signing for you, so it requires you to make timely payments -- otherwise, you could damage their credit.

Probably the fastest and easiest way to rebuild credit is to pay all of your bills on time, every month. Cellphone companies and some public utilities report payment information to the credit bureaus. That quickly rebuilds your credit and costs nothing.

Consumers faced with the task of rebuilding damaged credit are often told to follow a few simple steps.In addition to paying all their bills on time, t...

Credit card rates hit another record high

CreditCards.com puts the average rate at 16.11%

The Federal Reserve this week decided not to raise a key interest rate, but credit card rates are still going up.

The Fed's Open Market Committee left the Federal Funds Rate at present levels Wednesday, through market-watchers are betting on another hike in December, as the Fed works to get rates back to normal.

Perhaps because of that assumption, the interest rate consumers pay on their credit card balances continues to go up. In its weekly report, CreditCards.com puts the average credit card interest rate at another record high, 16.11%.

The average is made up of the rates on 100 popular cards covering different categories. The national average of 16.11% is up from 15.42% six months ago.

This week, student credit cards saw the biggest rate increase, rising from 15.14% to 15.64%. Cash back credit cards were not far behind, with the rate rising from 16.21% to 16.34%. The rate on rewards credit cards is 16.20%, up from 16.14% the previous week.

Capital One drives the increase

The credit card comparison site reports Capital One was responsible for much of this week's rate increase by raising the APR on its Journey Student Rewards card by four percentage points. Students now pay a single 24.99% rate, highest of any student card that CreditCards.com tracks.

Increases by Credit One and TD Bank also helped boost the national average with fairly hefty hikes.

Citi raised the maximum rate on its CitiBusiness Aadvantage Platinum Select card to 24.74%, but it left the card's minimum rate of 16.74% unchanged.

According to CreditCards.com, the national average credit card interest rate has risen from 15.42% to 16.11% over the last six months. On a credit card balance of $8,000, that works out to an additional $55 in interest charges per year.

A 2016 report by personal finance publisher NerdWallet put the average household credit card balance at more than twice that -- $16,425.

The Federal Reserve this week decided not to raise a key interest rate, but credit card rates are still going up.The Fed's Open Market Committee left t...

Choosing the right cash back credit card

Pick one card that rewards your biggest area of spending

Millennials have been slow to embrace credit cards.

Coming of age in the wake of the financial crisis, they appeared leery of using credit, preferring to make purchases using debit cards. Many are still more comfortable doing that.

But a new report from Bankrate.com suggests Millennials are leaving money on the table by using debit cards instead of paying with credit cards. The authors note that rewards credit cards offer cash back on the kinds of purchases that this younger generation tends to make.

They eat out a lot, they spend a lot on groceries, and they all have smartphones. Those purchases, the authors say, could be returning some cash.

Cautionary note

But Maya Kachroo-Levine , a Forbes contributor, sounds a cautionary note. She writes that Millennials should resist the temptation to sign up for too many credit cards just to reap the rewards.

"Free travel, shopping discounts, rental car deals, hotel deals, and cash back rewards all sound great when you’re signing up," she writes. "However, opening up multiple credit cards makes it harder to manage your money and easier to lose track of your spending."

So that makes picking the right rewards credit card all the more important. The first step, then, is to analyze your monthly spending, looking for where you spend the most money.

If you have a long commute, gasoline may be your biggest expense. Then again, if you take public transit and have a fuel efficient car, maybe it's not.

If you dine out a lot, or spend a lot at the supermarket each week, maybe you need a card that rewards those kinds of purchases.

Get 3% cash back on gasoline

If you find you spend the most each month on gasoline, the BankAmericard Cash Rewards card could be a good choice. It pays 3% back on gasoline purchases for the first $2,500 spent each quarter.

It's also a pretty good card if you spend the most money each month on groceries, paying 2% cash back on those purchases.

If you are a member of Amazon Prime and tend to buy a lot of stuff from Amazon each month, the Amazon Prime Rewards card will get you 5% off Amazon purchases.

To overcome a fear of running up an ever-increasing credit card debt, follow this simple step. Get a cash back card that generously rewards your biggest spending category. Only use the card for those purchases. Pay off the balance in full each month.

Millennials have been slow to embrace credit cards.Coming of age in the wake of the financial crisis, they appeared leery of using credit, preferring t...

Santander introduces new cash back credit card

'Ultimate Cash Back' pays 1.5% on everything

Rewards credit cards have grown in popularity in recent years, especially cash back cards.

Many rewards cards pay more for certain categories, such as gasoline or groceries, but Santander Bank has introduced what it calls the Ultimate Cash Back Credit Card that's fairly straightforward.

The bank says the card pays 1.5% cash back on all purchases, no matter how much you spend. The card also has no annual or transaction fees.

"The Ultimate Cash Back Credit Card is the most straightforward card on the market," said Ravi Acharya, head of consumer lending and innovation at Santander Bank.

Acharya says cardholders get the same amount of cash back, whether they are eating at a restaurant, gassing up the car, or buying groceries, or it becomes an all-purpose card.

Removing the guesswork

"We designed the Ultimate Cash Back Credit Card to take the guessing out of cash back rewards," he said. "Consumer research tells us that credit card users want a flexible, easy-to-use credit card that doesn't nickel and dime them with unnecessary fees and ensures they're going to earn money back on their purchases."

New cardholders will get a bonus of $100 cash back if they spend $500 on new purchases within the first 90 days of activating and using the card. If they spend an average of $500 a month with the card, the cash back would be $7.50 a month.

It might not sound like a lot, but consider that what the average savings account used to pay each month on a modest balance -- something it doesn't do any more.

Santander also recently announced that its customers are able to add their Santander credit and debit cards to Apple Pay. The bank says that makes it easier to make secure payments in stores and online.

It says upgrades to its mobile platform are coming later this year.

Rewards credit cards have grown in popularity in recent years, especially cash back cards.Many rewards cards pay more for certain categories, such as g...

Citi adds perks to its Prestige card

High-end card raises the competition for the affluent consumer

Citi has added new perks to its luxury travel credit card, upping the ante when it comes to rewards.

The Citi Prestige Card, which is metal instead of plastic, offers a number of new benefits, including a free night's stay at any hotel when you book stays of four nights or more and have the savings automatically applied to your statement. That takes effect July 23.

Another perk is the ThankYou Points program, which rewards cardholders with cash. For example, 50,000 points may be redeemed for $500.

New Prestige cardmembers will get 75,000 ThankYou Points if they charge $7,500 in purchases during the first three months the account is open. Citi says that works out to more than $935 when used for air travel through the Citi ThankYou Travel Center.

Increasingly competitive

Kimberly Palmer, NerdWallet's credit cards expert, says the announcement shows just how competitive the premium card market has gotten.

"Not only will consumers get a new metal card, which many credit card users associate with luxury, but they will also have access to some impressive perks to better compete with the Chase Sapphire Reserve and AMEX Platinum," Palmer said.

She says the $7,500 spending requirement to receive the bonus points is high, even for a premium card, and may put it out of reach for some frequent travelers.

"If you do use the card, you’ll get the most value out of it if you track your spending to maximize the benefits while taking care to avoid any interest or fees by paying off the balance in full each month," she said.

Annual air travel credit

The card also carries a $250 credit toward air travel each year, helping to offset the $450 annual fee. Chris Fred, head of proprietary products at Citi Cards, says the card has a loyal following among affluent consumers who value an adventurous lifestyle.

“We continue to see strong interest and engagement in this card, especially among millennials who comprise close to half of the portfolio, so the time is right to augment the Prestige card for a new generation of affluent customers,” he said.

Other perks include a $100 statement credit for global entry or TSA pre application fee; complimentary, unlimited access to over 1,000 Priority Pass Select Lounges worldwide; no foreign transaction fees on purchases; three times the points on air travel, two times the points on dining and entertainment, and one point for every dollar spent on all other purchases.

Citi has added new perks to its luxury travel credit card, upping the ante when it comes to rewards.The Citi Prestige Card, which is metal instead of p...

Average credit card interest rate hits record 16%

Those rates will probably go even higher in the months ahead

If you carry a balance on your credit cards, it's costing you more to do so. The average rate on 100 popular credit cards has risen to 16%, a record since CreditCards.com has been tracking the average.

The average rate on cards promoted as "low interest" cards is 12.83%, up from 12.09% six months ago.

The rate on cards issued to consumers with "bad credit" rose to 23.4%, from 22.95% six months ago.

The average rate on cash back rewards cards this week is 16.17%, having risen from 15.43% six months ago.

Rates will probably keep going up

The bad news for consumers carrying a credit card balance is those rates are probably going to continue going higher. Since the financial crisis, credit card interest rates have remained fairly stable because they are tied to the Federal Funds Rate, the key interest rate controlled by the Federal Reserve.

At the end of 2008, the Fed dropped that rate to near zero and kept it there for years, in hopes it would help the economy recover. Consumers with credit card balances have gotten accustomed to the interest rate they've been paying the last several years.

The Fed now appears to be ready to "normalize" that interest rate and raised it twice so far in 2017. That's going to have the effect of nudging credit card interest rates higher.

June 14th rate hike

CreditCards.com says this week's average rate increase was tied to the Fed's June 14 rate hike. Since then, several card companies have increased rates by the same amount, including Citi, American Express and US Bank.

The current interest rate environment may make it prudent to transfer a credit card balance to a card offering an introductory period of 0% interest, so that 100% of the monthly payment goes to paying down the principal.

The good news, says the CreditCards.com report, is the average length of interest-free balance transfer offers has increased slightly in the last week.

You can learn more about balance transfer options here.

If you carry a balance on your credit cards, it's costing you more to do so. The average rate on 100 popular credit cards has risen to 16%, a record since...

CFPB reins in four 'credit repair' firms

The agency charges the firms misrepresented their services and charged illegal fees

Four "credit repair" firms are facing fines and oher penalties for allegedly misleading consumers, charging illegal fees and misrepresenting their ability to repair credit scores.

“Today, the Bureau is taking action against companies that charged illegal fees and misled consumers about their ability to fix their credit,” said Consumer Financial Protection Bureau (CFPB) Director Richard Cordray. “We will remain vigilant about protecting consumers from companies that mislead them to turn a dishonest profit.”

Under a proposed final judgment, Prime Credit, LLC, IMC Capital, LLC, Commercial Credit Consultants, Blake Johnson, and Eric Schlegel would pay a civil money penalty of more than $1.5 million. Under a second proposed final judgment, Park View Law, known formerly as Prime Law Experts, Inc., and its owner Arthur Barens would pay $500,000 in relinquished funds to the U.S. Treasury.

The CFPB alleges that the defendants made misleading, unsubstantiated claims that they could remove virtually any negative information from consumers’ credit reports and could boost consumers’ credit scores by significant amounts. The companies attracted thousands of customers through sales calls and their websites, at times targeting consumers who had recently sought to obtain a mortgage, loan, refinancing, or other extension of credit.

Violated Dodd-Frank Act

The CFPB alleges that the companies charged these consumers millions of dollars in illegal advance fees for their services. The Bureau alleges that these practices violated the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Telemarketing Sales Rule. Specifically, the CFPB alleges that the defendants:

  • Charged illegal advance fees: Federal law bars telemarketers and certain companies from requesting or collecting fees for credit repair services until certain conditions are met about the delivery of those services.
  • Failed to disclose limits on “money-back guarantees”: The companies offered a money-back guarantee for certain services. However, they failed to disclose that the guarantee had significant limits.
  • Misled consumers about the benefits of their services: The companies misrepresented that their credit repair services would result in the removal of negative entries on consumers’ credit reports.

Four "credit repair" firms are facing fines and oher penalties for allegedly misleading consumers, charging illegal fees and misrepresenting their ability...

How is your 'credit awareness?'

Study shows increased awareness usually improves financial behavior

Consumers who routinely monitor their credit score and credit report are more likely to have positive financial behavior and a higher score, according to a new study from Discover.

While a majority of consumers in the study said they were aware of their credit standing, and nearly as many said their credit standing is important to them, a lot fewer actually follow through and check their credit regularly.

About half of consumers didn't check their score at all last year, or checked it only once. Only 8% checked it monthly.

“Consumers have come a long way in recent years in building awareness of their credit score and the ways in which it can impact their day-to-day life,” said Ryan Scully, Discover’s vice president of marketing.

Scully says consumers who stay on top of their credit standing throughout the year can gain helpful insight into the financial behaviors that affect their score. The result can be smarter financial decisions.

Like stepping on the scales

Checking credit frequently was also associated with a rising credit score, much like someone stepping on the scales each day is more likely to lose weight than gain it.

Positive financial behavior like paying bills on time, paying down loans and maintaining low balances on credit cards was likely to increase with the frequency of checking credit scores, the study found.

Credit information is more readily available than it used to be. Some credit cards, including Discover, as well as financial websites, provide free credit scores.

In addition, complete credit reports are available at no charge from Experian, Equifax, and TransUnion on an annual basis. You can access them at www.annualcreditreport.com.

Access reports individually

While the information in the reports may vary slightly, they should be very similar. It's a good idea to access the reports individually, at different times throughout the year.

The study found generational differences in how consumers view the importance of their credit standing. Millennials tend to place less importance on it than Baby Boomers, perhaps because the survey found younger consumers feel they have less control over their credit.

Having good to excellent credit carries numerous benefits. You can qualify for loans with lower interest rates and get better credit cards. A high credit score may also lower your auto insurance rates.

Consumers who routinely monitor their credit score and credit report are more likely to have positive financial behavior and a higher score, according to a...

The difference between 'deferred-interest' and '0% interest'

Consumer agency seeks more transparency in these kinds of offers

The Consumer Financial Protection Bureau (CFPB) is urging retailers to clear up some confusion surrounding store credit card promotions.

Specifically, the agency called for more transparency when retailers make promotional offers like “no interest for 90 days,” which is essentially a “deferred interest” promotion. The consumer who makes a purchase with the store's card pays no interest if they pay off the entire balance within the set time limit, such as 90 days.

But if they fail to pay off the entire balance in the prescribed time period, they are then charged the full interest on the purchase, which can blindside consumers who didn't understand the terms of the promotion.

Letters to retailers

The CFPB has fired off letters to major retailers asking them to consider more transparent promotions, like 0% interest during the introductory period. A number of credit card issuers take that approach, not charging interest for the first 12 to 21 months the account is open, if certain conditions are met, such as making a purchase during the first 60 days.

“With its back-end pricing, deferred interest can make the potential costs to consumers more confusing and less transparent,” said CFPB Director Richard Cordray. “We encourage companies to consider more straightforward credit promotions that are less risky for consumers.”

CFPB says one major retailer recently took that step, announcing it will drop its deferred-interest promotions in favor of a promotional period with 0% interest, much like the credit card companies offer. With that approach, consumers don't get hit with unexpected interest charges if they haven't paid off the balance by the time the promotional period ends.

How to tell the difference

How can you tell a deferred-interest promotion from a 0% interest one? CFPB cautions consumers to look for the word “if.” When an offer says “No interest if paid in full in 12 months,” that's a deferred-interest pitch. Escaping interest charges is fully conditional upon paying off the balance in the allotted time.

On the other hand, 0% interest offers say something like “0% intro APR on purchases for 12 months.” That means you are only on the hook for interest charges for the amount of the unpaid balance at the end of 12 months. It's a much better deal.

The problem is that consumers often confuse the two types of offers because they sound similar. The CFPB says the number of purchases using deferred-interest promotions jumped 21% between 2010 and 2013.

For consumers making a major purchase at a retailer whose store card only offers a deferred-interest promotion, consider this option: apply for a credit card, such as the Citi Diamond Preferred, that offers a lengthy introductory period at 0% interest, and purchase with that card instead.

The Consumer Financial Protection Bureau (CFPB) is urging retailers to clear up some confusion surrounding store credit card promotions.Specifically, t...

Credit card debt closing in on $1 trillion

Credit card balances rapidly catching up with student loans

A few years ago total student loan debt in the U.S. topped the $1 trillion mark, causing many economists to express concern. Now, a new report from the Federal Reserve shows total credit card debt is rapidly closing in on that milestone.

Overall, the Fed reported that total consumer credit increased in April at a seasonally adjusted rate of 2.5%. Of that total, revolving credit, which includes credit card debt, increased 1.8%.

In breaking down the data, personal finance site WalletHub found that consumers repaid more than $31 billion of their credit card debt in the first quarter, a big improvement over last year. Still, it was below the average first quarter pay-down since the Great Recession, and could be cause for concern.

The stepped-up pay-down came on the heels of a huge run-up in credit card bills last year, so there was a lot to pay off – and a lot still unpaid. Crunching the numbers further, the WalletHub editors project that U.S. consumers will add some $60 billion in new credit card debt in 2017, ending the year with a total balance over the $1 trillion mark.

Cautionary flag

Here's why the WalletHub editors are raising a cautionary flag: last year consumers started the year with a very weak pay-down of credit card debt. It finished the year by adding post-2007 records for new debt in the second, third, and fourth quarters.

“So it is not a question of whether consumers are weakening financially, but rather how long this trend toward pre-recession habits will last and just how bad it will get,” the editors write. “And WalletHub projects that we will end 2017 with more than $60 billion in new credit card debt. That would mean we’d owe well over $1 trillion in credit card debt overall.”

And credit card debt is very expensive debt. The average rate on credit card balances is currently at a record high of 15.83%. While this poses challenges for the economy, it also can put individual households in a bind, limiting their ability to make other purchases.

Credit card management tips

If you are struggling to pay off credit card debt, here are some tips that might make the process more manageable:

  • Make a budget and stick to it. Use any eliminated expenses to pay down credit card balances faster
  • If you can manage to save some money each month, put it toward an emergency fund. It may take a while to build it up, but it can provide a way to pay for an unexpected expense, instead of putting it on plastic.
  • If you have marginal credit, work on improving it. The best way to do that is to pay every bill on time. As your credit score rises, you may be able to qualify for a balance transfer card offering a lengthy introductory 0% interest rate period.
  • If you have more than one credit card balance, work on paying off the highest interest account first.
A few years ago total student loan debt in the U.S. topped the $1 trillion mark, causing many economists to express concern. Now, a new report from the Fed...

Credit card rates at another record high

With a Fed meeting looming, they could go even higher

When the Federal Reserve Open Market Committee meets next week, it is expected to once again raise the Federal Funds Rate, even though there isn't much of an economic case to do so.

When it does, it will likely send the interest rate consumers pay on credit cards higher, which is bad news because that average rate is already at an all-time high.

In its weekly report, CreditCards.com says the average credit card interest rate has hit 15.83%. Because it's the average of 100 cards in the survey, some rates are higher while some are lower.

Much of the increase can be traced to rate movement on just a few cards. Citi raised the minimum APR on its elite card, the Citi Prestige card, to 16.49%, while tacking on a maximum APR of 24.49%. In the past, there was just a single flat rate of 15.99%.

The sporting goods store Cabela's also raised rates on its card this week. It increased the minimum rate on the Cabela's Club Visa to 16.04% and the maximum rate to 22.04%. The Gap also raised its rate, but not as much – from 25.49% to 25.74%.

Low rate card averages 12.73%

Meanwhile, the rate on the typical “low interest” credit card didn't budge, remaining at 12.73%. However, at this time last year is was an even 12%.

The highest average rate, on cards for consumers with bad credit, remains at 23.23%. Rates on cash back, business, airline, and balance transfer cards also held steady this week.

The reason most credit card rates could go higher in the coming weeks is expectation concerning a Fed rate hike. The Federal Funds Rate doesn't really affect mortgages, but tends to impact consumer loan rates, especially credit cards.

Fed policy impacts consumers

The Fed signaled at the end of last year that it planned to boost that key interest rate at least twice in 2017. After raising it last December, it boosted it again in March.

By historic standards, the rate is still very low because the Fed slashed it to near zero after the 2008 financial crisis. It's raised it only three times since then.

The lesson for consumers is to pay down credit card debt as much as possible since interest charges are sure to increase in the future. Another option is to transfer balances to a card with an introductory 0% interest rate and no transfer fee.

One of the few cards to fit that description is the Chase slate card. You can check out balance transfer options here.

When the Federal Reserve Open Market Committee meets next week, it is expected to once again raise the Federal Funds Rate, even though there isn't much of...

What's the best credit card for overseas travel?

According to WalletHub, it's the Barclaycard Arrival Plus World Elite Mastercard

Choosing the right credit card is important. After all, some cards are more rewarding than others.

But in addition to how much cash back a card gives you, or how many miles in offers, there are other things to consider. How useful is the card in certain situations? In particular, how useful will it be to you in your specific situations?

For example, one card might be just fine if you never leave the country. But if you travel abroad every once in a while, you might consider a card that takes that into consideration.

Personal finance site WalletHub has compiled a report, comparing 69 of the most popular credit cards on the benefits they extend to international travelers. Among the things the report took into consideration are foreign transactions fees, and whether the card issuer requires notification before the cardholder leaves the U.S.

Top cards

Coming out on top is the Barclaycard Arrival Plus World Elite Mastercard. The card's very name suggests it was designed for travel, and it is.

Close behind are the USAA Visa Signature Card, the Citi Prestige Card, the Citi Thank You Premier, the BankAmericard Travel Rewards Visa Signature Card, and the Merrill Visa Signature Card.

Each of the cards have international-friendly aspects, some of which rate higher than others in the methodology. You can see the complete rankings here.

Key findings

Among the key findings, Barclaycard, USAA and Capital One are the best credit card companies for international travelers. Three of the largest card issuers do not charge a foreign transaction fee.

Two companies -- American Express and Capital One -- are the only card issuers that can automatically detect when you have left the United States, and do not require cardholders to notify them.

Finally, only three of the top 10 card companies will send you a free replacement card if yours is lost or stolen while traveling overseas. Four will send a replacement card, but not for free. Wells Fargo charges as much as $50 for a replacement card. U.S. Bank, Discover, and Capital One do not ship to international addresses, according to the report.

Choosing the right credit card is important. After all, some cards are more rewarding than others.But in addition to how much cash back a card gives yo...

Credit card rates at record high

CreditCards.com says the average interest rate is now 15.74%

Consumers who are carrying a credit card balance are paying a little more each month, even if they don't add a penny to their total debt.

The average credit card interest rate has risen to 15.74%, an all-time high, according to CreditCards.com.

That record covers the span that the card comparison website has been conducting its weekly analysis. In the past, long before the internet, credit card rates have been a lot higher. But in recent memory, they haven't.

CreditCards.com calculates its average by looking at the rates on the 100 most popular credit cards in the U.S., in all types of categories.

For example, the average rate on credit cards for consumers with bad credit is much higher – 23.20%. But “low interest” credit cards, usually offered to consumers with good or excellent credit, have an average interest rate of 12.50%.

There are lots of cards in between. The average rate on your cash-back credit card is 15.79%. The rate on business cards is 13.66%. For student credit cards, the average rate is 13.92%.

What's behind the rate moves

Why are credit card rates going up when mortgage rates are going down? The answer lies in the things that influence those rates, and they're different.

Mortgage rates take their cue from the 10-year Treasury bond. When the interest rate on this note goes down, as it has in recent weeks, mortgage rates also fall.

Credit card rates, however, are directly affected by the Federal Reserve's Federal Funds Rate. The Fed raised that rate in December, and again in March. It has signaled its intentions to raise it again a time or two later this year.

If you are carrying a large balance on a high-interest credit card, you might consider transferring the balance to a card that offers a year or more of 0% interest. We explain some options here.

Consumers who are carrying a credit card balance are paying a little more each month, even if they don't add a penny to their total debt.The average cr...

Are you using your credit card rewards?

A report finds nearly a third of cardholders are leaving money on the table

In the last decade, credit card companies have stepped up the rewards they offer to cardholders, providing everything from cash back to points toward travel discounts.

Surveys have found consumers like these rewards, and the offers often sway a decision on whether or not to apply for a card.

But once you have a card in your wallet, what do you do with the rewards? A new report by financial website Bankrate.com addressed that question and found 31% of consumers with a rewards card have never redeemed the rewards.

In fact, most of us fall into one of two categories: either we are nearly obsessive about redeeming rewards or we don't do it at all. Bankrate's Robin Saks Frankel says it's hard to figure out.

Not gaining value

"Credit card rewards don't usually gain value over time," Frankel said. "In fact, they're more likely to lose value as companies require more points or miles for the same perks. Your best move is to cash them in regularly."

Bankrate found that when consumers do take advantage of their rewards, nearly half prefer to get cash back. That's actually a very savvy choice.

It might be hard to place a quantitative value on other types of rewards, such as airline miles or hotel points. But cash is money in the bank. It can be accumulated to pay for a purchase or can be applied each month to pay a portion of the bill.

Of all the types of rewards, cash seems like the most useful. Millennials favor it over older consumers by a wide margin.

Airline miles a distant second

The Bankrate report found airline miles were a distant second, with only 17% of consumers opting for this perk. Twelve percent of consumers prefer to get their rewards in the form of gift cards.

One drawback to some of the more generous rewards cards is a sometimes hefty annual fee. With so many other rewards cards available with no fee, it's wise to carefully consider all offers before selecting a card that charges a fee.

"The credit card market is very competitive right now, so if you're not happy with a fee, you can either shop around to find another card that doesn't have one or you can see if the issuer is willing to waive the fee to keep your business," Frankel said.

In fact, as we recently reported, a study found more than 80% of cardholders were able to get an annual fee waived or reduced just by asking.

In the last decade, credit card companies have stepped up the rewards they offer to cardholders, providing everything from cash back to points toward trave...

Consumers use more credit cards, but enjoy them less

Harris Poll finds 61% of consumers think their card falls short

If you're like most consumers, every trip to the mailbox it seems leaves you with a handful of credit card solicitations.

Most consumers probably have more than one credit card in their wallet, and use them regularly if ballooning balances are any indication. Eight out of 10 adults say they use or own at least one credit card. On average, cardholders have about three cards they use regularly.

But a new Harris Poll suggests consumers are not all that satisfied with the cards they are using.

In recent years, credit card companies have worked to separate themselves from their competitors by offering more perks and rewards for just about every way you can use a credit card.

Rewards and perks

Some cards provide cash rewards while others build points toward travel perks. But the poll suggests consumers are not that impressed, with 61% expressing some level of dissatisfaction with the credit card they use most.

"In this highly penetrated and competitive industry, a company cannot afford to under-deliver," said Alison Bushell, client director at The Harris Poll.

And it could be because of that intense competition that consumers have a "grass is always greener" view of their credit card. That no matter how good their card may be, they can't help thinking there's a better one out there.

"Consumers are inundated with offers from competitors who are eager to take a precious slot in their wallets," Bushell said. "Issuers need to make promises they can keep, and stay ahead of consumer sentiment to stem off attrition and maximize loyalty."

What's most important to consumers

When consumers were asked to rate benefits many credit cards offer, 58% said merchandise points were "nice to have" but only 7% said they would pay extra for it.

At the same time, cash back appeared to be a highly popular perk. While 49% rate it as "nice to have," 34% rated it a "must have" feature and 10% said they would pay extra to have it.

For consumers, selecting a credit card that best matches needs and spending patterns will likely increase satisfaction levels. For example, if you use a card mostly to buy gasoline and groceries, and maybe an occasional big-ticket item, then a cash back card will likely work best.

But if you travel a lot, especially in your work, then using a card that provides generous travel perks will likely make you happier. Where possible, select a card that doesn't have an annual fee. If the card does carry a fee, make sure the rewards and perks you will receive will pay for it, and more.

If you're like most consumers, every trip to the mailbox it seems leaves you with a handful of credit card solicitations.Most consumers probably have m...

Consumers increase credit card use for small purchases

Survey finds purchases that once went on debit cards now going on credit cards

When you get to the checkout counter, you have a decision to make. How are you going to pay?

Let's assume you're like a growing number of consumers these days and you don't pay with cash. That leaves plastic, but what kind of plastic?

Traditionally, if it's a small purchase, a consumer might be more inclined to use a debit card. But a new report from CreditCards.com finds increasingly, consumers are putting small purchases on credit cards instead paying for the purchase immediately with a debit card.

The survey found that 17% of consumers with a credit card use that to pay for a transaction under $5, up from 11% a year ago. There was a decline in the number of consumers using a debit card or cash to pay for a small purchase.

The reason could be important

The survey doesn't explain why this trend is developing. It may be that more consumers are using cash back or rewards credit cards, and see the benefit of using the card for every purchase. If so, that might not be a bad strategy.

But if consumers are relying on credit cards for small purchases because there is less money in their checking accounts or their wallets, that's not a good sign.

"If you pay your balance off in full each month, there's no reason not to use credit cards for these small everyday purchases," said CreditCards.com Senior Industry Analyst Matt Schulz. "They're convenient, they're safe, and over the course of a year, all of those little cash and debit card payments can add up to a real missed opportunity to collect cash back rewards."

But if you don't pay off your balance each month, all those little $5 purchases are adding to your debt, costing you 15% or more in interest.

Big-ticket items

Credit cards are still the payment of choice for big-ticket items, in part because of potential rewards and in part because it can be paid off over two or three months.

"Big purchases are a great chance to rack up credit card rewards, as long as you do it responsibly," Schulz said. "Save up for what you want, then sign up for a new credit card to pay for it. If you've got good credit, it's an easy way to bring down the real cost of these big-ticket items."

Shultz says it's important to have the money in the bank to pay for the big-ticket item, so that you can pay it off in one billing cycle and don't have to pay any interest. To maximize your return, he suggests signing up to a new rewards credit card that provides a bonus if you spend a certain amount in the first three months.

Consumers made an average of about five purchases of over $500 in the last year. By doing a little planning, those big purchases won't cost quite as much.

When you get to the checkout counter, you have a decision to make. How are you going to pay?Let's assume you're like a growing number of consumers thes...

Venmo, other p2p systems eclipsing banks, which are planning to fight back

Big banks are launching Zelle, a Venmo-like service, later this year

If you're a person of a certain age then you may not be familiar with Venmo, but chances are your younger friends and family members know it well. It's perhaps the most popular of the peer-to-peer payment systems that are replacing bank transfers, mailed checks, and even cash.

Big banks have long had their own systems, but they tend to be clunky if you're sending money to an account at a different bank. And online giants like Google, Facebook, and PayPal all have their own systems. (PayPal owns Venmo, by the way). But for the most part, their transfers are not as intuitive and hassle-free as Venmo's, which works as a simple app on iPhones and Androids or on any other platform you can think of.

Millennials tend to be the biggest users of Venmo, often using it to split bar tabs and pizza bills while their parents perhaps are still using bank transfers to make their child's rent payment.

All of that may start to change later this year as a coalition of big banks introduce Zelle, a p2p payment system that can transfer money from your account to anyone who has a debit card. 

“We are always looking for opportunities to make it easier for our customers to bank with us,” said Diane Morais, CEO and president, Ally Bank, one of the first banks to commit to Zelle. “Transferring money via payment services is among the digital banking activities growing in popularity with consumers.”

A larger pond

You might think Zelle's entry would be bad news for existing services, but a recent Los Angeles Times report finds them feeling confident that the banks' big marketing push will attract more consumers to app-based payments, growing the market for everyone.

“We don’t see it as a winner-take-all scenario,” Josh Criscoe, a spokesman for Venmo owner PayPal, told the Times. “We welcome any effort to move folks to more digital payments and move toward the smartphone as the central point of financial life. The common enemy is cash.”

One competitive advantage Venmo brings to the fray is its low and sometimes nonexistent fees. Transfers between friends through a major debit card or checking account are free. Credit card transfers incur a 3% fee. 

Banks are generally not shy about piling on fees, charges, and penalties, but they may have to restrain themselves if they want Zelle to be successful.

Besides its no-fee approach, Venmo, despite a nearly nonexistent advertising budget, has managed to join the exclusive club of companies whose names become verbs. Drop by any coastal city coffee shop and you'll hear phrases like, "OK, your share is $8.35. You wanna' Venmo that to me?"

While the big banks will no doubt spend millions on advertising, it may be a while before you hear anyone say, "Could you Zelle me $20 until Friday?"

If you're a person of a certain age then you may not be familiar with Venmo, but chances are your younger friends and family members know it well. It's per...

Will your credit card company waive your late fee?

Chances are, it will if you'll just ask

Consumers hate fees, whether they are levied by a bank or credit card company. Overdraft fees were such a major bone of contention a few years ago that Congress passed legislation to reduce them.

But fees don't always have to be paid. Sometimes, if you ask, a credit card company will waive them. And it happens a lot more than you might think.

CreditCards.com reports its latest research which shows that 87% of consumers who asked a credit card company to waive a late fee were successful. It also found that 69% of the time, if a customer asked a credit card company to lower the interest rate, the answer was "yes."

While it is true that banks and credit card companies depend more on fees than ever these days, it is also true that they are in a very competitive industry. Consumers have lots of options.

Competition works in your favor

In many cases, a credit card company would rather waive a fee once than possibly lose a customer. If a customer has a good credit score, he or she can open a new credit card account and transfer a high interest balance, often getting more than a year of 0% interest. Credit card companies know this.

That said, CreditCards.com found that only 25% of credit card customers ever asked for a waived fee or a lower interest rate. That means consumers are spending money needlessly.

There's even wiggle room when it comes to annual fees. Many rewards credit cards charge as much as $100 or more for the privilege of using their cards. But CreditCards.com found more than half of credit card customers in the U.S. were able to persuade the company to drop the fee altogether. Thirty-one percent were able to negotiate a lower fee.

More power than you realize

"People have far more power with their credit card company than they realize," said Matt Schulz, CreditCards.com's senior industry analyst. "Competition among card issuers is incredibly high these days and customer retention is a priority."

Schulz says you can't be afraid to ask for an exception because, very often, you're likely to get it.

That also holds true for credit limits. Of those customers who simply asked their credit card company to raise the card's credit limit, 89% got what they asked for.

As we have previously reported, this also works in other highly competitive services, such as insurance. If you have been with your insurance carrier for several years, chances are you can get a discount by saying you are shopping for a new policy.

If you are a senior citizen, or getting close to being one, you can get a discount almost anywhere. But, you have to ask for it. Again, surveys show most people don't.

Consumers hate fees, whether they are levied by a bank or credit card company. Overdraft fees were such a major bone of contention a few years ago that Con...

Temkin rates Discover number one among credit card companies for customer experience

The industry as a whole rates higher with consumers

Some credit cards are better for some specific purposes. There are cards that pay generous cash back or offer travel rewards.

But what about the credit card company itself? The Temkin Experience Ratings looked at credit card issuers and named Discover as the card offering the best customer experience.

It made that assessment after surveying 10,000 consumers in the U.S.

Discover made it to the top of the heap of 11 credit card lenders, earning a 78% score and placing 28th overall out of 331 companies competing in 20 different industry segments.

American Express and USAA were right behind, tying for second place at 73%. Wells Fargo, still losing customers after last year's unauthorized accounts scandal, remained in last place with a score of 64%. Most of its competitors, meanwhile, moved higher.

Double-digit increases

"Quite a few credit card issuers saw double-digit increases from last year, bringing up the average quality of customer experience in this industry," said Bruce Temkin, managing partner of Temkin Group.

As a whole, the credit card industry improved its standing among consumers. It moved up seven percentage points, rising from 62.8% to 69.7%.

According to the ratings, Capital One was the only credit card issuer that lost ground year-over-year, while HSBC earned most improved card honors.

Here's the 2017 Temkim list:

  1. Discover: 78%
  2. American Express: 73%
  3. USAA: 73%
  4. Barclaycard: 72%
  5. U.S. Bank: 71%
  6. Chase: 70%
  7. HSBC: 69%
  8. Citigroup: 68%
  9. Bank of America: 67%
  10. Capital One: 66%
  11. Wells Fargo: 64%
Some credit cards are better for some specific purposes. There are cards that pay generous cash back or offer travel rewards.But what about the credit...

Cathay Pacific introduces travel rewards card

Regular Cathay Pacific customers would benefit the most

Cathay Pacific is the latest airline to roll out its own branded travel rewards credit card. The airline is teaming with Synchrony Bank to issue the Cathay Pacific Visa card.

Consumers who routinely fly the airline will get the most benefits. Cathay Pacific flies to 173 destinations in 42 countries and territories. While the most perks are for tickets on those flights, the company says the card can be used anywhere in the world where Visa is accepted.

While mostly an Asian-centered international airline, Cathay Pacific originates more than 100 flights each week from six U.S. airports -- Boston, Chicago, Los Angeles, New York-JFK, Newark Liberty, and San Francisco.

The card provides up to two Asia Miles per dollar spent on eligible purchases. For opening an account, consumers can earn 25,000 Asia Miles, as long as they spend $2,500 or more in the first 90 days of opening their account. The airline says that alone is enough for a one-way upgrade on a Cathay Pacific flight.

A natural step

Though it's relatively late to the rewards credit card game -- most major airlines already have branded cards -- Eric Odone, Vice-President of Sales and Marketing, Americas, Cathay Pacific, says the card is a natural step for a company that seeks to enhance the joys of travel.

"We share Cathay Pacific's passion for superior customer service and rewarding travelers well with greater perks and payment flexibility to enjoy their experience," said Tom Quindlen, Executive Vice President and CEO of Retail Card for Synchrony Financial.

Here's a quick rundown of what the new credit card offers:

  • Two Asia miles for every $1 spent on Cathay Pacific, either online or during a flight
  • One and a half Asia Miles for every $1 spent on restaurants in the U.S. and other countries
  • One and a half Asia Miles for every $1 spent anywhere outside the U.S.
  • One Asia Mile for every $1 spent in the U.S.

The Asia Miles website shows customers where they can find ways to redeem the miles they earn. The redemptions include use on Cathay Pacific, oneworld and partner airlines, and travel packages.

Cathay Pacific is the latest airline to roll out its own branded travel rewards credit card. The airline is teaming with Synchrony Bank to issue the Cathay...

GOP lawmakers seek to block prepaid debit card rule

Critics charge it's just another attack on the Consumer Financial Protection Bureau

In the wake of the financial crisis, millions of consumers became "unbanked," meaning they had no bank account.

Some became "unbanked" by choice, but many were either dropped by their banks or could no longer afford the fees associated with bank accounts.

These consumers often turned to prepaid debit cards as an alternative. These cards provided easy access to cash and an ability to pay bills online. But just like banks, these cards were often loaded with fees, including hefty overdraft fees.

In October, the Consumer Financial Protection Bureau (CFPB) finalized rules to increase consumer protections for prepaid card users. The rules require prepaid card issuers to provide many of the same protections to consumers that credit card companies provide. They also require issuers to give consumers clear information about fees before an account is opened.

Lawmaker claims rules hurt consumers

Now, seven Republican members of the U.S. Senate are seeking to block implementation of those rules. Sen. David Perdue (R-Ga.) is the primary sponsor of the legislation, claiming the rules are actually hurting consumers who use prepaid cards.

“If the CFPB wants to continue to impose rules and regulations that impact every American’s financial well-being, it must answer to the American people,” said Perdue, a member of the Senate Banking Committee. “As a business guy, I have experienced first-hand the impact overregulation has on growth and innovation. This rule is entirely too broad and would cripple the electronic payment marketplace which Georgians and millions of consumers across the country depend on.”

But the National Consumer Law Center (NCLC) contends that isn't the case at all. It claims the primary beneficiary of the CFPB rules rollback would be a prepaid card company called NetSpend (an Accredited Partner), whose parent company, TSYS, is based in Perdue's state.

More overdraft fees

NCLC contends a successful repeal of the rules would result in Netspend (an Accredited Partner) collecting $80 million a year in overdraft fees while blocking the expanded fraud protections.


“It is outrageous that Congress may block basic fraud protections on prepaid cards so that NetSpend (an Accredited Partner) can keep gouging struggling families with overdraft fees that have no place on prepaid cards,” said Lauren Saunders, associate director of the NCLC.

Sauders says the move is a continuation of the GOP's campaign against the CFPB, which was established under Dodd-Frank financial reform legislation. GOP lawmakers say the CFPB is not accountable as other government agencies are and has repeatedly overstepped its bounds.

But Saunders say CFPB has been an effective consumer watchdog that has returned nearly $12 billion to consumers since it was established.

In the wake of the financial crisis, millions of consumers became "unbanked," meaning they had no bank account. Some became "unbanked" by choice, b...

Why you really need to start paying down your credit cards

The average rate is the highest since 2007 and is going higher

Among your New Years resolutions for 2017 may have been paying down your credit card debt.

So, how's that working out?

True, it has been less than one month, but if that resolution was on your list it should take on new urgency. The average credit card interest rate has remained at a record high, 15.42% for a second straight week, according to CreditCards.com.

The average is made up of 100 of the most-used credit cards, representing every card category. For example, in the Low Interest Credit Card category, the average interest rate this week is 12.22%, up from 11.98% six months ago.

If you're carrying a balance on a credit card for consumers with bad credit, you're paying an average rate of 22.98%, up only slightly from six months ago.

And that balance transfer card that is giving you an introductory period of 0%? If that period ran out this week, you would be paying an average rate of 14.67%.

Federal Reserve pushing rates higher

Average rates on new card offers began to rise after the Federal Reserve raised its benchmark interest rate by a quarter of a percent last month. Most major card issuers increased rates by the same amount, pushing the national average to an all-time record, the highest since CreditCards.com started tracking rates in 2007.

But the record isn't likely to last for long. That's because the Fed has signaled it plans to boost rates at least a couple of more times this year. If the economy begins to heat up, they'll likely boost rates even more.

Before that happens, it's a good idea to reduce your credit card balances as much as possible, focusing on the highest interest cards first. And you won't make much headway unless you pay significantly more than the minimum due.

A University of Illinois study found 29% of consumers with credit card balances only pay the minimum each month. That means they take longer to repay the principal and pay more in interest.

Consider this: if you have a $5,000 balance at 16.25% and pay only the minimum of around $51 each month, it would take 19 years to pay it off, and cost you more than $11,000 in interest. But paying $185 a month would repay the debt in about three years.

Increase your payment

Here's a tip: instead of paying the minimum, look at your bill and see what the interest, or finance charge is. Next, figure out how much more you can pay -- then add that amount to the interest charge. Your payment will cover the cost of interest and your additional payment will reduce the amount of what you owe.

Transferring the balance to a credit card with a year or more of 0% interest is another effective way to pay down credit card debt. One of the best choices in a balance transfer card is the Chase Slate card, since it does not charge a balance transfer fee.

Among your New Years resolutions for 2017 may have been paying down your credit card debt.So, how's that working out?True, it has been less than on...

When a modest credit card debt can feel crushing

A large debt with a small income always spells trouble

Hopefully you've been careful with your credit cards this holiday shopping season, staying within your budget.

Otherwise, you could be facing a painful January, when the bill arrives and your credit card balance has ballooned.

CreditCards.com has conducted an analysis of consumers' existing credit card debt, breaking it down by states. It found that Florida, Texas, Georgia, and New Mexico – all Sunbelt states – have four of the five heaviest credit card burdens.

Relative to income

What makes a credit card debt burdensome is its relationship to your income. If you have a high monthly income, putting an extra $2,000 or so on your plastic might not be a big problem. But if you are living paycheck-to-paycheck, it's a very big deal.

For the purposes of the analysis, the researchers measured the average credit card balance against the average monthly income in each state. In the southern states, credit card debts weren't particularly high, but neither were incomes.

Take Florida, for example. Its average credit card debt is a respectable 18th out of the 50 states. But its median income ranks only 41st in the nation.

"It's very hard to get out of debt if you're already stretching every dollar to pay for food, housing and other essentials," said Matt Schulz, CreditCards.com's senior industry analyst.

Transfer balances to a 0% interest card

Schultz says consumers with large credit card balances need to consider signing up for a credit card that offers an introductory period of 0% interest for as long as possible. While there are a number of cards now offering 21 months of no interest on balance transfers, they carry a 3% balance transfer fee.

The Chase Slate Card stands out in that area. It offers a 0% introductory rate for 15 months, and, if you transfer a balance within the first 60 days the account is open, there is no balance transfer fee. If you are transferring a large balance, not having a fee can make a big difference.

At 0% interest, 100% of your monthly payment will go to paying down the balance. Otherwise, a major part of the payment just covers interest, since the typical credit card interest rate is north of 15%.

And speaking of payments, don't just pay the minimum amount due each month. A typical cardholder in Florida making just the minimum payment would take more than a dozen years to payoff a $5,603 credit card bill.

While Florida has the heaviest credit card burden, CreditCards.com found North Dakota has the lightest.

Hopefully you've been careful with your credit cards this holiday shopping season, staying within your budget.Otherwise, you could be facing a painful...

Here are three good low-interest credit cards

They could be more important since the Fed is hiking rates

Now that the Federal Reserve has hiked its short-term interest rate for only the second time in a decade, the interest rate on your credit card balance is likely to go up some.

And if the Fed follows through on its plans for as many as three additional hikes in 2017, that rate could go up even more. So finding a card that offers the lowest possible rate is a good idea.

We checked with three credit card comparison sites to see which low-interest credit cards they were recommending. At CreditCards.com, the editors like the Core Visa credit card from PNC Bank.

"When it comes to low-interest cards, math wins," said CreditCards.com editor-in-chief Daniel P. Ray. "And the PNC Core Visa has an outstanding regular APR that starts at just 10.24%, making it best in its class."

Five points below the average

Ray points out the PNC Core Visa not only offers the lowest interest rate, it's nearly five percentage points below the national average for all credit cards.

The card, which is a relatively new entry to the credit card market, also scores points for its 15-month 0% interest rate on purchases and balance transfers.

Meanwhile, a top choice at NerdWallet is the Citi Diamond Preferred card. It's interest rate ranges from 12.24% to 22.24%, with consumers with the best credit getting the lowest rate.

21 months at 0%

In addition, the Citi Diamond Preferred offers 21 months of 0% interest on purchases, meaning it would cost nothing to finance a major purchase – for example, a new refrigerator.

The card also offers a 21-month 0% interest period on balance transfers, but charges a fee of 3% of the transferred balance.

At CardHub, the editors like the Capital One VentureOne Rewards card when it comes to low interest. It matches the Citi Diamond Preferred's rates of 12.24% to 22.24%.

The VentureOne also provides 0% interest on purchases for the first 12 months. It's also a travel rewards card, paying 1.25 miles for every dollar spent on purchases. One hundred miles equals $1 in travel rewards.

Of course, interest rates are of little importance if you can manage to pay off the credit card balance each month. That way you'll never pay any interest, no matter the rate.

Now that the Federal Reserve has hiked its short-term interest rate for only the second time in a decade, the interest rate on your credit card balance is...

College-sponsored bank and credit card accounts may be pricey

Report finds that many schools put their bottom line ahead of students' best interests

Colleges and universities are often more focused on their bottom line than on their students' financial well-being, the Consumer Financial Protection Bureau (CFPB) warns in a report released today, which raises new concerns about costly fees and risky features that can be attached to certain college-sponsored credit and banking accounts.

“Deals between big banks and schools can drive students into accounts that contain high fees,” said Director Richard Cordray. “Many young people struggle to manage money while at school and we urge schools to put students’ financial interest first.”

The CFPB’s analysis of roughly 500 marketing deals between schools and large banks found that many deals allow for risky features that can lead students to rack up hundreds of dollars in fees per year. The CFPB also issued a bulletin today reminding colleges and universities that they are required to publicly disclose marketing agreements with credit card companies.

“Colleges across the country continue to make deals with banks to promote products that have high fees, despite the availability of safer and more affordable products,” said CFPB Student Loan Ombudsman Seth Frotman. “Students shouldn’t get stuck with the bill when their school inks a deal for an account that’s not in their best interest. ”

A worse deal

The report found that about 10 million students attend a college or university that has made a deal with a financial institution where the college directly markets or allows the promotion of checking or prepaid accounts, often endorsed with a college logo or linked to a student identification card. 

Research has shown that financial products sponsored by colleges or universities can contain high or unusual fees, which can be a worse deal for students than what they can find shopping around on their own. Since Congress passed new consumer protections for credit cards in 2009, marketing partnerships between colleges and universities and financial institutions have largely shifted from credit cards toward sponsored debit and prepaid accounts. 

The CFPB’s analysis of marketing agreements at 500 schools found that some of the nation’s largest colleges and universities continue to maintain deals with large banks that allow for the marketing of products that may not be in the best financial interests of their students, since many of them contain costly features. 

Key findings

Dozens of bank deals with colleges fail to limit costly fees. The Bureau found that dozens of deals with banks for school-sponsored accounts do not place limits on account fees, such as overdraft fees, out-of-network ATM fees, or other common charges.

Some students may pay hundreds of dollars per year in overdraft fees. This is particularly concerning given that a growing body of evidence suggests that small financial shocks—such as a few hundred dollars— can cause significant financial hardship for students and even deter college completion. 

Deals provide financial benefits for banks and schools but offer few, if any, financial benefits for students. The Bureau found marketing agreements between colleges and banks often contain extensive details about how the school and the bank can profit but do not require banks to offer safe and affordable accounts—and may drive students to high-cost products.

Some schools fail to disclose key details of marketing deals with banks, even though they are required to do so.

More information is available at: consumerfinance.gov/students

Colleges and universities are often more focused on their bottom line than on their students' financial well-being, the Consumer Financial Protection Burea...

Rising concern about credit card debt

NerdWallet study says average household owes more than $16,000

Numbers crunchers who follow consumer debt are growing increasingly concerned about rising levels of credit card debt.

As we reported last week, personal finance site WalletHub recently sounded the alarm, reporting that consumers racked up a record $21.9 billion in new credit card debt in the third quarter alone, the largest increase since 2007. It predicts 2016 will end with a net increase of about $80 billion in credit card debt, with the average household owing more than $8,000.

A new report from the personal finance site NerdWallet looks at total consumer debt, putting the total at $12.35 trillion. Credit card debt alone, it says, averages $16,061 per household.

It's one thing to owe money on a mortgage – there is always a cost of putting a roof over your year and right now mortgage rates are low. But the report's authors note that credit card debt is expensive, with the average household with a credit card balance paying over $1,200 in interest each year.

Costs rising faster than wages

"Cost of living continues to outpace wage increases, contributing to increasing debt levels," said Sean McQuay, NerdWallet's credit and banking expert.

But McQuay warns that consumers turning to credit cards just to meet monthly expenses are falling into an expensive debt trap. He says the average credit card interest rate is nearly 19%.

"Paying down credit card debt will mean changing spending habits or increasing earning power, both of which may be difficult adjustments, but they are the only way to build financial freedom," he said.

Consumers resorting to plastic to get through the month is not uncommon. Despite a low official inflation rate, McQuay says cost of living increases have risen faster than incomes over the last 13 years.

Household income is up 28% since 2003, but medical costs have increased by 57% and food and beverage prices rose by 36% during that time.

Debt uncertainty

Meanwhile, a new report from Affirm may shed additional light on the increase in credit card debt. It finds that consumers are more concerned about uncertainty than they are about debt in general.

In other words, if they feel confident in their ability to pay back the debt, they are more likely to take it on.

However, it did find that 60% of consumers have some degree of worry about getting too deeply into debt. Of those who expressed concern about debt, 57% cited a fear of “getting in over their heads” as the main reason for that concern.

Numbers crunchers who follow consumer debt are growing increasingly concerned about rising levels of credit card debt.As we reported last week, persona...

Another reason to skip the extended warranty

Your credit card probably already provides one

No doubt as you check out with your holiday purchases this month, the clerk will pitch you on buying some kind of extended service plan. It will provide coverage beyond the manufacturer's warranty, you will be told.

Often called “extended warranties,” these service agreements are mini insurance policies and their coverage can vary. It might be pretty good, but chances are there are a lot of gaps and loopholes.

The point is, unless you have done your homework on this particular store's extended warranty ahead of time, you really have no way of knowing whether it's good or not. So faced with making a snap judgment while standing in the checkout line, you might just want to take a pass.

And if you're paying with the right credit card, you might already be covered. Our friends at CreditCards.com have reminded us that 81% of credit cards provide their customers some level of extended warranty protection on purchases.

Check your credit card's policy

So the first step is checking your credit card company's policy. CreditCards.com has found that the typical card with extended warranty protection will extend the original manufacturer's warranty by two years at no cost, as long as the entire purchase is made with the card.

There are exceptions, so it's important to know what they are. Motorized vehicles -- as well as their parts -- computer software, and medical equipment are among the most common exclusions.

Chase's extended protection program adds an additional year to manufacturer's warranties of up to three years when the item is purchased with an eligible Chase card. Chase also provides a benefits administrator that can keep warranty information on file for easy access.

American Express also provides an additional year of protection. The coverage is embedded in card membership and requires no enrollment. If your claim is approved, American Express says you will get reimbursement equal to the value of your defective item up to $10,000.

If you feel you need extended coverage beyond the manufacturer's warranty and what protection your credit card provides, consider a third-party provider of buyer protection plans, which can cover your purchase well after you've bought it.

No doubt as you check out with your holiday purchases this month, the clerk will pitch you on buying some kind of extended service plan. It will provide co...

Fintech firms may soon be licensed as national banks

Licensing online-only institutions would be good for business and consumers, regulator says

So-called "fintech" firms may be gaining more legitimacy while also facing stiffer regulation, Comptroller of the Currency Thomas J. Curry said today as he announced that his office will move forward with licensing financial technology companies as special purpose national banks.

Companies like Lending Club and Prosper now make loans to consumers using funds invested by individuals and institutions. Typically, they charge lower interest rates and have a faster approval process than commercial banks, while returning higher earnings to investors.

Licensing by the OCC would provide a higher level of assurance that the companies are following sound banking policies, Curry said, while also encouraging their development.

“First and foremost, we believe doing so is in the public interest,” Curry said in remarks at the Georgetown University Law Center. “It is clear that fintech companies hold great potential to expand financial inclusion, empower consumers, and help families and businesses take more control of their financial matters.”

Empowering consumers

Considering fintech charter applications provides businesses a choice without creating a requirement to seek a charter. Companies that seek a charter are evaluated to ensure they have a reasonable chance of success, appropriate risk management, effective consumer protection, and strong capital and liquidity, Curry said.

The national banking system and the OCC were established by President Lincoln more than 150 years ago, in part to help the United States finance the Civil War. Since then, technology has changed the face of banking and many believe the fintech sector will grow substantially as the technology-friendly Millenial generation ages. 

A white paper with more details is available on the OCC website

So-called "fintech" firms may be gaining more legitimacy while also facing stiffer regulation, Comptroller of the Currency Thomas J. Curry said today as he...

Credit accounts surge just before Black Friday

But point-of-sale incentives usually not that attractive

Each November, just before Black Friday, there's a big spike in new credit card accounts. Equifax, one of the three credit reporting agencies, says it's happened each year since 2012.

Between the Sundays before and after Black Friday, Equifax says it has observed an average 50% increase in new credit accounts. New accounts peak on Black Friday itself, when consumers increase new accounts on average three fold.

The last four years have shown a consistent pattern in where these new accounts are opened. Furniture stores open the most, followed by department stores, jewelry stores, electronics retailers, and clothing stores.

Responding to a pitch

But the evidence suggests consumers aren't opening these accounts because they suddenly decide they need more credit. Usually, they are responding to a pitch by a retailer.

"Furniture stores tend to have high-value incentives linked to store credit which drive purchases and likely account for their leading position in terms of credit issuance in the retail credit space," said Gunnar Blix, deputy chief economist, Equifax.

But Blix says even when bombarded with these incentives, Equifax has noticed “a modest trend toward consumers showing more restraint in credit card usage."

That's probably a good thing, because responding to a store's offer of a discount if you will open a store credit card on the spot is not always attractive for every consumer.

Cash-back credit card a better deal

For example, if you carry a cash-back credit card, it's probably a better deal to use that, especially if it is a big ticket item and you plan to carry a balance for a while.

CreditCards.com recently reported that store-branded credit cards are pretty expensive for consumers who carry a balance. It cited research showing Big Lots charges 29.99% interest on its store card, Zales charges 29.24%, and Staples charges 28.24%.

On average, store cards charge 23.84% interest, more than 8% higher than the average credit card. And while retailers usually offer consumers some kind of incentive to sign up for a card, it usually carries a value of around $25, the study found.

"With their outrageously high APRs, most consumers would be wise to steer clear of these cards unless they're 100% certain they can pay their balance off every single month," said Matt Schulz, CreditCards.com's senior industry analyst. "And even then, there are plenty of general-purpose credit cards with better sign-up bonuses."

An exception, of course, is if a consumer doesn't have very good credit and does not have access to a rewards credit card. In that case, a store charge account could help build credit, assuming payments were made on time. But the higher interest rates should definitely be a concern for those consumers planning to carry a balance on a higher interest store card.

Each November, just before Black Friday, there's a big spike in new credit card accounts. Equifax, one of the three credit reporting agencies, says it's ha...

Three good hotel rewards credit cards

The Starwood Preferred Guest card from American Express tops the list

Not all travel rewards credit cards are alike. In addition to the variety of perks they offer, they tend to also reward different kinds of travel.

An airline card rewards frequent flying. A gasoline card provides extra cash back when you fill up. And a hotel credit card can give you a free night's stay here and there. Sometimes, it can give you a lot more.

When it comes to hotel credit cards, the card comparison site CreditCards.com singles out the Starwood Preferred Guest card as number one in its class. It sets itself apart with its flexibility.

It not only provides hotel perks, its points can be transferred to more than 30 airline loyalty programs, usually without any loss of points. And because Starwood points are generally worth more than other card points, cardholders usually get more bang for their buck.

All about flexibility

"To me, a good rewards card is all about flexibility," says CreditCards.com senior industry analyst Matt Schulz. "While the Starwood card doesn't have the flashiest sign-up bonus in the bunch, it does give cardholders plenty of options beyond just free hotel nights."

Starwood Hotels is owned by Marriott and operates more than 1,200 hotels under 11 brands, including Westin, Sheraton, and St. Regis.

New cardholders earn 25,000 bonus points after spending $3,000 during the first three months the account is active. There's a $95 annual fee that is waived the first year.

Other options

CreditCards.com also likes the Hilton HHonors Reserve credit card from Citi. New cardholders get rewarded with two free weekend nights at a Hilton hotel after spending $2,500 in the card's first four months.

Cardholders also receive an extra weekend night certificate every year when they spend at least $10,000. Other perks include trip cancellation and interruption protection, lost baggage insurance, and other extra insurance benefits.

“The only downside is Hilton points tend to be worth significantly less than the average card rewards point,” CreditCards.com says.

A third alternative is the Club Carlson Rewards Visa Signature card. CreditCards.com is impressed with its initial sign-up bonus – 50,000 points with the first purchase and 35,000 more after spending $2,500 in the first 90 days.

Cardholders can also earn 40,000 points and a free night every year if they spend $10,000 or more. But just like the Hilton HHonors Reserve card, the points provided by the Club Carlson card tend to be valued less than the industry average.

Not all travel rewards credit cards are alike. In addition to the variety of perks they offer, they tend to also reward different kinds of travel.An ai...

Retailer group rebels against Visa network

Claims new EMV terminals steer debit purchases to more expensive network

The nation's retailers appear to be renewing their feud with credit card companies over the fees they charge for processing credit and debit purchases.

Earlier this week, the National Retail Federation (NRF) filed a friend-of-the-court brief in support of the Justice Department motion that the full Second Circuit Court of Appeals hear its case against American Express. The government maintains American Express is still blocking retailers from suggesting customers use a different card, in violation of the law.

Now, the NRF has sent a letter to Visa, asking that it stop using new EMV terminals to steer debit card transactions to its own processing network, which NRF says is more expensive for retailers to use.

In a letter to Visa CEO Charles W. Scharf, NRF points out the Federal Reserve has said Visa's action run counter to the law.

More expensive choice

NRF complains that many credit/debit card readers installed since the card industry began implementing new EMV chip card technology present debit card users with a screen that asks them to choose between “Visa Debit” and “U.S. Debit.”

Though they don't know it, when consumers choose Visa Debit, their transaction is routed over Visa's more expensive network. Instead of a PIN, the consumer is usually required to use only a signature to approve the transaction.

On the other hand, when a consumer chooses the U.S. Debit option, NRF says the transaction goes over the retailer’s choice from about a dozen competing networks that charge merchants less but provide more protection by allowing the use of a secret, secure PIN.

“Visa charges more and offers less security while the competition charges less and does a better job of keeping consumers’ debit cards safe,” NRF Senior Vice President and General Counsel Mallory Duncan wrote.

Retailers say they should choose

Duncan says retailers should be allowed to choose the processor that provides the best value and offers their customers the best protection. He says that's what the law requires.

Why should consumers care? NRF says when costs rise for retailers, those costs get passed along to consumers in the form of higher prices.

NRF claims Visa is steering transactions toward the Visa network, and that the higher fees charged by Visa must be built into the cost of merchandise, ultimately contributing to higher prices paid by consumers.

The organization says the Fed ruled in early November that Visa's actions violate a 2010 debit card reform law that says retailers must be allowed to choose between at least two unaffiliated networks to process debit transactions.

The nation's retailers appear to be renewing their feud with credit card companies over the fees they charge for processing credit and debit purchases....

What to do if you can't get credit because of your credit report

Consumers have the right to see the damaging information

It can be one of life's more unpleasant circumstances. You get ready to purchase a car, a big screen TV, or other major purchase requiring credit, and the deal falls through.

The seller pulls your credit report and suddenly the deal is off. You might be embarrassed, or even angry, but the important thing to do is find out what was in your credit report that raised the red flag.

The Federal Reserve points out consumers have some rights in this area. For example, if you don't get a job or are turned down for insurance or credit of any type because of information in your credit report, you are entitled to know which credit bureau provided the information. Then, if you ask for it within 60 days, you can get a free copy of the report from the credit agency. This will not count against the free credit reports you are entitled to from all three agencies once a year.

Credit report can alter terms

Sometimes, a lender will not deny credit, but will offer less favorable terms than you expected, based on what he or she found in your credit history. The lender may give you a notice with information about the credit bureau that provided the credit report used to make the decision. Once again, the agency is required to provide you with a free copy of the report if you request it within 60 days.

Besides satisfying your curiosity, obtaining the document is a good idea. There is always the possibility that your credit report contains inaccurate information. There have been cases where portions of other consumers' credit histories have gotten mixed up in the wrong report.

Disputing incorrect information

When you find mistakes in your credit report, you are entitled to dispute the information and request that it be either deleted or corrected. To do that, you need to contact the credit bureau that issued the report or the company or person reporting the wrong information to the credit bureau.

The credit bureaus each have their own way of going about it. The process starts online at Equifax, Experian, and TransUnion.

Once you dispute an item in your credit report, it must be investigated, usually within 30 days. Once the investigation is complete, you are entitled to a written report of what was found.

It can be one of life's more unpleasant circumstances. You get ready to purchase a car, a big screen TV, or other major purchase requiring credit, and the...

Consumers battered by financial crisis getting their credit back

It's been seven years since many of these people lost their homes to foreclosure

It takes seven years for a foreclosure, short sale, or bankruptcy to come off a consumer's credit report.

Since the height of the foreclosure tsunami was 2009, a lot of former homeowners, whose credit has been practically non-existent since then, are getting back on their financial feet.

According to an analysis by Experian, one of the three credit agencies, 2.5 million consumers will see their credit standing improve sharply between last June and next June. Of these, the credit agency says 68% are scoring at near-prime or higher credit levels.

Back in the credit market

It means that millions of consumers, largely shut out of the credit market since 2009, will be able to take out loans again. Those who want to buy a home again will most likely qualify for a mortgage, putting even more pressure on extremely tight inventory levels around the country.

Experian also reports that formerly foreclosed or bankrupt borrowers who have already shed those events from the credit reports have returned to the credit markets in large numbers and, by and large, are showing good financial behavior.

The Experian analysis shows 29% of consumers who sold short between 2007 and 2010 have opened a new mortgage, with a delinquency rate that is a full percentage point below the national average.

Win-win

"With millions of borrowers potentially coming back into the housing market, the trends that we're seeing are promising for both the mortgage seeker and the lender," said Michele Raneri, vice president of analytics and new business development at Experian.

Raneri predicts that in the years ahead, these so-called “boomerang borrowers” will be a critical segment of the real-estate market, and perhaps could propel prices still higher.

The Experian report shows that homeowners who had a foreclosure in the past but now have qualified for a mortgage have an average credit score of 680, more than 20% higher than their score at the time of foreclosure.

The record is even better for consumers who sold short. Those who have now qualified for a new mortgage have an average credit score of 706, up 16.5% from when they were forced to sell.

It takes seven years for a foreclosure, short sale, or bankruptcy to come off a consumer's credit report.Since the height of the foreclosure tsunami wa...

Will mobile wallets make headway this holiday season?

Fin-Tech executive says they can increase consumer security

What will you use to make your holiday purchases this year? Consumers concerned about compromised credit or debt card information may choose cash.

A survey by TransUnion shows consumers are probably going to use a mix of payments to buy things this year, with 74% saying they plan to pay for at least some of their purchases with cash.

But 80% of parents with children under 18 said they will be using credit cards, with 89% of dads and 73% of moms saying they expect to pay off all their holiday spending within three months.

Vincent Alimi, Vice-President, Product & Innovation at Mobeewave, a Montreal-based Fin-Tech firm, says consumers shouldn't overlook using a mobile wallet when they shop. He says there are five good reasons to pay with a mobile wallet, including security. In terms of fraud reduction, he says mobile wallets use a surrogate card number.

Real-time transaction alerts

“Unlike when you use a credit card, details such as your PIN, name or consumer behavior are not shared when you use a mobile wallet,” Alimi said in an email to ConsumerAffairs. “They also include practical features, such as fingerprint verification to unlock the payment functionality, and real-time transaction alerts.”

But wait, don't credit cards offer generous rewards? They do, but Alimi says consumers can still reap rewards by adding retailer loyalty and reward cards to a mobile wallet. In fact, you can use your rewards credit card with a mobile wallet.

Sometimes called “contactless” payment systems, a mobile wallet is a way to carry your card information in a secure, digital form on your smartphone. Instead of using your actual plastic card to make purchases, you can pay with your smartphone, tablet, or smartwatch, simply by holding it close to an equipped point-of-sale terminal.

Faster check-out

Alimi also says mobile wallets get you checked out faster, while the transition to EMV “chip” cards has slowed things down. He says paying with a mobile wallet makes it easier to shop online and also harness the various complementary features on your smartphone.

“Not only can you keep track of your transaction history, you can also ensure you never have to deal with the embarrassment of having your maxed out credit or debit card declined at the checkout,” he said.

Apple Pay may be the most widely used mobile payment system, allowing consumers to pay with their iPhones in about three million locations in the U.S. Samsung has a competing mobile wallet for its Android phones.

What will you use to make your holiday purchases this year? Consumers concerned about compromised credit or debt card information may choose cash.A sur...

Consumers rejected for credit cards take it personally

But knowing why you were rejected can help you get accepted next time

Lenders tend to be cold and objective when they decide whether or not to grant a consumer's credit card application. Meet the requirements and you get a card. Fall short, and you don't.

Consumers don't look at it quite the same way. A new survey from NerdWallet shows we tend to take it personally when a bank says no. The survey found 70% of consumers would stop doing business with a bank that turned down their credit card application.

Rejection of any kind usually is hard to take. But the survey suggests there's an additional ingredient when it comes to financial matters. If a bank declines to extend you credit, you believe it to be a reflection on your financial standing.

It's embarrassing

About half of consumers said a credit card rejection would be embarrassing and they would not tell family or friends about it. About a third believe people who are rejected for a loan or credit card are irresponsible with money, which is far from the case.

If you are rejected for a credit card, the lender is required by law to tell you why. Knowing the reason may not only make you feel better, it can be useful information. In many cases, knowing the reason why you were turned down can guide you to a lender who would be happy to open an account for you.

In many cases, consumers apply for credit cards that are designed for consumers with higher credit scores. That's important, because these cards usually have lower interest rates and more generous rewards. That's because the lender considers these high credit score consumers a better risk.

However, the very same lender may have other credit cards that don't have those stringent requirements. Your chances of success may be much better if you apply for a card within your credit score range.

A number of reasons for rejection

As NerdWallet points out, consumers get rejected for a number of reasons, not just because they have bad credit. They might have too much outstanding debt, a thin credit history, or insufficient income.

That's why before applying for a card, it's a good idea to obtain your credit score and review your credit report, to make sure the information in it is accurate. Once you know your score, look for a card targeted to other consumers in your range.

Many of the credit card comparison websites list credit cards available for those with “excellent,” “good,” “fair,” and even “bad” credit. So, with a 640 credit score you probably are not going to qualify for the Capital One Venture Rewards Card, which is heavily advertised on TV. But you probably will qualify for the Credit One Bank Unsecured Visa.

It doesn't have the advantages of cards designed for excellent credit, but it will give you the chance to show you can use a credit card responsibly and raise your credit score so that you'll soon have more credit options and fewer rejections.

Lenders tend to be cold and objective when they decide whether or not to grant a consumer's credit card application. Meet the requirements and you get a ca...

Three highly rated airline credit cards

Consumers who travel a lot might benefit from one of these

Consumers should be aware by now that there are big advantages to using a rewards credit card, and in particular, a card that rewards certain things.

For example, most consumers are probably better off with a cash-back credit card, which pays as much as 2% on all purchases or as much as 5% on certain categories.

But frequent air travelers might profit more from using a card that rewards in miles. We've identified three such cards that are worth a look.

Capital One VentureOne Reward

Consumers who carry the Capital One VentureOne Reward Card earn an unlimited 1.25 miles on every purchase, making it easy to rack up miles. As an added bonus, there is no annual fee – a rarity in this class of credit card.

When you earn 100 miles, you've earned $1 dollar in travel rewards. But the rewards come a lot faster for new cardholders, who get 20,000 bonus miles if they make $1,000 in purchases within the first three months of card activation.

You can redeem your miles as a statement credit. As added perks, the rewards don't expire and you can carry a balance the first year without paying any interest.

Barclaycard Arrival Plus World Elite MasterCard's Rewards

Another good choice for frequent travelers is the Barclaycard Arrival Plus World Elite MasterCard's Rewards Card. You earn two times the miles on all purchases.

Right off the bat, new cardholders get 50,000 bonus miles if they spend $3,000 in the first 90 days of card activation. That adds up to a $500 travel statement credit.

The miles don't expire and you get 5% miles back every time you redeem, to use toward the next redemption. There's an $89 annual fee, but it's waived the first year. The card also has a 0% introductory balance transfer rate for 12 months if the transfer is made within the first 45 days.

Gold Delta SkyMiles Credit Card from American Express

For consumers who find themselves flying Delta most of the time, the Gold Delta SkyMiles Credit Card from American Express might be a good fit. It pays two miles for every dollar spent on purchases made directly with Delta, and a mile for every dollar spent on all other eligible purchases.

New card members earn 30,000 bonus miles if they make $1,000 in purchases within the first three months of card activation and earn an extra $50 statement credit just by making a Delta purchase during that time.

There are also some air travel-specific perks as well. Card members can check their first bag for free on every Delta flight, saving $100 on a round-trip. They also enjoy jumping to the head of the line with priority boarding.

There's a $95 annual fee, but it's waived the first year.

Consumers should be aware by now that there are big advantages to using a rewards credit card, and in particular, a card that rewards certain things.Fo...

Should you open a store credit account?

If you already have a general purpose credit card, probably not

When checking out at a chain department store, the clerk might ask if you would like to open a charge account and get 10% off your purchase. Should you? Probably not.

Long before Visa and Mastercard were household names, most consumers carried a number of store charge cards. It made buying things easier, since you didn't have to write a check or pay cash, just about the only other options in those days.

So why shouldn't you have a store charge card these days? If you can qualify for a rewards or cash-back credit card, that's a much better deal.

Nearly 30% interest

In fact, CreditCards.com reports that store-branded credit cards are pretty expensive for consumers who carry a balance. For example, its latest study shows Big Lots charges 29.99% interest on its store card, Zales charges 29.24%, and Staples charges 28.24%.

The study found the average store card charges 23.84% interest, more than 8% higher than the average credit card. And while retailers usually offer consumers some kind of incentive to sign up for a card, it usually carries a value of around $25, the study found.

"With their outrageously high APRs, most consumers would be wise to steer clear of these cards unless they're 100% certain they can pay their balance off every single month," said Matt Schulz, CreditCards.com's senior industry analyst. "And even then, there are plenty of general-purpose credit cards with better sign-up bonuses."

Might help improve a credit score

True, but there is a useful purpose for a store charge card. For someone with weak credit, opening a store account, making a small purchase and immediately paying it off, can be a way to boost a credit score. Eventually, his or her credit score should be high enough to qualify for a credit card.

One reason store cards charge such high interest is they are easier to get than a regular credit card – for the lender, there's a higher risk. Having a store card or two and not running up a balance helps establish credit. But with such high interest rates, carrying a balance on these cards should be avoided at all costs.

When checking out at a chain department store, the clerk might ask if you would like to open a charge account and get 10% off your purchase. Should you? Pr...

Why you should do your holiday shopping with a credit card

The rewards can be significant

The holiday shopping season is fast approaching and surveys have shown that many consumers have been making purchases since Labor Day.

So now might be a good time to point out that if you plan to do a lot of end-of-the-year spending, doing it with a rewards credit card might help you save as much money as hitting the stores early on Black Friday.

In recent years personal finance experts have emphasized rewards credit cards as an easy way to save money. Like any credit card, a rewards card needs to be used responsibly, but if utilized to make purchases you would ordinarily make with a debit card or cash, credit card purchases can put money in your pocket.

How much varies from card to card, but the folks at Discover have rolled out some special holiday promotions, upping the rewards consumers can earn during the holidays, using the Discover it Card or Discover it for Students. Both cards normally pay 1% on all purchases but also have special quarterly promotions.

5% bonus

For example, for the fourth quarter Discover will pay a 5% cashback bonus on purchases at Amazon.com, department stores, and Sam's Club – places where consumers probably do the lion's share of their shopping. The 5% bonus applies to a total purchase amount of $1,500. Above that, any additional spending earns the regular 1% cash back.

“We try to make sure that we don't make our program complicated,” Maureen Powers, vice-president of rewards for Discover, told ConsumerAffairs. “We don't want customers to have to start planning how they are going to earn their rewards, or having to do math.”

Added bonus for new customers

There's an even better payoff for consumers who just recently obtained a Discover it Card, or plan to get one soon.

“Our card members can earn Cash Back Match,” Powers said. “They are earning all of these rewards, and then at the end of the first 12 months that they have the card, we will double all of those rewards.”

How much can that add up to? Let's assume you are a new cardholder who ends up spending $1,750 at Amazon, a number of department stores, and Sam's Club. You earn $75 on the first $1,500 and $2.50 on the difference between $1,500 and $1,750. Then, because you qualify for Cash Back Match, the amount is doubled for a total of $155 in cash rewards.

Powers also says Discover offers price protection, in case you find the item you purchase later at a lower price.

“What consumers will do is send in the receipt and show where they found a better price, and Discover will refund the difference up to $500, if you do it within 90 days of the purchase,” she said.

While doing your holiday shopping with cash may keep you from overspending, it doesn't put money in your pocket. But it bears repeating, using a rewards credit card for all your holiday purchases will only put you ahead if you exercise discipline and don't over-spend.

The holiday shopping season is fast approaching and surveys have shown that many consumers have been making purchases since Labor Day.So now might be a...

Six credit cards that pay you at least $1,000 for opening an account

But three of them carry annual fees of $450

Rewards credit cards have grown in popularity as consumers have realized they can get a little money back every time they make a purchase.

Some cards pay 3% on some purchases, some pay 1% or 2% on every purchase. It isn't a lot of money, but it can add up over time.

What sometimes gets overlooked are the bonuses some credit card companies pay, just for opening an account. It's just a one-time payment, but it can be significantly more than the cash back you earn on purchases.

CreditCards.com, a card comparison site, has looked into these sign-up bonuses and reports six credit cards will pay consumers at least $1,000 for opening an account. None of them are cash back cards and all of them charge an annual fee, so that will have to be figured into the equation.

$1,500 sign-up bonus

The Chase Sapphire Reserve Card hands out rewards based on points. Right off the bat, it will give you 100,000 bonus points if you spend $4,000 in the first three months the account is open. More impressive, it will pay you a bonus of $1,500.

But hold on, the card charges an annual fee of $450. That might not be a complete disqualifier, depending on your spending patterns. But if you can't make the points pay off, that $1,500 sign-up bonus will pay for the first three years of annual fees.

The Chase – British Airways Visa Signature Card, as the name suggests, is a travel rewards card based on points. Just for signing up, it will award you 50,000 bonus points if you spend $3,000 in the first three months. It will also pay you a signing bonus of $1,145. Compared to the Chase Sapphire Reserve, its annual fee is a bargain – $95.

$450 annual fee

TheRitz-Carlton Rewards Credit Card pays $1,080 as a sign-up bonus. It also provides three complimentary nights at a tier 1-4 Ritz-Carlton hotel, if you spend $5,000 in first three months. To get that, however, you also have to pay a $450 annual fee.

Another travel rewards card, the Chase – Fairmont Visa Signature Card, pays $1,000 as a bonus for opening an account. On top of that, you get two free nights when you spend $3,000 in the first three months. You pay no annual fee the first year, but $95 a year after that.

The Citi/AAdvantage Executive World Elite MasterCard, affiliated with American Airlines, also pays a $1,000 sign-up bonus and awards you 50,000 points if you spend $5,000 in the first three months. It carries an annual fee of $450.

All five cards carry attractive perks and features, but whether they will be useful or cost effective will all depend on your travel habits and spending patterns. And while the sign-up bonuses are attractive, steep annual fees should not be overlooked.

Rewards credit cards have grown in popularity as consumers have realized they can get a little money back every time they make a purchase.Some cards pa...

Three good credit cards for gasoline purchases

Pick a rewards card that rewards you at the pump

With gas pumps in the U.S. equipped with credit card readers, and stations requiring you to go inside and pay in advance if using cash, you'll save a lot of time when you fill up by paying at the pump.

And with credit card cash back rewards programs, you'll save money as well as time. But choosing a credit card that rewards fuel purchases is important. Here are three that do just that. All three do not have an annual fee, which can significantly cut into an rewards you might receive.

BankAmericard Cash Rewards

One of the best credit cards to use for gasoline purchases is the BankAmericard Cash Rewards Card. It pays 3% cash back on gasoline purchases – among the best in the industry – but has a few limitations you need to know about.

First, you'll get 3% only on the first $2,500 in spending per quarter at gas stations, as well as supermarkets and warehouse clubs -- so purchases at supermarkets and warehouse clubs, which pay 2% cash back, will detract from your potential gas saving. If you use the card only for gasoline purchases, however, your potential cash rewards is $75 a quarter, or $300 a year.

As an additional perk, the card has a 0% interest introductory period on purchases and balance transfers. But it should be pointed out that gasoline purchases should be paid off monthly and not allowed to accumulate in a huge balance, even if it isn't racking up interest charges.

Chase Freedom Unlimited

While it doesn't have a separate gasoline rewards category, the Chase Freedom Unlimited makes the list because it pays a generous 1.5% cash back on every purchase, including gasoline. And as the name implies, it is unlimited. There are no annual or quarterly caps. It's good for consumers who do a lot of driving all year round.

There is a lot of flexibility in how you use the cash rewards and they never expire, as long as the account remains open. You get a $150 cash bonus after spending $500 the first three months after activating the account.

It also has a 0% introductory period on balance transfers, but the balance transfer fee is 5%.

Blue Cash Everyday Card from American Express 2%

The Blue Cash Everyday Card from American Express is another attractive option for gasoline purchases. It pays 2% cash back on what you spend at the pump. It also pays 3% cash back on spending at supermarkets, and 1% on all other purchases. The higher rates at gas stations and supermarkets, however, only apply to the first $6,000 of spending each year. After that, all purchases earn 1%.

Since most consumers do most of their spending at the supermarket and gas station, a smart strategy is to have both the BankAmericard and the Blue Cash card. Use the BankAmericard only for gas purchases, earning 3%. Use the Blue card only at the grocery store, which will also earn 3%.

With gas pumps in the U.S. equipped with credit card readers, and stations requiring you to go inside and pay in advance if using cash, you'll save a lot o...

Prepaid cards get new federal protections

Consumer Financial Protection Bureau issues new rule to cover all prepaid cards

The Consumer Financial Protection Bureau (CFPB)  has issued a new rule covering prepaid debit cards, providing a series of new consumer protections. The rule goes into effect October 1, 2017.

Consumers often use these cards instead of bank accounts. Money can be directly loaded on the cards, which can be used to make purchases or pay bills. The problem for consumers has been the fees associated with the cards and the lack of transparency for some of them.

That's because not all of these cards are the same. The cards have their distinct set of features, functions, and fees. Right now, it can be hard to compare cards because each card displays fee information differently.

The CFPB says the new rule will require clear, upfront information about fees so consumers will more easily shop for the best deal.

Reins in overdraft fees

The rule also tightly regulates overdraft fees connected to prepaid cards, which Nick Bourke, director of consumer finance at the Pew Charitable Trusts, is one of the most important features.

“The CFPB’s rule on prepaid cards is a big win for consumers,” Bourke said in an email to ConsumerAffairs. “First and foremost, it keeps the cards free from overdraft penalties, which aligns with consumers’ preferences.”

Bourke points to research that shows many consumers turn to prepaid cards to control spending and to avoid overdraft fees.

“Moving forward, we strongly encourage the bureau to rein in these harmful fees for checking accounts, the most widely used financial product in the U.S.,” he said.

Growing use

The use of prepaid cards has rapidly grown since the financial crisis, when many consumers joined the “unbanked” population. But Pew researchers say the cards are also widely used by people who also have bank accounts.

Use of prepaid cards rose more than 50% from 2012 to 2014, driven primarily by increased adoption among consumers with bank accounts, with approximately 23 million U.S. adults regularly using prepaid cards, according to Pew data.

Pew found that 72% of unbanked consumers and 45% of those with bank accounts say they use prepaid cards to avoid overdraft fees. A huge majority – 86% – prefer to have a transaction declined for insufficient funds than pay a $35 overdraft fee.

The rule also provides new features to make sure prepaid cards are safer to use at retail point-of-purchase locations and online. Currently, if an unauthorized person accesses a prepaid cardholder's account, the level of protection depends on the issuer. Under the new rule, there will be universal protections for all cards in case they are lost or stolen.

The Consumer Financial Protection Bureau (CFPB)  has issued a new rule covering prepaid debit cards, providing a series of new consumer protections. The ru...

Should you cancel your fraudulent Wells Fargo credit card?

Doing so will probably lower your credit score, at least for a while

What if you are one of the two million Wells Fargo customers who recently discovered that the bank opened a fraudulent bank or credit card account in your name?

If so, you're probably angry, since you didn't ask for the card. So you'll show them – you'll close the account.

But not so fast. Closing a credit card account, even one opened in your name without your permission, can negatively impact your credit score. So you might not want to act until you are able to figure out what the damage will be.

Diane Moogalian, Vice President, Customer Operations at Equifax, one of the three main credit agencies, says closing a credit card account that has no balance will reduce the amount of credit at your disposal. Often, she says, that can be a mark against you.

“Lenders and creditors want to see that a consumer is able to make a financial commitment and honor it – over time," Moogalian told ConsumerAffairs. “In other words, that ability to show responsibility can take time, and sometimes keeping an account open can be a good thing.”

But if you don't want the credit card, you will probably suffer less of a hit by closing it if the card has a low credit limit. Chances are, most of the fraudulent accounts have low credit limits. By closing it, you aren't reducing your credit availability that much.

Is it costing you money?

Moogalian says a consumer may also want to consider closing an account that has no balance if that account is costing money. The trade off between spending unnecessary money and having your credit score go down temporarily should go in favor of not spending money needlessly.

How much will closing a credit card account affect your credit score? It depends on how much credit you have, how much you've used, and how good your credit is.

If you have a total credit limit of $20,000 on all your cards but only have balances totaling $4,000, you have a low credit utilization rate and closing an account that reduces your limit by only $1,000 or so won't make a lot of difference, especially if you already have a pretty good credit score.

And if you do have a good credit score, the hit you take for closing your Wells Fargo account should be fairly small and short-lived. By continuing to pay all your bills on time and not opening new credit lines for a while, your score should quickly recover.

What if you are one of the two million Wells Fargo customers who recently discovered that the bank opened a fraudulent bank or credit card account in your...

Should you be paying with a cash-back credit card?

If you have the discipline to pay the bill in full each month, it will pay off

A new survey of college students by Discover has found that overall, they are managing their money wisely.

Once upon a time, students were bombarded with credit card offers the first week they arrived on campus, sometimes with predictable bad results. Reform legislation put an end to that and students appear to now be choosing the card that best suits their needs.

Or are they?

The Discover survey contends that students are leaving money on the table by not selecting the most advantageous cash back credit card. In fact, the survey found that 45% of students prefer to pay for everyday purchases with their debit card.

There's a lot to be said for that. Using a debit card takes money directly from your bank account, so you don't spend money you don't have. On the downside, debit cards can be a little riskier when it comes to fraud. They usually don't provide much in the way of rewards and don't boost your credit score.

Cash back cards

The point of the survey, of course, is to highlight Discover's cash back credit card for students – the Discover It for Students Card.

Fair enough – here's what the card offers: 5% cash back in rotating categories and 1% cash on everything else. The card offers a match of all cash back at the end of the first year for new card members. It pays $20 each school year the cardholder maintains a 3.0 or higher grade point average, up to five years.

Meanwhile, CreditCards.com has picked the Citi Double Cash card as its choice of the best cash back credit card. It pays 2% for all general purchases – 1% when the purchase is made and 1% when the bill is paid.

Simpler is better

"When it comes to credit cards, the simpler, the better," said Matt Schulz, CreditCards.com's senior industry analyst. "Unlike many cash back cards, the Citi Double Cash card doesn't make you chase bonus categories. It just gives you up to 2% cash back on everything."

The problem with putting everything on a credit card is it is easy to lose track of your spending. When the bill is bigger than you anticipated, it's easy to let much of the balance slide to the next month. That is how big credit card balances begin.

But it you have the discipline to pay your balance in full each month, a cash back credit card is like getting a small discount on every purchase. You just have to choose the card that makes the most sense for you.

Blue Cash Preferred from American Express

In addition to the Discover It for Students Card and the Citi Double Cash card, the Blue Cash Preferred card from American Express is worth checking out, even though it carries a fairly steep annual fee of $95.

Ordinarily, an annual fee is a deal-breaker, since there are so many good choices that don't have a fee. However, the Blue Cash Preferred offers 6% cash back on groceries on up to $6,000 of spending per year, and 3% cash back at gas stations and some department stores.

It's not a good choice for college students on a budget, but for large families that spend a lot each month, it might pay off.

A new survey of college students by Discover has found that overall, they are managing their money wisely.Once upon a time, students were bombarded wit...

Subprime borrowers increase credit access

Experian report also shows delinquency rate is down sharply over five years

The latest Experian Market Intelligence Brief shows the financially-weakest consumers in the U.S. are getting more access to credit.

The report reveals that in the first half of this year, credit limits for consumers in the subprime and deep subprime categories totaled $6.4 billion. That amounts to the largest amount of available credit to those groups in the last five years.

This is consistent with a report last month by Liberty Street Economics, a group affiliated with the Federal Reserve Bank of New York, which reported subprime consumers had increased their use of credit cards.

That can be a double-edged sword. On the plus side, subprime and deep subprime consumers are the most likely to take out a payday loan, which can begin a spiral of unending debt. Having access to a credit card for an emergency expense, if managed properly, can be a good thing.

On the downside, and what may worry some policymakers, is the fact that subprime debt has gotten out of control in the past. The housing bubble was fueled in part by people buying homes they couldn't afford, using subprime mortgages that had low payments at first but higher payments later on. That led to the collapse of the housing market.

Mixed results

The Experian report shows mixed results in that area. Credit card delinquencies in the first half of 2016 are up 7% over the first half of 2015. However, when spread over five years, subprime delinquencies are down sharply.

Overall, the report's authors say all consumers are doing a good job of meeting their credit card commitments since delinquency rates have fallen by 43% from the second quarter of 2011 to the second quarter of this year.

"Consumers credit card behavior improved since exiting the recession as evidenced by the growth of credit card limits in particular among the subprime credit card market," said Kelly Kent, vice president of Experian Decision Analytics. "Yet, even with the solid improvements, the year-over-year figures indicate a slight increase in delinquency rates."

Looked at geographically, credit card delinquency rates improved by double-digits in 32 states over a five-year period. Consumers in Washington, California, and Oregon improved the most, followed by New Hampshire and Hawaii.

The latest Experian Market Intelligence Brief shows the financially-weakest consumers in the U.S. are getting more access to credit.The report reveals...

How to select the best credit card

Money magazine consults with NerdWallet to offer the top picks

The “best credit card” is a pretty subjective label. It's all going to depend on how an individual consumer spends money.

While some advantages are hard to miss – no annual fee or a low interest rate – others are more subtle and will appeal to one consumer more than another.

With that in mind, Money magazine and NerdWallet analyzed more than 2,000 credit cards of all types and tried to select the ones most advantageous, based on consumers' spending habits.

Cash Back

When it comes to picking the best cash back card, the judges called it an easy choice: the Citi Double Cash card. The card pays 1% cash back on all purchases and another 1% when you pay it back.

It also has an 18-month introductory period of 0% interest on balance transfers. Coming in second was the Fidelity Rewards Visa Signature.

When it comes to everyday spending, the judges like the Blue Cash Preferred from American Express. The Discover It card took the honors as the Best for Maximizers and the Discover It Miles was picked as the card providing the best incentives in the first year of card activation.

Travel

Consumers often choose cards that don't offer the best advantages in their particular situations. For example, if you rarely travel then a travel rewards card may not do you much good.

However, if you are a frequent traveler then a travel card may be better than a cash rewards card. The judges picked the BankAmericard Travel Rewards as best for overall travel.

For frequent fliers, however, they recommend the Barclaycard Arrival Plus World Elite. The Starwood Preferred Guest from American Express is the pick for consumers who want to rack up hotel points.

Carrying a balance

When it comes to carrying a balance, consumers should look for a low interest rate. The judges found the Lake Michigan Credit Union Prime Platinum is best in that regard for consumers with a credit score of 720 or better.

For those with a score below 720, the judges suggest obtaining a credit card through a local credit union. For balance transfers, they recommend the Chase Slate, since it has no balance transfer fee.

The “best credit card” is a pretty subjective label. It's all going to depend on how an individual consumer spends money.While some advantages are hard...

Here are three highly-rated business credit cards

The Capital One Spark Cash for Business makes just about everyone's list

What's the best business credit card? Opinions vary, but it all depends on what kind of business you have and where and how you'll be spending money.

CreditCards.com picks the Capital One Spark Cash for Business as its choice of best business card. The Spark earns points for its cash-back program, low rates, and a generous, one-time initial bonus.

The Spark pays 2% cash back on every purchase, not just certain kinds of purchases. The judges found that to be an advantage because business spending can range over a wide number of categories.

"Spark Cash for Business keeps it simple, and that's perfect for busy businesspeople," said CreditCards.com senior industry analyst Matt Schulz. “Business owners don't want to hassle with transferring miles and chasing bonus categories. They just want a good, straightforward cash-back rate with low fees."

The Spark also pays $500 cash back when users spend $4,500 or more during the first three months of card activation.

NerdWallet also rates the Capital One Spark among its top business cards, but it should be noted that the Spark, like most business credit cards, carries an annual fee. In the case of the Spark, it's $59 a year.

Chase Ink Cash Business

Also high on NerdWallet's list is the Chase Ink Cash Business Credit Card, which is the rare business credit card that does not carry an annual fee. It only pays 1% cash back and has a lower sign-up bonus – $200.

However, cardholders earn 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on cellular phone, landline, internet, and cable TV services each account anniversary year. They also earn 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year.

At CardHub.com, another card comparison sight, the Capital One Spark and Chase Ink Cash Business Card rank one and two among business credit cards.

US Bank Business Edge

But its third choice, the US Bank Business Edge card, is definitely worth a look, especially for smaller businesses with only “good” credit. It has no annual fee and pays between 1% and 3% cash back. The highest rate of cash back is on cellular, gas, and office supply store net purchases. It pays 1% on all other purchases.

The card also pays an initial sign-up bonus of $150 if you spend $500 in the first three months of activation.

What's the best business credit card? Opinions vary, but it all depends on what kind of business you have and where and how you'll be spending money.Cr...

When it comes to credit card rewards, consumers like cash

Consumers have lots of good choices

Consumers are learning that it pays to be choosy about which credit card they use. Many now offer some type of reward or incentive, so instead of using a card that pays nothing, it's clear consumers should choose a card that offers some type of reward.

But what kind of reward? While there are many choices, a survey by Ally Bank shows most consumers prefer cold, hard cash.

Fifty-eight percent of the consumers in the survey chose cash back instead of miles, store promotions, and low introductory rates.

Ally Bank, of course, recently introduced a cash back card which has gotten some pretty good reviews. However, there are other cash back cards that offer attractive benefits as well.

First, let's take a look at the Ally CashBack Credit Card. The card, introduced in June, will provide a 2% cash back reward when the card is used for eligible gasoline and grocery purchases. It provides 1% cash back on all other purchases.

Having a bank account can add to rewards

The Ally credit card also pays an additional 10% bonus if earned cash back rewards are deposited into an Ally Bank non-IRA savings, interest checking, or money market account. That makes it similar to another attractive cash back card, the BankAmericard Cash Rewards Card.

The BankAmericard product pays 3% on gasoline purchases, 2% on groceries, and 1% on everything else, on spending of $2,500 per quarter. It too provides a 10% bonus when you redeem rewards into a Bank of America account.

While the BankAmericard caps rewards and the Ally card doesn't, the BankAmericard has the added benefit of a one-time cash bonus of $100 when you spend $500 in the first 90 days of account activation.

Meanwhile, the Chase Freedom Card is among the most generous of cash back credit cards. It pays 5% on up to $1,500 of purchases per quarter, with the categories eligible for the rewards changing on a quarterly basis. Still, if you managed to max out the purchases each quarter, you could earn $75 cash back.

Don't want to keep up with rotating categories? There are plenty of cash back cards that pay 1% to 1.5% on everything, with no caps.

When choosing a cash back rewards card, the important thing is to choose one with no annual fee. Otherwise, the rewards won't be quite so rewarding.

Consumers are learning that it pays to be choosy about which credit card they use. Many now offer some type of reward or incentive, so instead of using a c...

Wells Fargo feeling the heat over fraudulent transactions by its employees

Senate schedules hearings as bank jettisons its sales goals

Wells Fargo says it is eliminating sales goals as it works to recover consumer confidence after it was ordered to pay nearly $200 million because its employees opened more than two million unauthorized deposit and credit card accounts.

“Our objective has always been and continues to be to meet our customers’ financial needs and drive customer satisfaction,” said CEO John Stumpf in a press release. “We are eliminating product sales goals because we want to make certain our customers have full confidence that our retail bankers are always focused on the best interests of customers.”

That may not be enough to satisfy critics, however. U.S. Senators Claire McCaskill (D-MO) and Susan Collins (R-ME) are pressing the Consumer Financial Protection Bureau for more information about the fraud, which they say may have hit seniors especially hard.

The Senate Banking Committee’s Republican majority, meanwhile, has scheduled a hearing for Sept. 20, at which it wants to grill Stumpf. Democrats on the committee had earlier called for a hearing on the giant fraud.

“We should accept nothing less than a full and transparent explanation of what went wrong, who is responsible, how to fix it, and how to prevent such fraud in the future,” the Democratic senators said earlier on Monday. Wells Fargo executives are briefing regulators this week, explaining the bank's attempts to curtail illicit activity by its employees. 

Vulnerable seniors

McCaskill and Collins are emphasizing the vulnerability of seniors to financial fraud.

“As Wells Fargo begins the long process of identifying and making restitution to the consumers who were defrauded, I want to ensure that seniors -- who are often the targets of fraud and who also can be harder to find and make whole – are adequately protected,” the senators said in a letter to CFPB Director Richard Cordray.

“I have concerns about the impact this activity has had on our nation’s senior population, especially those who do not conduct their financial business on the Internet," McCaskill and Collins said in their letter. "According to Pew Research Center, just 56 percent of adults over age 65 use the Internet."

McCaskill also asked if CFPB had worked with other branches of government to pursue civil or criminal penalties against the employees engaged in fraud. Bank employees have largely put the blame for the fraudulent transactions on bank management.

"When I worked at Wells Fargo, I faced the threat of being fired if I didn't meet their unreasonable sales quotes every day, and it's high time that Wells Fargo pays for preying on consumers' financial livelihoods," Khalid Taha, a former employee, said in a statement to Bloomberg.

Some Wells Fargo customers have complained of similar allegedly fraudulent practices.

"Twice when I was dealing with WF I had over $7500.00 stolen from my account," said Sharon of Halethorpe, Md., in a recent ConsumerAffairs review. "I believe that it was someone who was working there. What they did to me was use a forged check, that would have that check number coming up soon, take a picture of it and withdrawal the cash. Some of the checks didn't even have a signature or who it was made out to."

The CFPB said that Wells Fargo employees applied for approximately 565,000 credit cards and 1.5 million deposit accounts that may not have been authorized by consumers—sometimes illegally transferring money into those accounts in order to make them active. This sometimes resulted in overdraft or late fee charges for affected consumers. Wells Fargo was ordered to pay $185 million in fines to various entities, including a $100 million fine to the CFPB.

Wells Fargo says it is eliminating sales goals as it works to recover consumer confidence after it was ordered to pay nearly $200 million because its emplo...

Credit card debt in second quarter sets record

Study projects total credit card debt will eclipse $1 trillion this year

Consumers went on a credit card spending spree in the second quarter of the year, adding a record $34.4 billion in new debt.

Personal finance website WalletHub said it was the largest second quarter build-up since the government starting tracking the statistic in 1986.

Credit card debt isn't terrible, as long as it's paid off. But the WalletHub study turned up a few other data points that the authors suggest mean the big increase in debt could be real trouble.

In all of 2015, consumers added $71 billion to their credit card balances, the most since 2007, just before the start of the Great Recession. Making matters worse, in the first quarter of this year, consumers paid off just $27.5 billion of their credit card balance – the smallest amount since 2008.

Staggering numbers

Put another way, they paid off $27.5 billion from January through March, then turned around and added $34.4 billion in April through June.

Here's another way to put it in context: in just three months of the year consumers racked up 48% of 2015's total increase and nearly 100% of 2012's increase in credit card debt.

“As a result, it is not a question of whether consumers are weakening financially, but rather how long this trend toward pre-recession habits will last and just how bad it will get,” the authors write.

At this rate, the study projects a total 2016 net increase of around $80 billion in credit card debt, bringing the total above the $1 trillion mark for the first time. Under such a scenario, the average credit card household debt would reach $8,500, an amount the authors call “perilous.”

How to manage debt

With the average household taking on more credit card debt, the report says it is now more important for consumers to have a strategy for managing and reducing that debt.

Among the tips it offers, it says consumers should transfer the largest balance to a credit card with a long 0% introductory period for balance transfers. This is by far the quickest way to pay down debt, since 100% of the payment goes to principal.

We recently reported on some of the options. The Citi Simplicity Card offers 21 months of 0% interest on balance transfers, but like most cards carries a 3% balance transfer fee. You might consider the Chase Slate card, with a shorter, 15-month 0% introductory period, but no balance transfer fee.

Consumers went on a credit card spending spree in the second quarter of the year, adding a record $34.4 billion in new debt.Personal finance website Wa...

Have you ever read your credit card agreement?

A study finds these legal documents are over the heads of most consumers

A credit card is like a loan, and when you borrow money, there's usually a long and all-encompassing agreement that goes along with it.

Ever read your credit card agreement? A study by CreditCards.com found 46% of cardholders “never” or “hardly ever” peruse the legal agreements that come with credit cards. When researchers asked consumers who had read the agreements to describe them in one word, 71% chose a negative adjective. The top choices were “lengthy,” “long,” and “verbose.”

Matt Schulz, CreditCards.com's senior industry analyst, says unreadable contracts are a hazard because in many cases, consumers are unaware of what they're signing up for.

"If you don't know all the fees that come with a card, for example, how are you supposed to work to avoid them?" Schulz asked.

A model for the industry

The Consumer Financial Protection Bureau (CFPB) has developed a prototype credit card agreement it says lenders should use as a model to make these documents understandable. While its use is not mandatory, it's apparent many lenders are making an effort to make their terms more understandable.

CreditCards.com said that, before the CFPB's intervention, the average credit card agreement was written at a 12th-grade level and included about 5,400 words. Now, the average agreement has been whittled down to 4,900 words, which takes a typical adult about 20 minutes to read. But it is still written at an 11th grade reading level, and CreditCards.com says that may still shoot over the head of the average consumer, who reads at a 9th grade level or below.

Best and worst

The study found HSBC Bank Platinum Rewards Card has the easiest application to read and understand, since it is written at an 8th grade level. The most difficult was Synovus Bank Visa or MasterCard, which requires a year of graduate school to fully understand.

"These contracts are so daunting that many people never even try to read them," Schulz said. "But the sad truth is that experts say the average American reads two or three grade levels below the highest grade they finished in school, so even if they did try to read their credit card agreement, a lot of it would simply go straight over their heads."

What to look for

What are the important parts of a credit card agreement? Here are some things to look for:

  • Date of the month that payment is due
  • Date when a late fee is assessed
  • The amount of the late fee
  • Annual fee, if any
  • Interest on balances
  • Interest and fees on cash advances
  • Balance transfer fees
  • Credit limit
A credit card is like a loan, and when you borrow money, there's usually a long and all-encompassing agreement that goes along with it.Ever read your c...

Whose credit card application is the easiest to understand?

A study finds banks are now doing a better job at transparency

When you shop for a new credit card, there may be several deciding factors. You may want a card with specific types of rewards, or you may want the lowest interest rate.

But how will you know which card to select if the applications aren't clear and transparent, presenting the positives and negatives in plain language?

That's why personal finance site WalletHub compiles an annual study of the credit cards with the clearest applications. The study evaluated online credit card listings from the websites of the 10 largest banks and 10 biggest credit unions. The sites were judged on how clearly they spelled out important information.

Can you understand the rewards program?

For example, the applications were judged on how clearly they presented information about rewards and how a consumer could redeem them. It looked at how prominently information about an annual fee was displayed.

Could the average consumer, the authors asked, figure out the annual cost of financing new purchases using an introductory rate? How was information about balance transfers presented?

On the plus side, the study gave high marks to Capital One, U.S. Bank, Bank of America, State Employees Credit Union, Boeing Employees Credit Union, Pentagon Federal Credit Union, and Navy Federal Credit Union.

On the other hand, the authors said Wells Fargo and San Diego County Credit Union finish at the bottom when it comes to clean, transparent credit apps.

Most improved application

Navy Federal Credit Union took the honors for most improved application. The study found Navy Federal's online credit card listings improved 18 points over last year. It credits the improvement to new-purchase and balance-transfer financing clarity.

While credit unions have the reputation for being more consumer friendly than banks, the WalletHub study found banks stepped up their game in 2016 and are now about as transparent with their credit card applications as credit unions.

The area where financial institutions are most vague tends to be about balance transfer fees and how cardholders go about using rewards.

It's important for consumers to remember that most cards that offer a 0% introductory rate for balance transfers usually charge a 3% fee to transfer a balance. When considering one of these cards, consumers should look for that information, and if the financial institution has a clear application, that fee should be readily apparent.

The good news? WalletHub says banks and credit unions continue to improve their applications. It says transparency is now at its highest point since the annual study began in 2010.

When you shop for a new credit card, there may be several deciding factors. You may want a card with specific types of rewards, or you may want the lowest...

PayPal, MasterCard partnership offers more tap-and-pay options

It also makes MasterCard a payment option within PayPal

PayPal and MasterCard have worked out a deal that they say will benefit consumers, merchants and, of course, themselves. It will make MasterCard a clear payment option within PayPal, increase PayPal's point-of-sale presence, and make Masterpass a payment option for PayPal Braintree merchants.

That might all sound a little confusing, but basically it's intended to make PayPal more competitive with Apple Pay and other tap-and-pay options like Android Pay and Samsung Pay.

PayPal says it will increase its presence at stores by allowing customers to use their "tokenized" MasterCard in their PayPal Wallet to make in-store purchases at more than 5 million merchants around the world where contactless payments are supported.

Under the expanded partnership, consumers and small businesses will be able to instantly cash out funds held in their PayPal accounts to a Mastercard debit card. PayPal will also be provided certain financial volume incentives and, as a result of the commitments made under this agreement, will no longer be subject to the digital wallet operator fee.

Familiar brand

“Whether paying in the physical or digital world, consumers want to see the familiar Mastercard brand from their chosen issuer,” said Ajay Banga, president and CEO, Mastercard. 

Breaking down the details a bit further, a MasterCard press release said:

  • Mastercard will be presented as a clear and equal payment option within the PayPal Wallet, making Mastercard and their issuers easily identifiable to the consumer when transacting.
  • Customers will see a familiar digital representation of their Mastercard from their chosen issuer, ensuring them that all payments made through PayPal are protected with the same safety and security measures that they have come to expect when using a Mastercard.
  • Customers will be able to select Mastercard as their default payment method to allow for quick and easy check-out.
  • PayPal will not encourage Mastercard cardholders to link to a bank account via ACH.
  • PayPal will expand its presence at the point of sale by utilizing tokenization services from Mastercard. This will allow consumers to use their tokenized Mastercard in their PayPal Wallet to make in-store purchases at the more than 5 million contactless-enabled merchant locations across the globe.
PayPal and MasterCard have worked out a deal that they say will benefit consumers, merchants and, of course, themselves. It will make MasterCard a clear pa...

RushCard introduces new mobile app

Cardholders can easily freeze their account if the card is lost or stolen

RushCard, a popular prepaid money card, is introducing a new. free mobile app it says will provide new safety features, while enhancing the card's functionality.

It is available on both the Android and iOS platforms.

One of the safety features allows the user to freeze activity if the card is lost or stolen. By engaging “Pause Protection,” a user can temporarily stop purchases on the card.

Another feature is “One Touch Access,” which allows cardholders to access their accounts on a mobile device by using a fingerprint instead of a password or PIN.

The app also includes a pharmacy benefit e-card, which gives cardholders discounts on prescription drugs at Walmart.

"We are dedicated to providing safe, simple and affordable products to our customers to help them achieve their personal and financial goals," said Ron Hynes, CEO of RushCard.

Popular alternative to bank accounts

Founded in 2003 by hip-hop impresario Russell Simmons, RushCard is billed as a solution to the millions of "unbanked" consumers, those who for one reason or another do not have a traditional bank account with checking and debit card privileges.

The card is an inexpensive service that allows consumers to have their paychecks and benefits payments direct-deposited to their cards, allowing them to make purchases immediately and get cash from ATMs. It has generally recorded high satisfaction scores from consumers. Simmons says the new app is simply a way to make the card easier to use.

"From the early days of prepaid, RushCard helped shape this industry and continues to provide innovative products that are easy to use, convenient to access and help provide financial opportunity to our customers," he said.

RushCard customers can get directions for downloading the “Make Moves” app here.

RushCard, a popular prepaid money card, is introducing a new. free mobile app it says will provide new safety features, while enhancing the card's function...

Here are the best credit cards for college students

But parents and students should agree on how they are used

With college students heading back to campus, parents may be considering whether a son or daughter should have a credit card.

Having one could provide some peace of mind, in case of an emergency expense. On the other hand, a credit card can quickly bury a student in debt if used irresponsibly.

With responsible use, a credit card can not only be a helpful convenience, it can help a student begin building a positive credit history. The question, then, is what's the best card for a college student?

Discover It Chrome for Students

According to CreditCards.com, it's the Discover It Chrome for Students card. The card comparison site was impressed by the card's generous cash back program and perks available to students. One impressive feature is a $20 cash bonus reward when the student maintains a 3.0 grade point average.

Finishing second in the judging is the Wells Fargo Cash Back College Visa. It earned points for a low interest rate and free budgeting tools.

The BankAmericard Cash Rewards Credit Card finished third. It impressed the judges with a significant cash back reward program.

WalletHub's picks

Personal finance site WalletHub has also picked its choices for best student credit cards. Number one on its list is the Journey Student Rewards Card from Capital One. It provides 1.25% cash back on all purchases when you pay your bill on time each month, a financial incentive for students to stay on top of their account. CardHub notes that's more than what’s offered by the average cash back credit card for people with excellent credit.

As a runner-up, CardHub recommends the BankAmericard Cash Rewards for Students Card. It offers nice rewards in expense categories that are widely used by students. It gives you 3% cash back on gas and 2% at grocery stores and wholesale clubs for the first $2,500 in combined quarterly purchases. Everything else draws a 1% cash reward.

Responsible use

One provision of the 2009 CARD Act is new limits on how credit card companies market to college students. Prior to the legislation, students were often signed up for subprime cards at campus social events and got no guidance on the proper way to use credit.

For students obtaining a credit card, a few ground rules may be in order. There should be firm spending limits in place and agreement on how the card will be used. Charging books and supplies and trips home might be fine. Meals at bars and restaurants might not be.

Students encounter enough debt just paying for books and tuition. They shouldn't add to it by running up large credit card balances. And in that regard, there is some encouraging news.

Credit agency Equifax has reported that its survey of college students found that 70% have one or more credit cards. Of that group, 72% said they pay their balance in full each month.

With college students heading back to campus, parents may be considering whether a son or daughter should have a credit card.Having one could provide s...

Quick, what's the biggest influence on your credit score?

TransUnion found that a lot of consumers don't know

A credit score seems like a fairly simple concept. If you have a high score, you can qualify for the best rates on loans. If you have a low score, you can't.

But what about the things that influence a score, that move it up or down? That's where things get a little murky for a lot of consumers.

A survey by credit bureau TransUnion has documented that confusion, learning that more than half of consumers who checked their credit score in the last month wrongly believed their income, employment history, and age are factors.

They aren't, and neither are salary raises and increases in personal savings, though a large percentage of consumers in the survey believe they are.

What you don't know can hurt

Why does this matter? Because if you don't know what influences your credit score, you might not take the right action to keep pushing your score higher.

“Our survey shows that even those who monitor their credit are only skimming the surface of their credit report and often don’t understand the factors that comprise their credit score,” said John Danaher, president of TransUnion Consumer Interactive.

Here's what influences your credit score: first and foremost, its paying your bills on time. All of your bill.

Danaher says some consumers buy into the myth that as long as they pay their bills and don't fall behind, it's okay. It's not. Paying bills on time and in full each month will have a positive impact on your score. Late bill payments can stay on your report for up to seven years.

How you use credit

How you use credit is another major factor. Paying off your credit card balance every month looks better to creditors than if you carry a balance that gets bigger every month.

They also look closely on how much of your available credit you've used. If you have a $5000 credit limit but are carrying a $4,000 balance, you'll have a lower score than if the balance is just $1,000.

Finally, you need to access credit to raise your credit score. If you don't have any credit accounts, the credit agencies have no way to assess your creditworthiness. Having a mortgage, car payment, and credit card bill that you pay on time, month after month, is the best way to maintain and build your credit score.

A credit score seems like a fairly simple concept. If you have a high score, you can qualify for the best rates on loans. If you have a low score, you can'...

Are you using the right credit card?

A J.D. Power study shows why you probably aren't

What's in your wallet? According to J.D. Power, it's probably the wrong credit card.

The market analysis firm reports at least one in five credit card customers are not using the card that best matches their spending patterns. It's not just a matter of convenience, it could be costing them money.

For starters, many consumers carry a credit card that charges them an annual fee. Typically, cards only charge a fee if they can provide the kinds of benefits and rewards that more than offset it. In that case, it might pay to use a card with an annual fee.

But for most consumers, the payoff simply isn't there. So they could be spending $50 to $75 a year needlessly.

The J.D. Power study also found that customers using a card not synced to their needs spend less per month on their primary card, use their card for a smaller share of their total spending, and are more likely to switch cards.

Alarming

"The percentage of people carrying the wrong card is alarming, and that doesn't even include the 30% to 50% of people who have the right card, but could find a card that's an even better fit for them if they looked at other options," said Jim Miller, senior director of banking at J.D. Power.

The problem, Miller says, is when consumers are mismatched to their credit card, they're less satisfied. He says when consumers have the right card, it's better for both customers and card issuers.

The study also found that people usually pick a credit card for its rewards program. A consumer might like a particular retailer and choose a credit card that provides rewards in the form of points, redeemable for merchandise. But they might be much better off with a cash back rewards card that puts money in their pocket.

The study found that 20% of consumers who carry a rewards card would be better off with a different rewards card or a lower interest rate card without rewards. Some simply aren't spending enough to earn rewards that offset the annual fee.

Some could qualify for a card for people with excellent credit but are using a card targeting people with only fair credit. As a result, they pay much higher interest than they should.

Do you really need an airline card?

Miller notes that consumers seem to love airline travel cards that issue miles. However, he says these cards can be terrible choices unless you spend at least $500 a month. Without that spending level, he says you are unlikely to recoup the annual fee.

To make sure you have the right credit card in your wallet, think about your spending patterns. A card that pays 6% back on gasoline purchases and 3% on groceries will be a much better fit than an airline card, if you only take two or three trips a year.

What's in your wallet? According to J.D. Power, it's probably the wrong credit card.The market analysis firm reports at least one in five credit card c...

Choosing a balance transfer credit card

Don't overlook the balance transfer fee

If you have a lot of credit card debt, you might save a good bit of money if you moved it to a credit card that doesn't charge any interest for several months. That way, all of every monthly payment would go toward paying down the balance.

Every so often CreditCards.com, a card comparison site, analyzes balance transfer cards and ranks the ones it thinks are best. This year, the Citi Simplicity Card comes out on top.

In fact, CreditCards.com says it really wasn't close. The card won high marks not only for its promotional offer, but also its forgiving stance toward an occasional late payment.

“By offering a 21-month balance transfer period, nearly twice as long as the typical interest-free promotion, Citi has set the Simplicity card far apart from its competitors,” the judges said.

21 months at 0% interest

The card's 21-month introductory period at 0% interest is impressive. That means for nearly two years cardholders can make significant progress on paying down a balance.

The only drawback is the balance transfer fee. The card charges $5 or 3% of the transferred balance, whichever is greater, to move a balance from an existing card to a new Citi Simplicity card.

Suppose you transfer a balance of $10,000. That increases your balance to $10,300 immediately. Spread over 21 months, that adds about $14.28 in interest to each payment.

Perhaps a better use of the card is to make a large purchase to be paid off over 21 months, because the 0% introductory rate also applies to purchases. However, since it is not a balance transfer, there is no 3% fee.

If you needed a new HVAC system for your home, for example, you could charge it on a new Citi Simplicity card and spread the payments out over 21 months, interest-free.

Oddly overlooked

Oddly, the Chase Slate card did not make CreditCards.com's final cut, but it might be the best choice for a consumer who wants to transfer a large balance from a high interest rate card to one with a no-interest introductory rate.

The Chase Slate's introductory period at 0% is shorter, just 15 months. However, for consumers who transfer a balance within the first 60 days of activating the account, there is no transfer fee. That saves someone transferring a $10,000 balance $300.

If you have a lot of credit card debt, you might save a good bit of money if you moved it to a credit card that doesn't charge any interest for several mon...

Subprime borrowers continue to increase their credit card usage

But the percentage of those doing so is down sharply from 2008

Liberty Street Economics, a group affiliated with the Federal Reserve Bank of New York, which monitors credit usage, reports overall household debt increased slightly in the second quarter of the year. Mortgage debt dipped slightly while auto loan and credit card debt rose.

But drilling deeper into the data, the report shows consumers with a subprime credit score of 620 or below have increased their use of credit cards. Whether that's good news or bad, of course, depends entirely on how those cards are used.

In 2007, just before the credit crisis, about 60% of subprime consumers had at least one credit card. After the financial crisis hit, subprime card issuers unilaterally closed millions of accounts, getting these subprime consumers off their books. Today, the percentage of subprime consumers with a credit card has fallen to 50%.

Handy in an emergency

For consumers, having access to a credit card can be important when an emergency occurs, such as an unexpected car repair bill or a trip to the emergency room. Without a credit card, many subprime borrowers turn to payday lenders.

The report also looks at credit card balances – the amount of money that remains on an account each month and is not paid off at the end of a billing cycle. Only 40% of cardholders carry a balance of $1,000 or less while 14% have balances of more than $10,000.

“When comparing the distribution of balances across credit score groups, we see some surprises,” the authors write. “While an increase in a borrower’s credit score is initially accompanied by an upward shift in the debt balance distribution, borrowers with the highest credit scores instead are much more likely to hold smaller debt balances compared to all other groups.”

In other words, as a consumer's credit score improves, he or she is more likely to take on more debt. However, this increase stops and begins to fall when consumers reach the highest level of credit scores.

The percentage of consumers with at least one credit card peaked at 68% just before the crash, plunging to 59% afterwards. It now stands at around 61%.

So far, so good

So far, at least, both prime and subprime consumers appear to be handling their increased use of credit cards better than in recent years. Credit card delinquency is trending downward since 2008, but that may be a result of more credit concentrated among high credit score consumers.

Consumers at the lower end of the scale, once squeezed out of the market and paying down debt, are now beginning to open new accounts. The report credits improving economic conditions, tighter lending standards, and a more stable credit card market.

The Federal Reserve Bank of New York, which monitors credit usage, reports overall household debt increased slightly in the second quarter of the year. Mor...

Russian hackers breach huge point-of-sale payment system

Oracle's MICROS credit card payment system compromised, reports say

One of the world's top three pont-of-sale credit card payment systems has been breached by Russian hackers, according to press reports, affecting hundreds of thousands of check-out points.

Brian Krebs' KrebsOnSecurity reports that a Russian organized cybercrime group "appears to have breached hundreds of computer systems at software giant Oracle Corp." Among the systems breached was Oracle's MICROS point-of-sale system.

 Oracle acknolwedged it had "detected and addressed malicious code" in some legacy MICROS systems and asked all MICROS customers to change their passwords.

"To prevent a recurrence, Oracle implemented additional security measures for the legacy MICROS systems," Oracle said in a letter to customers quoted by CNBC.

MICROS is among the top three point-of-sale vendors globally, manufacturing point-of-sale systems used at more than 330,000 cash registers worldwide. 

Krebs said the breach appeared tied to the Carbanak Gang, which is suspected of stealing more than $1 billion from banks, retailers, and hotels last year.

Krebs has been investigating the incident since a customer emailed him on July 25 to say he had heard about a potentially large breach at Oracle's retail division.

What to do

The breach does not appear to pose a direct threat to consumers. If the hackers intercepted point-of-sale information, they would gain access to customer names and card numbers but presumably not any other information, although that can't be positively determined until more is known about the breach.

Banks and potentially some retailers would be liable for losses. 

One of the world's top three pont-of-sale credit card payment systems has been breached by Russian hackers, according to press reports, affecting hundreds ...

Should an annual fee be a credit card deal breaker?

It all depends on how you plan to use the card

There are plenty of good credit cards out there, and nearly all are different in one way or the other.

But cards can usually be divided into two groups – those that charge an annual fee and those that do not. So, why would anyone ever choose a card with an annual fee? Does it ever make sense?

The cards that charge an annual fee almost always provide some kind of significant reward. But whether that reward is worth paying the annual fee will depend on the value of the reward and how – and how much – you use the card.

Let's review some of the annual fee cards and compare them to those without a fee. We'll look at cards for consumers with good to excellent credit.

Annual fee cards

The Capital One Venture Card has no fee the first year but $59 after that, so its rewards need to be significant. If you are a frequent flier, they are.

Credit.com rates the Venture Card as best for airline miles because it provides a one-time bonus of 40,000 miles if you spend $3,000 on the card the first three months. That amounts to about $400 worth of travel.

Cardholders also earn double miles per dollar spent on every purchase. The miles don't expire and there are no blackout dates.

That makes it a good credit card for people who travel a lot, running up big credit card bills in the process. But for people who don't travel a lot, the $59 annual fee probably isn't worth it.

But not all cards with an annual fee are that generous. For example, the Credit One Cash Bank Rewards Card carries an annual fee of up to $99, meaning you would need to rack up a lot of rewards to make it pay.

The card provides 1% cash back, but only on eligible purchases. It has other benefits, however, that could possibly save you money on late fees, if you have a habit of being late with your payments.

No annual fee

You need to compare a card like that with rewards cards that do not charge an annual fee, and fortunately, there are plenty.

The Bank Americard Cash Rewards Card has no annual fee and pays 3% cash back on gasoline purchases, 2% on grocery store and wholesale club purchases, and 1% on everything else, for the first $2,500 in spending each quarter. That makes the card an attractive alternative.

Another good choice is the Capital One Quicksilver Card for excellent credit. There is no annual fee and it pays unlimited 1.5% cash back on every purchase, with no rotating categories.

You can get your cash as a check, statement credit, or gift card.

Before signing up for a credit card with an annual fee, think about how you use a credit card and look first for a card with no annual fee that offers rewards that are in sync with your spending habits.

There are plenty of good credit cards out there, and nearly all are different in one way or the other.But cards can usually be divided into two groups ...

Consumers encountering fewer credit card fees

However, choosing the wrong prepaid card can be costly

Oil prices aren't the only thing going down. A new report from CreditCards.com found fewer credit cards are charging foreign transaction fees – a significant cost savings for consumers who travel outside the U.S.

According to the report, 77 credit cards levied the fee last year but this year only 61 do.

When you add up all the fees charged by the 100 credit cards, the report says the total number is 593, down from 613 a year ago.

"Many card issuers are eliminating foreign transaction fees in an effort to win business from high-spending international travelers," said Matt Schulz, CreditCards.com's senior industry analyst.

$3 for every $100 spent

The typical foreign transaction fee is 3%, adding $3 to every $100 charge. Schultz says getting rid of the fee is a smart way for credit card companies to become the go-to card in travelers' wallets.

The report also looked at the credit cards with the most and fewest potential fees. In the most category, First Premier Bank Credit Card and First Premier Bank Secured MasterCard top the list at 12 each.

Close behind are Club Carlson Business Rewards Visa and Credit One Visa Platinum with 11 each.

On the other hand, Pentagon Federal Credit Union Promise Visa Card has no fees and seven cards have only two. The report says the average credit card has six different fees, with the late fee and cash advance fee being the most common.

"The trend toward fewer credit card fees is a great thing for consumers," Schulz said. "It's such a crazy-competitive time in the credit card business and lower fees are just another way that Americans are reaping the benefits."

Prepaid card fees

Prepaid cards, while technically not credit cards, also carry a lot of fees. A new report by CardHub.com finds selecting the wrong card can cost consumers more than $300 a year.

Among the report's findings, prepaid cards offered by big national banks tend to be 82% less expensive to use than those issued by smaller banks. The report also found that nearly half of prepaid cards lack the necessary features to make them suitable for the average consumer.

“Perhaps surprisingly, prepaid cards charge far fewer fees than their first cousin, checking accounts,” the authors write.

The report found the best prepaid card to use as an alternative to a checking account is American Express Serve, followed by Bluebird and the Green Dot Gold Card.

Oil prices aren't the only thing going down. A new report from CreditCards.com found fewer credit cards are charging foreign transaction fees – a significa...

Why it pays to regularly check your credit score

Survey finds the more you check your score, the higher it is

You probably know why you should check your credit report once a year. Doing so alerts you to any negative information in it, including whether someone has stolen your identity and opened credit in your name.

You are entitled to a free download of your credit reports from all three credit reporting agencies once a year. You can access them by going to www.annualcreditreport.com.

But it also turns out that checking your credit score on a regular basis can pay off – but for different reasons.

A survey by Discover found that checking your credit score regularly is associated with good credit behavior. In other words, checking your credit score tends to result in a higher credit score.

FICO Score

When people talk about a credit score, they usually refer to the FICO score maintained by Fair Isaac. That's the score most lenders use to judge a consumer's creditworthiness.

Accessing your FICO score usually carries a fee. However, a number of financial organizations and websites offer free credit scores that are based on the same financial information used to calculate the FICO score. It isn't your FICO credit score, but it's probably pretty close.

The Discover survey found that 73% of consumers who checked their credit score at least seven times in a year said that practice improved their credit behavior. They paid their bills on time, paid down debt, and maintained low credit card balances.

Of the consumers who checked their score just a single time in a year, only 44% felt like they were taking the right steps to improve their credit.

Checking leads to rising score

That result was borne out in the data. Those who checked their score on a regular basis actually saw their scores rise. The more a consumer checked his or her score, the more that score improved.

“Checking your credit score is one of the simplest things that anyone can do to get on the path to understanding their credit health,” said Julie Loeger, executive vice president and chief marketing officer at Discover. “But checking is just the first step.”

Discover offers free access to consumers' FICO score, as well as a personalized scorecard to help stay on top of the factors influencing scores. Even non-Discover customers can check their score by going to www.Discover.com/creditscorecard.

Why is a credit score so important? If you plan to buy a car, purchase a home, or just apply for a credit card, you need a credit score that is as high as possible. But the survey found that many consumers don't have a good grasp on how a credit score impacts their lives.

Millennials in the survey suggested having a more personal connection to their credit, compared to other generational groups. Forty-six percent of millennials connect their credit standing with their self-worth, more than any other age demographic.

You probably know why you should check your credit report once a year. Doing so alerts you to any negative information in it, including whether someone has...

Retailers blame credit card companies for delay in chip roll-out

Claim industry has been too slow to certify the new card readers

Why are there so few chip-enabled card readers at retailers around the country? It depends on who you ask. The nation's retailers say they've done their jobs – it's the credit card companies that have dropped the ball.

The National Retail Federation (NRF) points to a survey that found 48% of retailers have implemented the new EMV chip card system, or are expected to within weeks. A total of 86% said they expected to be EMV compliant by the end of 2016.

But the NRF said the survey also found that 57% of the retailers who had not yet implemented the new system had installed the card readers, but were waiting for certification by the credit card industry. About 60% said they had been waiting for six months or longer.

NRF says those numbers are in sharp contract to the statistics issued by the banking industry, which it says has tried to shift blame for the slow start to retailers. The survey, NRF says, found retailers are eager to begin using the chip card system since it protects them from liability connected to fraud.

Certification process

The certification process for the chip card system checks out a number of important functions to ensure the new technology is working properly. It can be a complicated process because the system must check out across multiple card platforms, including MasterCard, Visa, American Express, and Discover.

The size of the retailer can also complicate things. Big retailers with more point of sale positions take a lot more time.

Hundreds of tests may be required and the process might take two weeks or eight months. The cost to the retailer might be as little as a few hundred dollars or could run into the tens of thousands of dollars.

Visa says it's helping

Visa, meanwhile, recently announced steps it said could help speed up the implementation of the chip card technology. It said it has streamlined testing requirements, made the certification process simpler, and made commitments to improve the technology. It also said it is changing its policy to help limit exposure to counterfeit fraud liability for merchants who are not yet chip-ready.

While retailers might feel frustration at the pace, Visa maintains that progress has been “significant,” with over 300 million chip cards in the hands of consumers and 1.2 million retail locations now equipped to accept them.

But the NRF said it is disappointed the credit card industry has not provided enough personnel to make sure certification happens in a timely manner. In the meantime, it says consumers are confused as to whether they continue to swipe their cards or begin “dipping.”

Why are there so few chip-enabled card readers at retailers around the country? It depends on who you ask. The nation's retailers say they've done their jo...

Five questions (and answers) about your credit report

Consumers should have a basic understanding of how credit reports work

Surveys have shown that there are significant knowledge gaps among consumers when it comes to credit reports. Yet these documents are very important to consumers when they want to finance a home or car, or even get insurance.

So it is very important to have at least a basic understanding of credit reports and how they work. With information provided by the Federal Reserve, here are five key questions consumers might have.

1. Where does the information in the report come from?

Your credit history is compiled into an ongoing report by three credit reporting agencies – Experian, Equifax, and TransUnion. These companies get the information from other companies that have extended you credit.

That includes the obvious, like mortgage lenders and credit card companies. But it can also include your cell phone provider, the utility company, and many other companies that send you a monthly bill. The report lets these companies know if you pay your bills on time.

2. Who gets to see my credit report?

The information in your credit report is highly confidential, but there are a number of entities that, with your permission, may get access to it. Anyone extending you credit may see it, as can a prospective employer.

Insurance companies you are doing business with can also review your credit report, and so can some government agencies reviewing your financial status for benefits.

3. Can anything be done if there is incorrect information in my report?

Yes. If you are denied credit because of something in your credit report, you have a right to know what it is. If the information is incorrect, you may appeal to have it removed.

If you appeal within 60 days you can get a free copy of your credit report – in addition to the free report you can get annually – and review the information. If you find information you believe is erroneous, follow these steps to have it removed.

4. If the negative information is legitimate, how long does it remain?

In most cases, negative credit information will remain in your credit report for seven years. A personal bankruptcy filing will stay in your report for 10 years.

If you have been sued or there is an unpaid judgment against you, it can remain for either seven years or until the statute of limitations runs out, whichever is longer. If you have been convicted of a crime, that fact may stay on your credit report indefinitely.

5. Can I see a copy of my credit report?

Absolutely. The law allows you to obtain a copy from each of the three credit reporting agencies once a year, at no charge. This only includes the report, not your credit score – that costs extra.

To receive a free copy of your credit report, go to www.annualcreditreport.com, or call (877) 322-8228.

Surveys have shown that there are significant knowledge gaps among consumers when it comes to credit reports. Yet these documents are very important to con...

Growth among Latinos helps American Express through a bad patch

The Costco loss hurt, but Amex sees big growth in the Hispanic market for the longterm

American Express has taken its lumps lately, losing about eight percent of its business when Costco defected to Visa. It also lost co-branding deals with Fidelity Investments and JetBlue, but on the plus side, it has more than doubled its share of Latino consumers.

Between 2005 and 2015, the number of Latinos with American Express cards more than doubled from 1.7 million to 3.7 million, for a net gain of nearly two million customers, according to Packaged Facts, a market research company.

Regardless of what Donald Trump may think, the Latino market is vitally important to any national brand. In sheer numbers growth alone, Hispanics dwarf other ethnic groups, likely accounting for more than half the U.S. population growth over the next decade.

In ten years, Hispanics will account for one in five Americans and will be on the verge of becoming a majority in California and Texas. That's a lot of credit cards. 

Increasingly affluent

It's not just that Hispanics are a growing part of the population; they're also an increasingly affluent group and are viewed as a "pillar of growth" for the financial services industry, according to David Sprinkle, research director, Packaged Facts.

For example, between 2005 and 2015 growth in credit card use by Latinos grew 11 times faster than it did among non-Hispanics (44% vs. 4%). The 5.1 million additional Latinos with credit cards accounted for around half (49%) of the growth in the number of consumers using credit cards, Sprinkle said.

Millennial Latinos are especially important to the financial services industry, simply mainly because Hispanics on average are younger than non-Hispanics. As a result, millennials account for a greater share of the Hispanic population. 

Hispanic millennials (those in the 25- to 34-year-old age group) make up 25% of the Hispanic population, while non-Hispanics in this age group represent just 16% of the non-Hispanic population, per the report.

Longterm, Amex' prospects still look bright enough that one of their biggest shareholders, Warren Buffett, recently defended his fund's investment in the company and said he had no intention of dumping it.

American Express has taken its lumps lately, losing about eight percent of its business when Costco defected to Visa. It also lost co-branding deals with F...

Sam's Club needles Costco, notes it accepts all credit cards

Costco membership card can be used as a credit card at Sam's through July 4th

Costco's troubled switch from American Express to Visa has left untold thousands of consumers adrift, as they find themselves without a usable credit card for their shopping trips to Costco.

Sensing opportunity, rival warehouse Sam's Club says it will accept Costco membership cards as a free Sam's Club Card through July 4th. And it notes in a Facebook posting that it accepts all major credit cards.

The Sam's Club Card, issued by Mastercard, is Sam's version of Costco's Anywhere Visa. Costco once issued a Costco-branded American Express card but switched earlier this month to a Visa card.

Consumers rate Sam's Club

Costco members who had a Costco American Express card were supposed to get a Visa Anywhere card but many did not, for reasons that in many cases are unclear. Also, Costco members who had been using their own American Express cards were left to fend for themselves. 

Many Costco members left behind in the switch say they will now see Costco only in their rear-view mirror.

"As far as I am concerned, if Amex is not good enough for Costco then Costco is not good enough for me. Bye Bye Costco, it's off to Walmart we go....." said Charles Horn in a comment on a recent ConsumerAffairs story.

Sam's Club memberships go for $45 for individuals and businesses. A $100 "Plus" membership includes cash back benefits and other extras.

Costco's troubled switch from American Express to Visa has left untold thousands of consumers adrift, as they find themselves without a usable credit card ...

Which credit cards provide the best travel insurance protection?

According to a study, the Chase Sapphine Preferred comes out on top

There are many things that can derail a vacation, leading to some hefty expense for those with non-refundable reservations. That's why many consumers choose to purchase travel insurance.

But a new report from CardHub, a credit card comparison site, finds a handful of credit cards provide pretty good insurance coverage, if used to purchase the trip. They don't cover all contingencies, but some you might not expect.

The CardHub study found that travel insurance perks by credit card companies can reimburse customers when a trip gets cancelled, when a connecting flight is missed, when damage is lost or delayed, and even in the event of death.

The coverage varies from card to card, so the study compared 57 personal and 23 business credit cards to evaluate the coverage.

Nearly 93% of the cards in the study offer travel accident insurance, providing an average of $352,000 in coverage. Chase Sapphire Preferred was judged to be the best, providing $500,000 in coverage.

43% insure lost luggage

Almost 43% of cards will compensate travelers when luggage is lost, with an average of $2,500 included in the coverage. The Sapphire Preferred and Citi Prestige Card tied for best, with $3,000 in coverage. They both also pay up to $500 per trip for delayed bags.

The Chase Sapphire Preferred also wins in the category of best trip delay/cancellation coverage, paying $10,000 per trip. That beats the card average of $3,300, offered by 33% of cards in the study.

Not surprisingly, the Chase Sapphire Preferred also wins in the category of best overall card for travel insurance.

Among business credit cards, the Chase Ink Plus swept all categories as the best card to protect business trips. It achieved an overall score of 93%, compared to its nearest competitor, the Chase Ink Cash, at 84%.

Consumers using these cards do not have to register or sign up to receive the coverage. They simply have to contact their credit card company if they want to file a claim.

There are many things that can derail a vacation, leading to some hefty expense for those with non-refundable reservations. That's why many consumers choos...

Ally Bank issues cash back credit card

Provides additional 10% bonus when cash is redeemed in Ally bank account

Ally Bank has issued a new rewards credit card. The Ally CashBack Credit Card joins the ranks of other cards that reward customers by returning a percentage of purchases in the form of cash or other perks.

The new card will provide a 2% cash back reward when the card is used for eligible gasoline and grocery purchases. It provides 1% cash back on all other purchases.

However, the new credit card features an additional 10% bonus if cash back rewards are deposited into an Ally Bank non-IRA savings, interest checking, or money market account.

Ally says another feature of the card is the rewards are not capped, as they are with many credit cards, and they never expire, as long as the account remains open and in good standing.

Issuing card a logical move

"As we evaluated options to expand our product offerings, adding a credit card to our portfolio was a logical move since it has been a frequent request of our Ally Bank customers," said Diane Morais, CEO and president of Ally Bank.

Morais is particularly pleased with the 10% reward for deposits in bank accounts, saying it is consistent with the bank's philosophy to help customers maximize savings opportunities.

Ally Bank, formerly GMAC Capital, has been a completely online financial institution since 2010. The bank, headquartered in Charlotte, N.C., has no brick and mortar branches.

Customer survey

The company said it launched this new product after studying consumer preferences in credit cards with a focus on looking at the best way to use rewards. It conducted a survey of customers who use credit cards and found 58% preferred cash back rewards over travel rewards, store promotions, and introductory interest rates or bonus rewards.

The survey also found 80% said they would like to have multiple financial products with the same bank – bank accounts, loans, and credit cards – if they earned rewards for doing so.

"The savviest consumers not only know what cards to pick, but how to maximize their rewards," Morais said. "When stacked against all the credit cards available to consumers, the Ally CashBack Credit Card is a highly competitive product."

The Ally CashBack Credit Card is issued through TD Bank N.A.

Ally Bank has issued a new rewards credit card. The Ally CashBack Credit Card joins the ranks of other cards that reward customers by returning a percentag...

Credit scores: what you don't know could hurt you

Difference in car insurance rate just one area where a bad score can hurt

First, the good news. Most consumers understand the basics of credit scores and how they work.

An annual survey by the Consumer Federation of America (CFA) shows about 80% of Americans know that credit scores are important and are a major factor in whether people get a mortgage or a credit card.

But the survey also reveals some significant knowledge gaps. For one thing, consumers very often underestimate the cost of having a low credit score. Just 22% of respondents knew that a low score could increase the cost of a 60 month auto loan of $20,000 by up to $5,000.

More than half were unaware that credit scores are also used by businesses and organizations that are not in the business of extending credit. Businesses like insurance companies.

Effect on car insurance rates

In an independent study, the personal finance site WalletHub found that consumers with absolutely no credit rating paid 53% more on average for car insurance than someone with an excellent credit score. In some states the rate spread was as high as 122%.

The study found that Farmers Insurance relies on credit scores the most in setting auto insurance rates. Geico relies the least on credit data.

WalletHub said it obtained quotes for two hypothetical consumers who were identical, expect for credit score. One had no credit score while the other possessed an excellent credit profile.

While it is important for a consumer with a poor credit history to know which companies place the most importance on credit scores, WalletHub said that information is more accessible from some companies more than others. It found Travelers to be the most transparent about its use of credit information when setting rates. It said State Farm is the least transparent.

Other uses of credit scores

In addition to insurance rates, CFA says credit scores are often used by utility companies to determine whether a new customer is required to place a deposit for service. Cellphone providers and landlords also consider credit information when evaluating a potential customer or tenant.

Here are some other key facts about credit scores:

  • Credit scores are negatively affected by missed or late payments
  • Carrying a balance that approaches your credit card's limit will reduce your credit score
  • Cancelling a credit card will lower your credit score
  • Paying every bill on time, every time is the fastest way to raise a credit score
  • Paying off your credit card balance each month helps raise your credit score

“The good news is that consumers understand the basics of credit scores, such as the importance of making loan payments on time,” said Stephen Brobeck, CFA’s executive director. “The bad news is that this knowledge is limited and, each year, can cost them hundreds of dollars in fees on services and additional interest on consumer loans.”  

First, the good news. Most consumers understand the basics of credit scores and how they work.An annual survey by the Consumer Federation of America (C...

Police can now strip the money right off your card

Civil asset forfeiture takes a big leap forward, thanks to technology

Carrying a lot of cash is dangerous. Criminals may take it and so may the cops, who increasingly view having a lot of cash as evidence of wrongdoing. But now, police have added a new twist -- they've started using a scanner that lets them swipe the money right off prepaid cards.  

The device is called an ERAD -- Electronic Recovery and Access to Data machine, and Oklahoma's state police began using 16 of them last month. Hundreds of other police departments around the country are also using the device but haven't fessed up to it. 

It's all pretty simple. If a state trooper or other police officer suspects you are tied to some type of crime, he can scan your prepaid cards and seize the money on them. No formal charges, no trial, no due process.

It's an extension of a long-standing practice of shaking down anyone police think is suspicious. All too often, as the Washington Post demonstrated in a Pulitzer Prize-winning investigation a few years ago, all you need to do to look suspicious is have a lot of money.

"Different factors"

The police, of course, say the process is completely straightforward.

"We're gonna look for different factors in the way that you're acting,” Oklahoma Highway Patrol Lt. John Vincent said, according to a Washington Post report. “We're gonna look for if there's a difference in your story. If there's some way that we can prove that you're falsifying information to us about your business."

Of course, when Lt. Vincent says police will "prove" you're falsifying information it doesn't mean they'll prove it in court, where you can confront the witnesses and challenge the evidence. And that's what has critics upset.

State Sen. Kyle Loveless (R-Oklahoma City) said he will introduce legislation in the next session of the state legislature that will require a conviction in a court of law before anyone's assets are seized.

"If I had to err on the side of one side versus the other, I would err on the side of the Constitution,” Loveless said. “And I think that's what we need to do."

Loveless said there have been too many documented cases of abuse in Oklahoma to allow police to continue treating citizens as criminals without benefit of trial.

"We've seen single mom's stuff be taken, a cancer survivor his drugs taken, we saw a Christian band being taken. We've seen innocent people's stuff being taken. We've seen where the money goes and how it's been misspent," Loveless told a local television station.

Where it goes

As for what happens to the money seized with ERAD, 7.7% of it goes to the ERAD Group, a Texas-based company. The rest? Oklahoma Watch, an investigative journalism organization, says records show that in one recent year, 70% of all forfeiture amounts were used to fund salaries for law enforcement. 

Oklahoma law currently allows police and prosecutors to keep the money they take from citizens, even those who are never convicted or indicted, so those victimized by modern-day highway robbers basically have no recourse.

The Post's series caused a stir when it was published, but progress in cleaning up the practice has been slow. New Mexico, Montana and New Hampshire recently passed laws requiring a conviction before property can be forfeited, although the Post says New Mexico police routinely ignore the law.

The ERAD devices, by the way, can strip money off prepaid cards, but they can also decipher quite a bit of information from the magnetic strips on credit and debit cards, information police could conceivably use to track down and swipe additional assets.

ERAD claims its devices are an invaluable tool in fighting money laundering. 

"Each year, there are about $120 billion dollars moved to Mexico, Iran, Colombia, China as well as others as a result of illicit activity in the US," ERAD says on its website. "Prepaid debit cards are becoming the preferred process to move funds for pick up in these countries."

No right to privacy

ERAD CEO T. Jack Williams claimed recently at a conference that American citizens have no right to privacy when it comes to magnetic encoding on their cards, Oklahoma Watch reported.

“Prepaid cards are cash, they are not bank accounts,” Williams said. He claimed that prepaid cards are not protected by the Bank Secrecy Act and are not protected by the Constitution's Fourth Amendment protections against unreasonable search and seizure.

Brady Henderson, legal director for ACLU Oklahoma, says that's debatable and predicted Oklahoma's Department of Public Safety will find itself facing legal challenges to warrantless search and seizures using ERAD.

The situation is not unique to Oklahoma. The ERAD devices are in use around the country by "hundreds" of police agencies, Williams said, although he refused to give an exact number or name any of the police departments using the devices. 

Carrying a lot of cash is dangerous. Criminals may take it and so may the cops, who increasingly view having a lot of cash ...

Best credit cards for rental car coverage

Nearly all cards provide some coverage, but there can be plenty of exclusions

Your credit card can get you more than cash back on purchases and points toward perks. Most provide some basic rental car insurance. Some coverage is better than others.

But to make it pay, a cardholder first needs to know it exists, and then what it covers. Progressive Insurance has found that about 20% of rental car customers always pay for the damage waiver, with another 20% doing so occasionally. But since all rental car payments are made with credit cards, it is very likely most of those purchases are unnecessary.

The credit card review site CardHub has analyzed credit cards, choosing the ones that provide the most coverage for rental cars. Among individual cards, it found the cards issued by CitiGroup provide the most extensive rental car coverage.

Citi cards achieved a score of 95.5%, with American Express' 89.5% being the closest competitor. Chase cards are third, with a score of 87.5%.

MasterCard is best

Cards in the MasterCard network provide the best coverage, but all four networks are ranked fairly close together in their coverage.

The top ranked cards don't require you to sign up for the coverage. It is activated when you decline the rental car company's damage loss waiver. The best cards cover costs stemming from damage to or theft of rental vehicles, up to $100,000.

Like any insurance policy, there are some exclusions. Here's where it pays to have one of the higher-rated cards, because they have fewer exceptions to their coverage.

The average card won't cover a truck, open-bed vehicle, exotic or antique car, or even a large van or full-size SUV. The best cards do cover those vehicles, but draw the line at off-road vehicles. Another common exclusion is tire and rim damage. CardHub found that more than 60% of cards don't cover it.

Almost 40% of cards only cover domestic rentals for up to 15 days, but the best cards will extend coverage up to 31 days.

Fewer global options

You're safe with just about any card if you are renting in the U.S., but only Citi and Discover cards provide global coverage. Ireland, Israel and Jamaica are the most common exclusions among other issuers.

There is something else to understand about rental car coverage. Neither the company's damage loss waiver nor your credit card's coverage will protect you from liability in the case of an accident. You'll need to buy a liability supplement or rely instead on your personal auto insurance policy.

It should cover you but not all policies do. It is a good idea to call your insurance provider before renting a car and asking.

Your credit card can get you more than cash back on purchases and points toward perks. Most provide some basic rental car insurance. Some coverage is bette...

Chase Sapphire Preferred wins honors as best travel card

Initial 50,000 bonus points impressed the judges

If you were to choose a credit card solely for use to pay travel expenses, CreditCards.com recommends the Chase Sapphire Preferred card.

The credit card website says the Chase Sapphire Preferred came out on top in its latest rankings. It won points for the 50,000 points cardholders get just for opening an account.

It also won praise for ease in cashing in those points and its collection of rewards the judges described as “user friendly.”

Popular card

There is no doubt the Sapphire Preferred is a popular card. Back in March it ranked very high when ConsumerAffairs rated the best reward cards, singled out for its many travel-related perks.

We pointed out that to earn the 50,000 bonus points, new customers needed to charge $4,000 on the card in the first three months the account is open. Those points are good for $625 toward airfare and lodging when you redeem them through Chase Ultimate Rewards.

On the downside, the card carries a $95 annual fee, but it is waived the first year. After that it costs you nearly $100 to carry this card, so you have to take advantage of the rewards to make it pay.

The CreditCards.com judges were also impressed that customers who dine out frequently can easily rack up extra bonus points.

“Hit the sweet spot”

"The Chase Sapphire Preferred card has hit the sweet spot for the frequent but not constant traveler," says CreditCards.com Editor-in-Chief and travel card judge Daniel Ray.

He notes the sign-up bonus provides a generous head start and a frequent traveler can easily accumulate valuable points.

Placing second in the competition is Capital One's Venture Rewards card. It gained points for its low interest rates and consumer-friendly redemption policy.

Coming in third was the Barclaycard Arrival Plus World Elite MasterCard. It impressed judges by granting cardholders two miles for every dollar they spend. On top of that, it comes with a generous 40,000-mile bonus.

If you were to choose a credit card solely for use to pay travel expenses, CreditCards.com recommends the Chase Sapphire Preferred card.The credit card...

Consumer credit slowed in April after surging in March

Independent study shows worrisome trend in credit card debt

Consumers continued a strong pace of borrowing money in April, but at a slower rate than March.

The Federal Reserve reports consumer credit grew by more than $13 billion in April, an annual increase of 4.5%. That was a significant slowdown from the record increase the month before.

The Fed's report measures all kinds of credit, but economists particularly follow credit card debt, since it has widespread ramifications for the overall economy.

In April, credit card debt rose 2.1%, down from a 13.3% rate in March.

A study by the personal finance site CardHub shows U.S. consumers paid down nearly $27 billion in credit card debt during the first three months of the year. But that may not be the good news it appears to be.

The study's authors note the payments come on the heels of a late 2015 spending spree. Last year consumers added $71 billion to their credit card accounts. The study notes the first quarter pay-down is the smallest first quarter reduction in credit card balances since 2008.

$1 trillion in outstanding balances possible

“As a result, CardHub is projecting that we’ll end 2016 with roughly $1 trillion in outstanding balances for the first time ever, which would bring the amount owed by the average indebted household to more than $8,500,” the authors wrote. “You therefore have to wonder how long we can keep this up.”

The report shows that consumers' payments on their credit card balances covered just 38% of the $71 billion added to the total last year. More disappointing, eight of the last 10 quarters reflect year-over-year regression in consumer performance. That's cited as evidence that credit card users are reverting to pre-Great Recession bad habits.

The authors suggest the first quarter of 2016 shares a lot of similarities with the first quarter of 2007, just before the start of the Great Recession. Those similarities include the pay-down amount, how it compares to the previous quarter’s build-up, and the charge-off rate at the time.

“That is not good news for consumers, considering the financial turmoil that followed the last time around,” the authors conclude.

Consumers continued a strong pace of borrowing money in April, but at a slower rate than March.The Federal Reserve reports consumer credit grew by more...

Four good credit cards for buying gas

These cards pay a higher cash back reward for gasoline purchases

Gasoline prices have been low for nearly two years now but in recent weeks have been creeping up again. No one thinks they're going back to the way they were a couple of years ago, but getting an extra break at the gas pump would be nice.

Using a credit card that pays extra rewards for gasoline purchases might be a way to accomplish that. Here are four cards that might help:

Blue Cash Preferred Card from American Express

The Blue Cash Preferred Card from American Express is a good card for all-around purchases, and one feature is a generous cash back reward for spending at the gas pump.

One drawback is a $75 annual fee. Paying an annual fee normally cuts into any rewards you might receive.

However, the American Express card pays a bonus of $150 if you charge at least $1,000 in the first three months. That will cover the first two years of annual fees.

If you use the card to make gasoline purchases, you'll get 3% cash back. As a bonus, you'll get 6% back on the first $6,000 you spend on groceries.

BankAmericard Cash Rewards Credit Card

The BankAmericard Cash Rewards card is another way to get rewarded for filling your tank. Using this card at the gas pump will also earn 3% cash back on the first $2,500 of gas, groceries, and warehouse club purchases each quarter – a total of $10,000 per year.

In addition, the card pays 2% cash back on groceries and 1% on all other purchases. Unlike the American Express card, it carries no annual fee – a big bonus.

Hilton HHonors Card from American Express

The Hilton HHonors Card from American Express is a good choice for those who travel a lot, in addition to driving a lot. The card racks up points rather than returning cash to you.

You get five times the points for each dollar spent on gas, as well as on groceries. It earns seven times the points for each dollar spent at a participating hotel or resort within the Hilton portfolio.

You start off with 50,000 points if you spend $750 in purchases on the card during your first three months of card membership, and there is no annual fee.

Discover It Secured Card

Credit not so good? Even if that's the case, there's a card that can help you save on gas purchases.

The Discover It Secured Card is secured with a deposit in your account. If you deposit $500, you can charge $500 each billing cycle.

You earn 2% cash back on combined gasoline and restaurant purchases of up to $1,000 each quarter and 1% cash back on all other purchases. At the end of the first year, Discover matches the total amount of your cash back earnings.

There is no annual fee and, if you pay your bill on time each month, you'll rebuild your credit so that you'll soon have more credit card options.

Gasoline prices have been low for nearly two years now but in recent weeks have been creeping up again. No one thinks they're going back to the way they we...

Alaska Air expands credit card benefits

Card no longer carries foreign transaction fees

Alaska Airlines has made a couple of benefit changes to its Visa Signature Card. The credit card no longer carries foreign transaction fees, and bonus miles for new customers have been increased to 30,000, as long as the new cardholders meet the qualifying spending level.

"As we continue to expand our global partnerships and add to our growing list of more than 800 partner destinations worldwide, eliminating foreign transaction fees is the right thing to do for our world-traveling cardholders,” said Sangita Woerner, Alaska's vice president of marketing.

The expanded perks are in addition to the other benefits the card carries, including a free checked bag for the cardholder and six others included in his or her party; three times the miles on Alaska Air purchases; and an annual companion fare for $121.

Alaska Air's mileage plan currently features 17 international and domestic airline partners, flying to more than 800 global destinations. Alaska Air says its mileage plan was rated number one among airline rewards programs by U.S. News.

It should be noted that an airline credit card is probably not the best choice for people who rarely travel by air. While there are other rewards associated with the cards, the most lucrative are associated with air travel.

Other options

For example, the Frontier Airlines Credit Card is another attractive choice. Right off the bat, new cardholders earn 40,000 bonus miles after spending $500 the first 90 days the account is open. Those 40,000 bonus miles are good for two round-trip domestic tickets, subject to availability.

Customers earn double miles per $1 spent on Frontier Airlines purchases and one mile per $1 spent on all other purchases.

Customers earn a $100 Frontier Airlines flight discount voucher after spending $2,500 or more in purchases during the card membership year.

For consumers who do not travel by air that much, a rewards card with a generous cash back feature is the better choice. Here are some options to consider.

Alaska Airlines has made a couple of benefit changes to its Visa Signature Card. The credit card no longer carries foreign transaction fees, and bonus mile...

Best credit cards for a major purchase

These cards provide up to 21 months with no interest

Personal finance experts are quick to tell you that the best way to stay out of financial trouble is to not carry a credit card balance. When the bill comes in each month, pay the full amount.

But not everyone follows that advice. Statistics vary depending on the source, but the average U.S. household carries $5,000 to $6,600 in credit card debt at any given time. Making matters worse, they may be paying 20% or more in interest, depending on their credit ratings.

Most consumers who carry a balance probably didn't intend to do so – there was an unexpected dental bill or car repair here and there, and debt just started to pile up.

Credit card debt is very expensive. There are almost no interest rates in single digits. If you have excellent credit, maybe you'll pay 12% APR. If your credit is so-so, you can expect your rate to be significantly higher.

Low interest cards

So if you are thinking of applying for a credit card and using it to make a major purchase, you want a card that charges as little interest as possible. In that case, your best choice will probably be a card that charges no interest for an introductory period – and the period should be as long as possible.

These cards are mostly marketed for transferring balances from high interest cards, but fortunately they also extend the same 0% perk for purchases, at least for a limited time. If you need a few months to pay for a new refrigerator, for example, one of these cards might be worth considering.

Citi Diamond Preferred Card

The Citi Diamond Preferred Card is a favorite of consumers who are transferring a balance, because it provides a 21-month 0% interest introductory period on balance transfers. Fortunately, it also offers a 21-month interest-free period on purchases.

Other benefits include no annual fee and 24/7 access to personalized concierge service, providing help in booking hotels and flights and finding entertainment. You'll need an excellent credit score to get it, however.

Citi Simplicity Card

The Citi Simplicity Card also offers 21 months with no interest on both balance transfers and purchases. Other perks include no late fees, no penalty rate, and no annual fee.

Both of the Citi Cards carry a 3% balance transfer fee, but if you only plan to use the card to make a purchase that you will pay off during the 21 month introductory period, you don't really care. This card also requires an excellent credit score.

Chase Freedom

If your credit score isn't excellent, but only good, you might consider the Chase Freedom Card. It has a 0% introductory period, but for only 15 months.

But since it's a rewards card, it offers some other benefits as well. For example, if you spend $500 during the first three months the account is open, it pays you a bonus of $150 cash back, which can go toward that new refrigerator. You can earn 5% cash back on up to $1,500 in spending in different rotating categories.

Just remember that after you've made your major purchase with any of these three cards and paid for it, interest-free over 15 to 21 months, regular interest rates will apply on any remaining balance. so you'll want to make sure the purchase is completely paid for by then.

From then on, use the card like any credit card – just pay the balance in full each month.

Personal finance experts are quick to tell you that the best way to stay out of financial trouble is to not carry a credit card balance. When the bill come...

What consumers know about their credit cards

They're largely in the dark about fees and rewards

If you ask most consumers about credit cards, they'll tell you they are handy ways to make a purchase online or in a store.

Since millions of consumers carry credit card balances, they will also likely tell you that a credit card is an easy – albeit expensive – way to borrow money, since you could theoretically make payments on something forever.

Beyond that, consumers don't think much about the credit cards in their wallets. We know that because of a new study by NerdWallet, in which researchers asked consumers about their credit card knowledge.

Among the key takeaways is the fact that 41% of cardholders don't consider foreign transaction fees and fees for cash advances when they select a credit card. Nearly a third admitted to being confused by fees in general.

Confusion about rewards

About one-third of consumers with credit cards are also unsure how to rack up rewards. Although most – 73% – attach value to rewards, 19% said they don't really understand the dollar value attached to their card's rewards.

There also seems to be some confusion about what kind of points and rewards are most valuable.

“Most Americans would get more value from a general purpose, 3% cash-back card than a gas card issued by a national station chain,” the authors write. “Our analysis showed that gas prices would need to fall to $1.20 per gallon or lower for the typical gas card rewards to top a general purpose card that offers 3% cash back on gas purchases.”

Admittedly, if you aren't planning to travel outside the U.S., foreign transaction fees might not be a concern. However, NerdWallet reports that the foreign transaction fee on major credit cards can be as high as 3% on purchases.

Annual fee is most important to most

When it comes to fees, most consumers are focused on whether a card has an annual fee. Eighty-seven percent said they consider an annual fee when they decide to apply for a card.

It's probably not surprising that many consumers don't understand their card's rewards system, since systems and rules can differ card to card and be somewhat confusing. General rewards can come in the form of dollars, points, or miles. The value of each can vary, even within card types.

The NerdWallet study found in the case of airline cards that points or miles earned can be worth as much as three cents or less than a penny. The way the cardholder decides to redeem the reward can also affect its value.

If you ask most consumers about credit cards, they'll tell you they are handy ways to make a purchase online or in a store.Since millions of consumers ...

Chase offers new rewards credit card

Chase Freedom Unlimited pays 1.5% cash back on everything

Chase is now advertising a new credit card, the Chase Freedom Unlimited Card, a companion to its Chase Freedom Preferred.

While the Preferred pays 1% cash back on most purchases, and 5% on rotating categories, the Unlimited, as its name implies, pays 1.5% cash back on an unlimited amount of everything, with no annual fee.

The card has four main features that make it attractive. First, the aforementioned 1.5% cash back on every purchase. Other cards usually have caps.

You can redeem for cash back at any time, and the rewards you rack up don't expire, assuming your account remains active.

Bonus cash

The card also pays a $150 bonus after you spend $500 during the first three months the account is open. If you add an authorized user, you earn another $25 reward, if that user also makes a purchase during the first three months.

The Unlimited also has a 15 month introductory rate of 0% APR on purchases. That would allow you to finance a significant purchase and pay for it over 15 months without paying any interest.

If you want to transfer a balance from another card, you get the same 15 month introductory period at 0% interest. However, there is a 5% balance transfer fee.

After the 0% introductory period, the variable interest rate on both purchases and balance transfers is 14.24%, 19.24%, or 23.24%, depending on creditworthiness.

Consumer protections

Like many credit cards, the Unlimited comes with some consumer protections. In case of fraud, the cardholder has zero liability. It also allows you to decline a rental car company's collision damage waiver, providing replacement coverage at no extra charge, as long as you use the card to pay the entire cost of the rental car.

There is also an insurance policy of sorts on new purchases. The Unlimited's Purchase Protection feature covers your new purchases for 120 days against damage or theft up to $500 per claim and $50,000 per account.

Its price protection feature can make sure you always get the best price. If a card purchase made in the U.S. is advertised for less in print or online within 90 days, you can receive the difference, up to $500 per item and $2,500 per year.

Chase is now advertising a new credit card, the Chase Freedom Unlimited Card, a companion to its Chase Freedom Preferred.While the Preferred pays 1% ca...

Consumers relying more on credit cards

But American Bankers Association says consumers are exercising financial discipline

Consumers are spending more money with credit cards, a stat that can have either positive or negative implications.

The American Bankers Association (ABA), which has issued its May 2016 Monitor, sees mostly the positive. It says consumers are spending more, but are exercising discipline.

The report reflects data from the fourth quarter of 2015, when ABA counted more than 80 million new credit card accounts, a 16% rise from a year earlier. ABA did not express concern at a 26% increase in subprime credit cards, noting the number of accounts remains well below pre-Great Recession levels.

ABA says that number actually shows the results of efforts to extend more credit to people who have been unable to obtain it since the financial crisis. It said the number of prime and super-prime credit accounts also posted increases.

“Recent growth in the credit card market largely mirrors what we’re seeing in the economy’s consumer sector,” said Jess Sharp, executive director of ABA’s Card Policy Council.

Sharp says labor markets are still relatively strong, wages are slowly climbing, and gasoline prices remain low. He says it all translates into a healthier outlook for both consumers and the credit card market.

Most cardholders carry a balance

There were slight increases in both accounts where the cardholder carries a balance and accounts that are paid in full at the end of each month. According to the ABA report, 42.1% of all credit card accounts maintain a balance. It found nearly 30% of cardholders pay the full balance each month.

Outstanding credit card balances, as a share of disposable income, rose to 5.38%, but ABA said it is still relatively low.

“Even as consumers more actively use their credit cards, they continue to do a good job of managing credit to ensure they’re spending within their means,” said Sharp.

The report shows credit card issuers are consistently increasing consumers' credit lines, but mostly for cardholders with prime credit. Super-prime accounts saw credit limits rise 2.4% and prime consumers got 1.6% more on their credit line. Subprime credit lines expanded less than half a percent.

Consumers are spending more money with credit cards, a stat that can have either positive or negative implications.The American Bankers Association (AB...

Three credit cards for consumers with excellent credit

Excellent credit has its privileges when it comes to credit cards

How's your credit score? If it is a number that's considered “excellent,” you shouldn't respond to just any random credit card offer.

If you do, you could be leaving money and services on the table. That's because credit card companies have cards for different levels of credit worthiness. They save the best benefits for consumers with excellent credit and, as a rule, have no annual fee.

Excellent credit, by the way, is considered a FICO score of between 750 and 850.

Chase Slate

The Chase Slate has a couple of features that make it an attractive choice. If you are carrying a balance on another card, you can transfer the balance to your Chase Slate card with no transfer fee, as long you do it during the first 60 days the account is open.

On the other hand, if you have an excellent credit score, you might not be carrying a balance, negating one of the card's primary benefits.

Another nice feature is a monthly FICO credit score, given at no charge. While there are several sites now that provide a “free credit score,” these scores are not always your FICO score, a proprietary formula that most lenders rely on to make credit decisions.

What you won't get with the Chase Slate are generous cash back rewards, so it might be wise to consider a rewards card instead if you don't need the balance transfer feature.

BankAmericard Cash Rewards

While there are many cash back rewards cards for consumers with excellent credit, the BankAmericard Cash Rewards card is definitely worth a look, especially if you are already a Bank of America customer.

Upon signing up, the card pays a $100 cash bonus after you spend $500 in the first 90 days the account is open. You earn 3% cash back at the gas pump, 2% at the supermarket, and 1% on all other purchases. In all, you can earn up to $1,500 in combined purchases each quarter.

If you are a Bank of America customer, you can get a 10% customer bonus every time you redeem your cash back into your checking or savings account. For Bank of America Preferred Rewards clients, that bonus can be 25% or more.

There are plenty of other good rewards cards. You can check out some of them here and here.

Citi Diamond Preferred

If you would like a lot of extra services with your credit card, then you might consider the Citi Diamond Preferred card. VIP treatment is its main attraction.

Cardmembers are entitled to 24/7 access to personalized concierge service, providing help in booking hotels, flights, and concert tickets.

It also has a fairly lengthy 0% introductory period for balance transfers – 21 months. However, there is a fee for these transfers, ranging from a minimum of $5 to a maximum of 3% of the transferred amount.

How's your credit score? If it is a number that's considered “excellent,” you shouldn't respond to just any random credit card offer.If you do, you cou...

Three good credit cards for small business owners

All three have business-friendly features and no annual fee

In the last eight years, since the financial crisis drastically increased the unemployment rate and many people had to rely on their entrepreneurial instincts, there has been a surge in people going into business for themselves.

It hasn't hurt that the Internet now provides a global marketplace and social media is a cheap way to advertise.

Small business owners, as they grow, usually find the need for a business credit card, to keep business expenses separated from personal spending. And credit cards designed specifically for business use come with some tools and advantages that a small business owner might find useful.

Here are three credit cards small business owners might consider. While the three cards have different features, all three have a very important one – no annual fee.

Spark Cash Select From Capital One

The Spark Cash Select From Capital One is a rewards card, providing unlimited 1.5% cash back on every business purchase. There is no minimum to redeem and cardholders earn a one-time $200 cash bonus once they spend $3,000 on purchases within the first three months.

If employees need cards, they can be added to the account at no cost and their spending helps rack up rewards.

If you need to finance some purchases, the card has a 0% intro APR until January 2017. After that, the rate can vary from 13.24% to 21.24%.

Blue for Business Credit Card from American Express

With the Blue for Business Credit Card from American Express, you get 10,000 Membership Rewards points as soon as you make a purchase during the first three months of card membership. Like the Capital One card, you have the option of carrying a balance for nine months at a 0% rate. After the introductory period, the rate ranges from 11.49% to 19.49%, based on your creditworthiness.

While the Amex card is nice for using points toward purchases and payment flexibility, it also comes with purchase protection features. Eligible purchases made with the card are protected against accidental damage and theft for up to 90 days from the date of purchase.

There is also a baggage insurance plan, protecting the cardholder against lost, damaged, or stolen baggage when you pay for the entire fare with your card.

Ink Cash Credit Card

The Ink Cash Credit Card from Chase is another rewards card intended for business, providing 5% cash back on the first $25,000 spent in combined purchases at a number of business retailers and service providers each account anniversary year. They include office supply stores, cellular phone providers, and landline, internet, and cable TV services.

Cardholders will get 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year. It pays 1% cash back on all other purchases.

This card comes with some handy tools. You can set individual spending limits on employee cards and get an instant alert every time a purchase is made.

You can also snap, tag, and file receipts instantly with the card's mobile app.

In the last eight years, since the financial crisis drastically increased the unemployment rate and many people had to rely on their entrepreneurial instin...

Dick's Sporting Goods relaunches rewards credit card

Store-issued cards can be rewarding but usually carry higher interest rates

Sporting goods retailer Dick's Sporting Goods is relaunching its Rewards of Sport Credit Cards, issued by Synchrony Bank.

The company said it would continue to offer two different cards under the program. One – the Rewards of Sport Credit Card – remains a private label card for use at all Dick's Sporting Goods, Field & Stream, and Golf Galaxy locations.

The Rewards of Sport MasterCard is a more general purpose card. It can be used at all the same locations, in addition to any other retail location that accepts Mastercard.

Dick's says its cardholders will get some new benefits under the relaunch, including 10% back in rewards on in-store purchases the first day the account is active.

Periodically, consumers using the card may have the option of financing in-store purchases.

Cardholders will also still get upgraded ScoreCard Rewards benefits on purchases. They include 6% back in rewards on routine in-store purchases and 1% back in rewards on purchases in other stores where MasterCard is accepted. That benefit will apply only to Rewards of Sport MasterCard holders.

Other store-issued cards

Store-issued credit cards have become more common in recent years, with retailers using them as a means to build brand loyalty. Some are more rewarding than others, but consumers who choose a store-issued card should make sure the store is a place they shop frequently.

In its analysis of store-issued credit cards, Consumer Reports says most store-issued credit cards carry interest rates much higher than you would pay on other cards. If you are in the habit of paying the balance in full, each month, it's not really an issue.

Often retailers will offer an attractive discount of 15% or so on whatever you happen to be buying if you apply for their card on the spot. While that might be tempting if you are making a very large purchase, consumers should guard against opening too many credit card accounts because of the potential negative impact it can have on credit scores.

Sporting goods retailer Dick's Sporting Goods is relaunching its Rewards of Sport Credit Cards, issued by Synchrony Bank.The company said it would cont...

Survey finds college students credit card knowledge lacking

Two-thirds who have credit cards carry a balance each month

In many cases, young people have their first experience with credit cards when they go off to college. Some handle the experience better than others.

Lendedu, a student loan marketplace, recently quizzed college students at three different four-year institutions about their credit card knowledge. The results suggest that colleges would do well to add a few personal finance courses to the curriculum.

Off the bat, the survey found that only 38.46% of the students it polled have a credit card in their own name. That means the rest either do not have a credit card or, more likely, use a card that is in their parents' name. As a result, these students never see a credit card bill and have less accountability.

The survey found only 9.44% of students knew the interest rate on their credit card. If you paid off your account in full each month, you would have no real need to know the rate. But the survey shows that, unfortunately, this is not the case.

Two-thirds carry a balance

A full two-third of students – 67.78% – carry a balance on their credit card, exposing them to mounting debt, in addition to any student loans they might have. Perhaps because so many students carry a balance, a fairly large percentage – 58.89% – knew precisely the credit limit on their card.

Not all students have credit cards, and the survey takers wondered why not. Forty-three percent said they had considered applying for a credit card, but had not done so.

Almost the same number admitted the reason they had not applied was the fear they would run up too much debt.

CARD Act

In years past, college freshmen were bombarded with credit card offers as soon as they moved into their dorms. In 2009, Congress passed the Credit Card Accountability, Responsibility and Disclosure (CARD) Act.

The Card Act enacted a number of reforms, including curbs on credit card marketing efforts targeting college students. Students still get credit cards but are under much less pressure to do so.

A credit card can be a useful financial tool if used properly. A rule of thumb is to never charge anything you can't pay for at the end of the month. If you pay the bill in full, you start each billing cycle with a clean slate and won't accumulate debt.

Several credit cards are specifically designed for people who are new to credit, with forgiving features to keep consumers out of trouble. We recently profiled three cards that could be good choices for students who are considering a credit card.

In many cases, young people have their first experience with credit cards when they go off to college. Some handle the experience better than others.Le...

Best credit cards for poor credit, bad credit, and no credit

Used responsibly, they can be tools for rebuilding your credit

Let's face it, not everyone has perfect credit. A financial setback here and there can result in a credit history that is either poor, or downright awful.

Then again, you might be new to credit and have no credit history at all.

Fortunately, there are credit cards designed with you in mind. In all three cases, you will probably find that you can only qualify for a secured credit card. A secured credit card is one that is backed up by a refundable security deposit.

The amount of the deposit is the amount of your credit line. If you make a deposit of $500, then you can have a balance of up to $500.

While many people get credit cards in order to expand their purchasing power – spending money they don't have – that's a ticket to financial trouble. The best way to use a credit card is as a convenience in lieu of writing a check. When the bill comes, you should have the money to pay your bill in full.

If you can do that month in and month out, any one of the three credit cards below will not only provide that convenience but will help you quickly build your credit as you establish good money-managing habits.

Poor credit

If your credit classifies as “poor,” consider the Discover It Secured Card. For starters, there is no annual fee and no late fee on your first late payment. However, if you are trying to rebuild your credit, having any late payments should be avoided.

Even though this is a secured credit card, it is not without rewards. You can earn 2% cash back at restaurants and gas stations on up to $1,000 in combined purchases each quarter. The reward on all other purchases is 1%.

For new members, Discover will match all the cash back you earn in the first year, getting you off to a great start.

After 12 months, Discover will review your history to see if you can get your security deposit back. It reports your credit history regularly to the three credit agencies.

Bad credit

If your credit is bad, you might apply for the Capital One Secured Card. There is no annual fee, and you receive all the credit building benefits of any credit card as long as you use the card responsibly.

Keep in mind this is different from a pre-paid card, which does nothing to help your credit score. Capital One reports your payment history to the three credit agencies.

No credit

If you have never had a credit card, or never borrowed money, you can find it difficult to get started. No one, it seems, wants to be the first to extend you credit.

A secured credit card, from Open Sky Visa, might be an answer. You can establish a credit line of between $200 and $3,000, depending on the amount of your refundable security deposit. The one drawback is a $29 annual fee.

This card requires no credit history in order to apply and it reports monthly to all three credit bureaus, helping you quickly build a credit history through responsible use of the card.

Let's face it, not everyone has perfect credit. A financial setback here and there can result in a credit history that is either poor, or downright awful....

There are big differences between rewards credit cards

Choose the one that best rewards your spending patterns

There are many rewards credit cards to choose from, and some rewards are better than others. But do you know how much better some are?

The personal finance website CardHub.com recently calculated what cardholders stand to get over a two year period, then did a side-by-side comparison. Over that two year period, the study found an $800 difference between the best and worst rewards.

According to the authors, Capital One offers the best credit card rewards program, with a score 49% higher than last place finisher TD Bank. The difference between the two programs is $812 over two years.

Capital One offers two Quicksilver rewards cards – the Quicksilver Card for excellent credit and the Quicksilver One Card for just average credit.

The Quicksilver Card for excellent credit provides unlimited 1.5% cash back on every purchase. In addition, there is a one-time $100 bonus if you spend $500 on purchases within the first three months.

The Quicksilver One Card is almost as rewarding. It has the same unlimited 1.5% cash back on every purchase but lacks the $100 bonus. It also charges a $39 annual fee while there is no fee with the Quicksilver Card.

By way of comparison, the TD Bank Visa Credit Card pays a $100 bonus when you spend $500 in the first 90 days. It also pays 2% on purchases from local delis, fast food restaurants, and coffee shops, as well as casual restaurants and fine dining, plus 1% on all other eligible purchases.

Most rewarding for travel

How you use your rewards can also make a difference in the benefits. For example, the study found using Capital One rewards for travel produced 54% more value than using the points for merchandise.

Ease of use for rewards is sometimes a major factor. The study found Discover has the most consumer-friendly redemption policies; Fifth Third Bank has the most restrictive policies.

The authors offer some advice for choosing a rewards card. They say to start with identifying where you tend to spend the most money and to find a card that rewards that particular activity. For example, if you rarely eat out, don't choose a card that weights its rewards toward restaurant spending.

Consider a card's earning potential, but don't overlook the redemption value. Both are important. Look for a nice balance between the two.

If you are not particularly detailed-oriented, choose a card with the fewest hassles. If you are undecided about which rewards suit you best, go with cash back. It's usually hard to beat cash.

Finally, don't overlook annual fees. Choosing a card with no annual fee will put you ahead. Paying an annual fee will cut into any rewards you might gain.

There are many rewards credit cards to choose from, and some rewards are better than others. But do you know how much better some are?The personal fina...

First-time homebuyers worry about their credit scores

With tighter mortgage underwriting standards, a good credit score has never been more important

Shopping for a home is a pretty intimidating process, but a new report from Experian suggests that it is often even more so for today's first-time homebuyer.

It's hard enough to save for a down payment. Beyond that, however, the survey found that many consumers approaching the buying process for the first time worry about their credit score.

There may be good reason to worry. In the wake of the collapse of the housing market, mortgage underwriting standards have tightened considerably. Lenders are demanding higher scores from buyers than ever before.

In the Experian survey, 34% of would-be buyers expressed worry that their credit score might hurt their chances to obtain a loan. Another 45% said they would put off a home purchase to give themselves more time to raise their credit score.

"Your credit profile is one of the factors that can have a substantial impact on securing a home loan because it is used by lenders as an indicator of your financial health," Rod Griffin, director of Public Education at Experian, said in a release. "Consumers planning to purchase a home should check their credit scores and reports to see where they stand.”

Once consumers know their score, they pretty much know where they strand. From there, they can develop a financial plan that results in obtaining a mortgage.

Also determines interest rate

What many would-be buyers don't realize is that a credit score not only determines whether you will get a loan, it also determines the interest rate you will pay. An excellent credit score will usually qualify a borrower for the best rate.

According to Bankrate.com, a credit score of 740 or above will qualify you for the best rates. A score below 620 not only makes it less likely that you'll get a loan, but will saddle you with the highest interest rate.

The difference between the best and worst mortgage rate can be a swing of 1.5%. In terms of dollars and cents, on a $150 mortgage, that can mean a difference of $135 in the monthly payment, adding up to an extra $1,620 per year.

How to improve your credit score

If you are trying to improve your credit score so you can go home shopping, Fair Isaac, the company that produces credit scores, says there are three important things you can do:

Check your credit report: You can get a free copy at www.annualcreditreport.com. Download a copy from all three credit reporting agencies and check it for accuracy. If there are errors – and there can be – you'll need to get the information corrected.

Pay your bills on time: One of the biggest influences on your credit score is how reliable you are when it comes to paying your debts. Make sure all bills get paid, in full, on time.

Reduce your debt: If you have a large credit card balance, particularly if you have nearly maxed out your card, work on reducing it. You don't have to pay it down to zero, but the balance should not greatly increase your debt to income ratio. Showing you can manage debt will do wonders for your credit score.

Shopping for a home is a pretty intimidating process, but a new report from Experian suggests that it is often even more so for today's first-time homebuye...

Visa says it has upgraded chip card technology

The company hopes to encourage its use with faster processing

According to Visa, consumers have received more than 265 million Visa credit and debit cards, making the U.S. the largest market for chip-embedded cards in the world.

However, just 20% of all merchant locations now have chip-enabled terminals.

Back in February, payments consultant Allen Weinberg speculated that large retailers are reluctant to begin using the new terminals because they think they are inefficient.

“They see [chip cards] as just slowing down lines and chose to wait until consumers learned what to do – and do it quickly – at someone else’s store,” Weinberg wrote.

Visa has announced a chip technology upgrade that it says will speed things up a bit and perhaps prompt more retail outlets to start using the chip-enabled terminals. The upgrade is called Quick Chip and is available at no charge to payment processors, banks, and other payment networks to offer to merchants.

Speeds up processing

Visa says Quick Chip streamlines chip card transactions by speeding up the processing. As a result, a customer can dip and remove his or her EMV chip card in two seconds or less, even removing the card before the transaction has completed processing.

The net result, says Visa, will be faster checkouts and processing. The card can be inserted and removed while items are still being scanned – a feature of the magnetic strip cards that makes them more efficient, if less secure.

In fact, Mark Nelsen, a senior vice president at Visa, says the upgrade will make the checkout experience using the chip cards comparable to the ease and speed of magnetic strip transactions.

Liability shift

The chip card readers were introduced in October, when liability for fraudulent transactions passed from credit card companies to merchants. The chip cards are more secure, though the National Retail Federation has argued that requiring only a signature when using the cards, and not a PIN, is a very real security flaw.

While most consumers have now received at least one chip-embedded debit or credit card, they aren't finding many places where they can use the new technology. Visa says its technology upgrade addresses a very real reason why.

Visa says the software needed for the upgrade can be downloaded with ease to any chip-compliant payment terminal. It says the technology will function with all cardholder verification methods, including signature and PIN. It does not require a merchant to make any changes to the way transactions are routed or handled.

It also does not require further testing if the terminal has already been certified as EMV chip compliant.

According to Visa, consumers have received more than 265 million Visa credit and debit cards, making the U.S. the largest market for chip-embedded cards in...

A 0% balance transfer card can save you thousands

Two cards now offer 21 months of 0% interest

If you are like most consumers, you are trying to pay off a balance on a credit card or two. Given the high interest rates on credit cards, that's often hard to do.

By transferring a balance from a high interest credit card to one that has no interest charges, the payoff can occur much faster. There are several credit cards that are specifically designed for balance transfers, giving the cardholder a few months of 0% interest.

Lately, these introductory periods have gotten longer, so if you are not taking advantage of them, you're leaving money on the table.

How much can you save? Let's do an experiment to find out.

Experiment

Let's suppose you have a $10,000 balance on a credit card that charges 15.9% interest. You have found $500 a month in your budget to apply to paying off the balance, so how many months will it take?

Using a credit card payment calculator at Bankrate.com, we discover that it will take two years – 24 months.

But suppose you were able to roll the entire $10,000 over to a credit card with 0% interest. Making the same $500 a month payment, you would pay off the balance in 20 months – four months sooner, saving $2,000 in interest payments.

But is any credit card going to give you 20 months of 0% interest? We know of two that will.

Citi Simplicity

The Citi Simplicity card offers a 0% rate on balance transfers for 21 months, meaning you would pay no interest during our hypothetical payoff period. Other perks of the Citi card include no late fees, no penalty rate, and no annual fee.

With just about any balance transfer card, there will be a fee involved in moving a balance from one card to another, which will cut into your interest savings. The Citi Simplicity card charges $5 or 3% of the transferred balance, whichever is greater.

In our experiment, that would amount to a fee of $300, meaning the total savings from the transfer would be $1,700.

Citi Diamond Preferred

The Citi Diamond Preferred card also has a 21-month 0% interest on balance transfers. Like the Simplicity card, it has no annual fee and charges the same balance transfer rate – $5 or 3% of the transferred balance.

Cardmembers also get 24/7 access to personalized concierge service, providing help in booking hotels and flights and finding entertainment.

Both cards are good options for saving on interest costs while paying off debt. However, you'll need a pretty good credit score to get either one.

If you want to avoid a balance transfer fee, the Chase Slate is the card for you. The 0% interest introductory period is a little shorter – 15 months instead of 21 – but there is no fee to move the balance. Credit score requirements are also a bit less than for the two Citi cards.

If you are like most consumers, you are trying to pay off a balance on a credit card or two. Given the high interest rates on credit cards, that's often ha...

What you should know about your credit report and score

The biggest influence on your credit score is timely bill payment

To understand money, it helps to understand credit. Today, big ticket items, like homes and cars, usually require a loan in order to purchase them.

Every consumer who has opened a credit account somewhere has a credit report and a credit score. Understanding both can help you be a better money manager. The Federal Reserve has compiled this helpful consumer guide.

Your credit report tells your credit history. It lists all the credit accounts you have, or had in the past. It indicates what the balance is and whether they are in good standing.

It will also show any existing public record involving you and your finances. If there is a court judgment against you, tax liens against your property, or bankruptcy, they will show up in your credit report.

A credit report will also contain a list of people or companies that recently requested a copy of your credit report.

Why it's important

Here's why your credit report is important: banks, insurance companies, prospective employers, and a lot of other people you interact with may get a copy of your credit report. What they look for is evidence of how you manage money.

A lender looks at your credit report to decide whether or not to lend you money. Insurance companies may adjust your rate depending on what they see in your credit report.

Prospective employers, if you give permission for them to review your credit report, may base their decision on whether or not to hire you by what they see in your credit report.

Service providers and landlords will also take a look at your credit report before doing business with you, so having a clean report is important.

The information contained in your credit report is used to assign you a credit score. That way, someone reviewing your credit history knows at a glance whether you have excellent credit or just fair.

Adding up your credit score

There are a number of factors that go into a credit score, but perhaps the most important – and the one you can most easily control – is whether you pay your bills on time. Paying every bill on time, every month, will push up your credit score faster than anything you can do. Having one or more debt collection actions against it will drag it down faster than anything else.

Having too many accounts open – or too few – can bring down a score. Tapping out the credit limit on a credit card will do the same.

By law, every consumer is entitled to review copies of his or her credit report compiled by all three credit reporting agencies each year. It's free, and you can start the process at www.annualcreditreport.com.

Getting a copy of your FICO credit score is not free, but can usually be obtained for a small fee.

To understand money, it helps to understand credit. Today, big ticket items, like homes and cars, usually require a loan in order to purchase them.Ever...

Consumers missing the boat on travel rewards credit cards

When you sign up can determine the payoff

When it comes to travel rewards credit cards, when you apply can make a big difference. At certain times of the year the rewards are much greater.

NerdWallet's 2016 Travel Credit Card Study shows most consumers are oblivious to this fact and are leaving an average of 15,338 rewards points on the table by applying for a card at the wrong time. That works out to an average of $177 in lost value.

Sean McQuay, NerdWallet's credit card expert, says consumers may love travel credit cards, but they aren't making the most of them.

Limited time offers

"Many consumers know that signing up for a travel card means getting a sign-up bonus, but most don't realize that there are limited-time offers that often push those sign-up bonuses up by an average of nearly $200 and that those offers follow a seasonal pattern every year,” McQuay said in a statement.

But by signing up at an optimal time, he says consumers can significantly improve the value of their credit card.

For general travel, November is the best month to sign up based on the sign up bonus. Despite that, the study found most consumers sign up for this type of card in July. As a result, NerdWallet estimates about 91% of consumers miss out on maximum rewards.

November is also the best month to sign up for an airline rewards card, but the study found that most consumers sign up for them in January.

For a hotel rewards card, the best time to sign up is August. Unfortunately, most consumers sign up for one in April, missing out on the maximum bonus.

Wait five months

It usually is not a good idea to sign up for a travel credit card just for a specific trip. In fact, it pays to wait at least five months between the time you get the credit card and when you take a trip. That's because many cards require a minimum amount of spending before the maximum reward kicks in.

But McQuay says if you are not currently earning rewards, it may be advantageous to take the current sign-up offer to make sure you begin accruing rewards immediately.

“Ultimately, only you can make the best decision about when you apply for a credit card," he said.

When it comes to travel rewards credit cards, when you apply can make a big difference. At certain times of the year the rewards are much greater.NerdW...

Three good credit cards for students

All three offer some rewards and forgiving features

Not all credit cards are alike, and some are better than others for certain periods of life. When you're young, it pays to have a credit card that takes that into account.

Fortunately, there are several credit cards designed specifically for young people still in school. Here are three pretty good ones.

Discover It Chrome for Students

The Discover It Chrome for Students has some forgiving features that might come in handy. There is no annual fee, no fee for going over your limit, no foreign transaction fee, and no late fee on first late payment. In fact, a late payment won't raise your interest rate, as it would with most other cards.

The rewards are pretty good too. You'll get 2% cash back at restaurants and gas stations, capped at $1,000 spending on the combined categories. You'll get 1% back on all other purchases.

Currently, Discover will match all the cash back received in the first year for new cardholders. It will also reward students for hitting the books, adding $20 cash back each school year your GPA is at least 3.0.

Freeze-It is a nice security feature, allowing you to prevent new purchases, cash advances, and balance transfers on misplaced cards instantly, using a mobile app or PC.

Wells Fargo Cash Back College Visa

The Wells Fargo Cash Back College Visa Card is another credit card that can benefit a young person with limited credit history. You can build your credit as you use the card – as long as you use it responsibly. There is no annual fee.

You can also rack up a few rewards along the way, earning 3% cash rewards on gasoline, groceries, and drug store purchases the first six months you have the card and 1% cash back on virtually all other net purchases.

Cash rewards can be redeemed in $25 increments and you can set it up so that the money is deposited into a Wells Fargo savings account. You can also apply the money to a qualifying Wells Fargo credit account or receive a check.

Journey Student Rewards card from Capital One

The Journey Student Rewards card from Capital One is another good choice for someone starting out to build a positive credit profile. You get 1% Cash back on everything you buy and there's no annual fee, so you are already ahead of the game.

Beyond that, Journey will send you text alerts so you know when your payment is due. Make the payment on time and Journey will give you a 25% bonus on the cash you've earned.

Not all credit cards are alike, and some are better than others for certain periods of life. When you're young, it pays to have a credit card that takes th...

Car shoppers getting new tool to check their credit

Free tool will be accessible through dealer websites

Equifax and Black Book Avtivator are teaming up to give consumers an easy way to check their credit score before heading to a car dealer. The tool – Black Book Activator eCredit – will be accessible on participating dealer websites.

The tool will allow car shoppers to check their Equifax Risk Score at no charge. While it isn't the consumer's FICO score, generally regarded as the industry standard, Equifax says its score is a key measurement that can help consumers better understand the financing options they will be offered.

Knowing your credit score going into a vehicle transaction is generally regarded as an important piece of knowledge. A good score should get you a good rate. A lower score may limit your financing options.

The information provided by the new tool is both instant and private. Equifax says it is not shared with third parties, including the dealer. The dealer will access the consumer's FICO score if and when the financing process begins.

Social Security number unnecessary

Equifax says using the new tool will also be secure. Unlike some sites providing free credit ratings, users will not have to enter Social Security numbers. The tool only needs a name, address and a couple of answers to a multiple choice quiz, to verify the identity of the user.

"Our testing and consumer feedback have shown that car shoppers want access to their credit scores as they are making buying decisions, but until now, there hasn't been a simple, non-intrusive way for auto shoppers to get an instant, accurate score without sharing a lot of detailed information," Mike McFall, president of Black Book Activator Division, said in a release."Working closely with Equifax, we've created an easy plug-in for dealers, and a truly risk-free way for consumers to gain insight about which vehicles might make the most sense for their budgets, moving them one step closer to purchase."

Market testing

The tool has been tested with several dealers before the rollout. Frances Looper, Internet Manager at Love Chevrolet in Columbia, S.C., says the tool is helpful for a dealer that makes its initial contact with prospective customers online.

“As a bonus, users don't leave our site to get the information, and they don't feel as if their privacy has been compromised,” she said. “It makes everything friendlier.”

Your credit score not only determines what kind of loan you receive, it may determine whether you can actually get a loan. Carfax notes that auto lenders generally have a more flexible definition of excellent credit than mortgage lenders.

It says a minimum credit score to finance a used car might be 640 to 680, depending on the dealer. Below that, you might be assigned a subprime loan, with rates three to five times higher than prime borrowers.

Credit score benchmarks are generally higher for new car loans.

Equifax and Black Book Avtivator are teaming up to give consumers an easy way to check their credit score before heading to a car dealer. The tool – Black...

Citi unveils Costco Go Anywhere credit card

New card offers more rewards, including 4% cash back on gas

In early March, Costco announced it had entered into a new credit card agreement with Citi to replace its current co-branded American Express card. Now, Citi has announced that the launch date for its new Costco card will be June 20.

Once issued, the Citi Visa Costco Go Anywhere credit card will serve as the Costco membership card, while providing rewards to users in the U.S. and Puerto Rico.

Citi says the new Costco Visa cards will be mailed in May. Costco members should follow the directions for activating the card but should keep using their current American Express card until the switch-over on June 20.

Rewards

Citi says its new Costco card will allow users to earn 4% cash back on eligible gasoline purchases, including at Costco pumps. The 4% reverts to 1% after $7,000 in gas purchases in a given year.

The card will pay 3% cash back at restaurants and eligible travel purchases. It pays 2% cash back on Costco purchases and 1% everywhere else.

Citi says Costco members who currently use the American Express card do not have to apply for the new Visa card. It will automatically be sent to members, who should destroy the Costco American Express card on June 20.

Current points

But what about any rewards that members may have piled up from American Express? Citi says customers won't lose them.

“Rewards that were not previously distributed to you will be transferred automatically to your new card on June 20, 2016, so you won’t lose any of the rewards you’ve already earned,” Citi said on its website. “Your February 2017 cash back rewards coupon from Citi will include cash back rewards earned on your Costco card from American Express during 2016 that were not previously distributed to you by American Express.”

However, if your Costco card from American Express earned Membership Rewards points, they will not transfer to your new card.  

In early March, Costco announced it had entered into a new credit card agreement with Citi to replace its current co-branded American Express card. Now, Ci...

Credit cards can help insure your rental car

We highlight three that provide primary coverage at no extra charge

When you travel, your credit card may offer a number of rewards, ranging from miles to cash back. A very useful reward is insurance coverage at the car rental counter.

Most consumers have been confronted with the question – do you want the rental car company's coverage? It's pricey, often costing $25 or more a day.

Actually, it isn't even insurance. It's technically a “collision damage waiver (CDW),” meaning the rental car company will assume liability, up to a certain amount of money. Usually it's enough money to cover most accidents.

Credit card protection

Most credit cards will offer some level of protection, usually secondary protection – meaning it would pay if the costs exceed the primary coverage – either the CDW or the consumer's personal auto insurance.

If you want primary insurance coverage at no extra charge, then it may be to your advantage to pay for the car rental with a card that provides it, such as the Chase Sapphire Preferred Card.

“Decline the rental company's collision insurance and charge the entire rental cost to your card,” Chase says on its website. “Coverage is primary and provides reimbursement up to the actual cash value of the vehicle for theft and collision damage for most rental cars in the U.S. and abroad.”

As a bonus, you can earn two Ultimate Rewards points for every dollar spent on travel.

Two other options

The Discover Escape Card also provides primary rental car coverage. Discover says all you have to do is use the card to pay for the rental car and you're covered for damage to the car.

A third option is the Fairmont Visa Signature Card. It provides an Auto Rental CDW benefit that will reimburse for damage due to collision or theft up to the actual cash value of most rental vehicles.

It is also primary coverage, which means you do not have to file a claim with your personal insurance carrier.

There is one big caveat, however, to all of these options. As you may have noticed, they all address damage, not personal injuries. Should you be in a rental car accident resulting in injuries, you will need to rely on your personal auto insurance policy.

Before renting a car, it's a good idea to review your policy to see if there are any exclusions that apply to rental cars.

When you travel, your credit card may offer a number of rewards, ranging from miles to cash back. A very useful reward is insurance coverage at the car ren...

Retailers want another reduction in swipe fee

Bank transaction costs have gone down, industry group claims

About five years ago, the Federal Reserve stepped in and imposed a cap, significantly lowering the “swipe fee” credit card lenders charged for each debit card transaction.

Mallory Duncan, a senior executive at the National Retail Federation (NRF), says the nation's retailers have passed along two-thirds of the $8.5 billion in annual savings to consumers. But he says the cap should be even lower.

“In most cases, 24 cents per transaction represents a significant savings over the prior non-competitive pricing,” Duncan said in a statement. “However, it is still substantially higher than issuers’ incremental costs.”

Key issue

The key, Duncan says, is following Congress's stated goal of keeping the transaction fee in line with banks' actual costs of processing the transaction. Looked at that way, he says, 24 cents is still overcharging both retailers and consumers.

Duncan made his comments to the Federal Reserve, which is required to review the swipe fee cap as a normal part of the regulation process.

The cap on swipe fees came about in the aftermath of the financial crisis. The sweeping Dodd Frank law required the Fed to monitor transaction fees, to ensure that they were “reasonable and proportional,” and that banks weren't making up for declining profits elsewhere by jacking up the revenue flowing from the retail sector.

12 cents became 24 cents

Originally, Federal Reserve staff estimated the average cost of processing a transaction at 4 cents, and recommended limiting the swipe fee to no more than 12 cents.

So how did it get to be 24 cents? Duncan says intense lobbying by the banking industry resulted in a cap of 21 cents, plus 0.05% of the transaction for fraud recovery, allowing another one cent for fraud prevention in most cases.

Last October liability for fraudulent debit and credit card purchases switched from lenders to retailers, with the introduction of the chip-and-signature card system. Duncan says the result has meant the banks' fraud recovery costs have gone down, and that credit card companies “may no longer have a legitimate basis” for collecting the fee dealing with fraud.

About five years ago, the Federal Reserve stepped in and imposed a cap, significantly lowering the “swipe fee” credit card lenders charged for each debit c...

Picking the best rewards credit card

First, decide what type of reward is best for you

Fortunately for consumers, the credit card business is highly competitive. Different issuers compete, not so much on the rates they charge borrowers – almost all are at least in the double digits – but in the rewards they offer for using the cards.

The problem for consumers is picking which rewards card is best. It isn't easy to do because it is all going to depend on the kinds of rewards that make the most sense for the individual consumer.

For example, if you are a frequent traveler, the Chase Sapphire Preferred Card may be a good choice. New customers who put $4,000 on the card in the first three months get $50,000 in bonus points. That's good for $625 toward airfare and lodging when you redeem them through Chase Ultimate Rewards.

There is no fee the first year, but cardholders are charged $95 a year after that. If you don't plan to aggressively take advantage of the rewards, this probably isn't the card for you.

Day-to-day purchases

Maybe you aren't much of a traveler, but need a card for day-to-day purchases. Then the Blue Cash Preferred Card from American Express might be your ticket.

Currently, you can get $150 cash back just by spending $1,000 in the first three months. That will pay the first two years of $75 annual fees.

The real rewards of the card come in the form of 6% cash back on up to $6,000 dollars per year on groceries – $360 – and 1% cash back on purchases over $6,000. You'll get 3% back at gas stations and department stores. As with most rewards cards, the cash back is applied as statement credits.

For those who make a lot of purchases from online retailers, the Discover It Card might be an attractive choice. Right off the bat, one of the best features of this rewards card is no annual fee. Saving $75 to $100 a year is a nice reward in and of itself.

The card pays 5% cash back on some, but not all, online purchases, and on other types of purchases as well. Categories are always changing, so you have to keep up. You can do so here.

All-purpose card

Suppose you have enough to do without keeping up with changing categories and just want a simple, all-purpose cash back card. Then you might consider the Citi Double Cash Card.

It pays 1% cash back on everything you buy, then gives you an additional 1% credit when you pay for it. As an added bonus, there is no annual fee.

Let's say your credit report has a few dents and scratches. That doesn't mean you can't enjoy some credit card rewards.

The Discover It Secured Credit Card is designed for consumers who are rebuilding their credit. Your credit limit is determined by the amount of money you deposit to secure your account. Deposit $500, and you can charge up to $500 each billing cycle. Deposit more and you can charge more.

You earn 1% cash back on every purchase and 2% cash back at restaurants or gas stations on up to $1,000 in combined purchases each quarter. Best of all, there is no annual fee and you get rewarded while rebuilding your credit.

Fortunately for consumers, the credit card business is highly competitive. Different issuers compete, not so much on the rates they charge borrowers – almo...

Banks tracking customers' cell phone locations to detect fraud

The opt-in program should also reduce declines when customers are traveling

As long as your cell phone and your wallet are in the same place, a new security effort by banks should improve your protection against credit card fraud.

U.S. Bancorp is one of the first banks planning to use a new service that tracks the locations of customers' cell phones to ensure that credit card charges are legit, according to a Wall Street Journal report. The service will be offered on an opt-in basis.

The tracking will help banks detect when a card is not in the customers' possession, a prime indicator of potential fraud. That saves money for banks, which typically cover the costs of fraudulent transactions, and could also be a big convenience for clients whose charges might be declined when they're away from home.

Discover and USAA are also planning to adopt the program, according to the Journal, which says Visa has estimated the tracking could reduce unnecessary declines by 30%.

While the tracking raises privacy concerns, the banks say they will use the location information only for security, not for marketing purposes. Nevertheless, while both Visa and MasterCard are offering the tracking program, most banks are taking a wait-and-see attitude.

As long as your cell phone and your wallet are in the same place, a new security effort by banks should improve your protection against credit card fraud....

Google introduces facial-recognition payment app

Leave the smartphone in your pocket. Just show your face and say "I'll pay with Google"

Why should you have to wrestle your smartphone from your pocket to pay for that double grande caramel macchiato?

Google doesn't think you should. It's working on a new facial recognition app called Hands Free that lets you pay for items in stores without takng your phone out of your pocket or purse.

Google released the experimental app today. The iOS and Android app relies on Wi-Fi, Bluetooth, and GPS to detect when you're near a participating retailer.

If so, all you have to do is walk up to the cashier and say, "I'll pay with Google" and the money is automatically transferred. It's currently operating in a small portion of the San Francisco Bay Area.

It's designed to be a companion to Android Pay, a separate payment service that now has about 9 million registered members. 

"We ... wanted to explore what the future of mobile payments could look like. Imagine if you could rush through a drive-thru without reaching for your wallet, or pick up a hot dog at the ballpark without fumbling to pass coins or your credit card to the cashier," wrote Pali Bhat, a senior director on the project. "This prompted us to build a pilot app called Hands Free that we’re now in the early stages of testing. It lets you pay in stores quickly, easily, and completely hands-free."

This might be a little too creepy for many consumers, and privacy advocates are likely to object to the idea of identifying consumers through a massive database of facial images. Google appears to be proceeding cautiously as it tests the reaction.

Why should you have to wrestle your smartphone from your pocket to pay for that double grande caramel macchiato?Google doesn't think you should. It's w...

Costco's transition to Citi Visas now set for 'mid-2016'

The switch from American Express had been expected to happen March 31

It was announced with much fanfare last year that the exclusive deal between American Express and Costco would end on March 31, 2016, when the Citi Visa would become the only credit card accepted by Costco.

There is, however, the little matter of $1 billion.

That's the estimated size of the portfolio of loans outstanding to 51 million holders of the co-branded Amex/Costco credit card. In a statement today, just 32 days away from the announced transition date, American Express said it has concluded negotiations with Citi, which will acquire the portfolio for about $1 billion.

"The sale is expected to close June 2016, at which time all eligible Costco American Express Card cobranded accounts will be transferred to Citi. Additional details will be provided to Card Members in advance of the partnership end date," American Express said in a statement.

If that sounds to you like the March 31 date has slipped, you're probably right. Here's how Citi put it: "The transaction is expected to close in mid-2016 at which time Citi will begin issuing Costco credit cards."

Costco has not troubled itself to issue any public guidance to its members, but Citi says it will issue new Citi Visas to all eligible holders of Amex Costco cards in "mid-2016."

"We are immensely pleased to have entered into an agreement to acquire the Costco portfolio and look forward to a long-term partnership with Costco and the opportunity to deliver value, convenience and seamless service to their 51 million loyal members across the country," said Jud Linville, Chief Executive Officer, Citi Cards.

Linville said Citi is "working with Costco to provide a new value proposition to its members."

It was announced with much fanfare last year that the exclusive deal between American Express and Costco would end on March 31, 2016, when the Citi Visa wo...

Despite having chip-enabled readers, many merchants aren't using the new technology

Experts speculate as to why only one in five U.S. retailers currently use their chip card readers

If you’re the proud owner of a chip-enabled credit card, you’ve probably noticed that not every card reader accepts the new technology. Despite having a slot for the new chip cards, many terminals still instruct customers to swipe the magnetic strip instead of dipping the chip.

Only about 17% of retail locations are currently equipped to accept chip cards. In other words, just one in five checkout lines are equipped with an activated chip card reader. 

So why is it that so many terminals are EMV compatible but haven’t yet been enabled to accept chip cards?

Wait-and-see approach

According to payments consultant Allen Weinberg, it’s because many retailers (particularly the larger ones) are taking a “wait-and-see” approach on enabling the chip card transactions. It seems they’d rather leave the task of teaching customers how to use the chip cards to other merhants.

“They see [chip cards] as just slowing down lines and chose to wait until consumers learned what to do -- and do it quickly -- at someone else’s store,” Weinberg wrote.

Weinberg notes that small businesses are another factor in the slow incorporation of EMV cards. Many of them aren’t even equipped with a chip-card enabled terminal yet.

Why? Weinberg says that like larger businesses, small business aren’t in a hurry to teach their community how to use the cards. They also either don’t think they’re at significant risk of fraud or simply weren’t aware the shift to chip cards was coming.

Cost might also be a factor for small businesses. Chip card readers and installation can cost anywhere from a few hundred dollars to thousands of dollars per terminal, as we reported. The industry average is around $2,000.

Liability shift

Now that we’re on the other side of the liability shift -- when credit card fraud became the responsibility of retailers instead of banks if they didn’t have their chip card systems running -- Weinberg says it won’t take much for merchants to “get religion,” as he puts it, and upgrade their systems. It’ll only take one instance of fraud or chargeback from people abusing the liability shift to motivate them to upgrade their terminals.

Terry Crowley, CEO of TranSend, a company that makes software to help merchants and their equipment work with the EMV standard, says there’s an invisible hand at work that is about to accelerate the incorporation of EMV cards.

“If you use a chip card at a point of sale that says swipe -- and you later say that wasn’t me -- there’s very little a merchant can do to dispute that charge,” Crowley tells Brian Krebs, adding that the "friendly" fraud is inevitable. “When people are made aware that if I swipe and I have a chip card, that lunch can be free if I’m a bad consumer.”

After this invisible hand takes hold, the U.S. will be able to jump on the chip card bandwagon with the rest of the world.

If you’re the proud owner of a chip-enabled credit card, you’ve probably noticed that not every card reader accepts the new technology. Despite having a sl...

Handling a dispute when the seller has your credit card

Getting a new credit card doesn't always help

Just about all transactions are done with plastic these days, so when a consumer decides to part ways with a company, he or she has to make sure the company stops entering charges on the account.

In most cases, this isn't an issue. But when a consumer wants to cancel a recurring charge and the company makes it difficult, the consumer may feel there are few options. This seems to happen a lot in the case of anti-virus software subscriptions or online dating sites that auto renew.

When you purchase anti-virus software, for example, you should assume that the account will auto renew when the subscription ends. The company will tell you it does that to make sure your protection is not interrupted because you forget to renew.

There might be some truth to that, but it is also a fact that many consumers decide after a year they don't need the product any longer, or are dissatisfied and want to try something else.

So pay attention if the company sends you an email – as it should – telling you the account is about to auto renew. If you don't find a way to turn off the auto renew, the charge will show up on your credit or debit card.

Free trials

People who sign up for free trials also find it sometimes hard to stop recurring charges. Usually, you have a set period – anywhere from seven to 30 days – for the trial. If you do not cancel before the period is up, the company will begin charging your credit or debit card on a monthly basis.

If you are lucky you will find a human being on the company's customer service line and work out an acceptable solution. But many companies have automated systems and consumers hang up in frustration.

When that happens, what do you do? What you don't do is cancel your card and replace it with a new one, with a different number. If you do, you might be surprised to learn that the company with your old credit card can keep charging your new one.

Account updater

That's because credit card companies offer a service to merchants, supplying them with updated account information about consumers with whom they do business. Sometimes that works to the consumer's benefit – they don't have to contact all the companies that have their credit card information.

But when the consumer changes cards to escape unauthorized charges, it definitely is not an advantage.

Visa offers a service called Visa Account Updater (VAU), and promotes it to merchants as a way to reduce authorization declines. An authorization decline, of course, is exactly what a consumer locked in a dispute with a merchant wants and expects.

“Merchants enrolled in VAU receive updates to cardholder account information, including new account numbers, new expiration dates, and/or contact cardholder notifications from participating Visa issuers,” Visa explains on its website.

ConsumerAffairs reached out to Visa's media relations department two days ago to ask if there is a means for consumers to exempt their accounts from VAU, but as yet we have received no reply.

What to do

If you believe the charge on your account is unauthorized, the first step is to contact your bank or credit card company and tell them you want to dispute a charge.

In most cases these institutions will be helpful, and when they get involved a merchant will pay attention. You may not be able to recover all the money taken from your account in the past, but you should be able to stop the recurring charges.

If you live in a state with a consumer-friendly attorney general, calling the AG's consumer hotline may help.

Finally, if other options continue to fail, filing a complaint with the Consumer Financial Protection Bureau may help. Here's the link.

And don't forget to post a review of your experience at ConsumerAffairs so that you can help other consumers handle similar problems.

Just about all transactions are done with plastic these days, so when a consumer decides to part ways with a company, he or she has to make sure the compan...

Higher One to pay restitution to nearly one million college students

Regulators say company omitted key information about fees in its marketing materials

Nearly one million college students who received financial aid payments through Higher One, an institution-affiliated party of WEX Bank, were victims of deceptive practices, according to the Federal Deposit Insurance Corporation (FDIC).

The affected students will share $31 million in restitution, according to the terms of a settlement between the financial institutions and the government. In addition, the financial institutions will pay a total of nearly $4 million in civil penalties.

When colleges and universities hand out financial aid to students, they use a firm such as Higher One to actually make the payments. After tuition and fees are paid directly to the schools, the rest of the aid, such as money for books, supplies, and living expenses, can be disbursed to students through Higher One's "OneAccount."

The OneAccount is a debit card-based product that is offered in partnership through financial institutions. WEX Bank has offered the OneAccount since May 4, 2012, according to FDIC.

Omitted important facts

After an investigation, the FDIC concluded that the Higher One website and marketing materials, which were approved by WEX Bank, omitted important facts about certain fees, features, and limitations of the OneAccount in violation of the Federal Trade Commission Act.

Left out, the complaint alleges, were details about other disbursement methods available to students, a full and complete fee schedule, and the availability of fee-free ATMs. As a result of these material omissions, FDIC charges Higher One improperly collected $31 million in fees from students from May 4, 2012, to July 15, 2014, the period covered by the enforcement action.

"It is important that financial products offered to college students under the sponsorship of their universities are clear, transparent, and trustworthy," FDIC Chairman Martin J. Gruenberg said. "Today's action holds both the bank and its student card partner accountable for the practices related to the products they offered to college students and provides restitution to those students harmed by these practices."

In trouble before

This is not Higher One's first brush with regulators. In 2012, it was required to pay $11 million to 60,000 students over the ATM transaction fees it charged.

If you are an affected student, the FDIC says you do not have to take any action to collect compensation. The financial institutions will contact you.

At the same time, former students should be on guard against scammers who claim to be representing one of the parties and demand some kind of “fee.” No payment of any kind is required to receive compensation.

Nearly one million college students who received financial aid payments through Higher One, an institution-affiliated party of WEX Bank, were victims of de...

Consumers having easier time paying credit card bills

Balances are way up, but delinquency rates are way down

Experian released a report this week that, at first blush, looks like bad news. But a closer reading might indicate consumers might not be so bad off.

The Experian Third Quarter Market Intelligence Brief shows consumer credit card debt has reached is highest level since the fourth quarter of 2009. Some economists might see that as worrisome.

If consumers are loading up credit card balances because they can't make ends meet, there's no question that's something to be concerned about. But if debt is rising because consumers are making more purchases and have confidence they can pay it back, that might be different.

Delinquency rates plunge

Delinquency rates would suggest whether consumers are struggling with the rising debt. The third quarter numbers suggest they aren't.

According to Experian, credit card delinquency rates on outstanding balances 60 or more days past due have decreased 71% during the three month period. Combining those indicators with the national unemployment rate dropping 50% during the same span, the authors contend, illustrates a positive economic outlook on credit card trends among lenders and consumers.

“Overall credit card limits have increased 102% since Q4 2009 with $82 billion originated in Q3 2015,” said Kelly Kent, vice president of Experian Decision Analytics. “The increase in limits from lenders and the steady climb in credit card debt combined with exceptional delinquency rates signals greater confidence among consumers as they are showing more assurance in managing their credit since the recession.”

Experian said it expects to see credit card debt increase in the current quarter, since consumers historically spend more, and put much of that spending on plastic, during the holiday season.

Cautionary interpretation

Credit card website CardHub.com raised concern last week when it reported its analysis of data shows consumers erased almost all of their first-quarter credit card paydown during the second quarter of the year, racking up a staggering $32 billion in new balances.

In the third quarter, it reported consumers added another $21 billion to the tab, making for the largest second and third quarter binges since CardHub began conducting this study in 2009 – a finding that coincides with the Experian report.

But CardHub's interpretation of the data is more cautionary, saying the projected 2015 net increase of $68.5 billion in new credit card debt puts the country perilously close to a tipping point, at which balances become unsustainable and delinquency rates could skyrocket.

Experian released a report this week that, at first blush, looks like bad news. But a closer reading might indicate consumers might not be so bad off.T...

Credit card debt remains a major question mark for the economy

Two independent reports see consumers moving back to carrying large balances

To understand how the American consumer is doing, it's important to keep an eye on credit card debt.

Despite the fact that 2015 started with a lot of promise, with consumers paying down nearly $35 billion in balances during the first quarter, a new report suggests things started to go downhill after that.

Credit card website CardHub.comreports an analysis of data shows consumers erased almost all of their first-quarter paydown during the second quarter, racking up a staggering $32 billion in new balances.

Third quarter binge

In the third quarter, consumers added another $21 billion to the tab, making for the largest second and third quarter binges since CardHub began conducting this study in 2009.

As a result, CardHub is flashing a warning sign, saying the projected 2015 net increase of $68.5 billion in new credit card debt puts the country perilously close to a tipping point, at which balances become unsustainable and delinquency rates skyrocket.

Here are a couple of other discouraging facts from the study: The $21.3 billion in new credit card debt in the third quarter was the largest third quarter buildup since the Great Recession. It's 71% higher than the post-recession average.

Eight of the past 10 quarters show year-over-year regression in the way consumers are handling credit card debt. The conclusion? The authors suggest consumers are reverting to the bad habits they had before the downturn.

“Hopeless” amount of debt

Meanwhile, another credit card site, CreditCards.com, has released a survey showing a growing number of consumers believe they will never get out of debt.

Of those who have debt, 21% said they believe they are stuck with it for life. That's up from 18% in last year's survey and a big jump from 9% in 2013.

But not all consumers have debt, and here is a bit of good news. This year, 22% of those surveyed said they were debt-free, compared to just 14% last year.

The data paints a picture of two very different types of consumers who are now on two distinct financial paths – one healthy, the other not so much.

Since the Great Recession, one group has taken on more and more debt, to the point that it has given up hope of ever paying it off. Others, meanwhile, have reduced their debt balances and adopted sounder financial habits after years of becoming addicted to credit.

Paying it off each month

Despite the CardHub study showing rising credit card balances, an American Bankers Association (ABA) report has found that more consumers – about 30% – pay their balances down to zero every month – a post-recession high.

"You're talking about two distinct groups there, so it's not surprising," said James Chessen, chief economist with the ABA. "Generally, I'm bullish on consumers and how they have been handling their debt. However, there are some delinquencies, and there are some people who for various reasons have difficulty paying their obligations."

To understand how the American consumer is doing, it's important to keep an eye on credit card debt.Despite the fact that 2015 started with a lot of pr...

Feds tout benefits of CARD Act

Still, the CFPB concedes concerns remain about some practices

It's nice to know that every now and then a government action really does what it's supposed to do -- more or less. Case in point, the Credit Card Accountability Responsibility and Disclosure Act or CARD Act.

The Consumer Financial Protection Bureau (CFPB) has released a report that says the Act has helped reduce the cost of “gotcha” credit card fees by more than $16 billion. In fact since the reform law, total costs to consumers have fallen with the elimination of certain back-end pricing practices such as over-limit fees.

In addition, the CFPB says credit has generally become more available to consumers and the number of new accounts has grown faster than in almost every other major consumer credit market.

However, concerns remain about other back-end practices such as deferred-interest promotions that can hit consumers with unexpected costs.

“The CARD Act has helped people avoid more than $16 billion in gotcha credit card fees,” said CFPB Director Richard Cordray. “The law made it easier for consumers to evaluate costs and risks by eliminating the worst back-end pricing practices in the market. There is more work to do. But with commonsense rules in place, credit cards are safer and more affordable, credit is more available, and companies remain profitable with improved customer satisfaction.”

Big business

More than 60% of adults own at least one credit card account. In the first six months of 2015, more than 14.5 billion credit card transactions accounted for more than $1.4 trillion in purchase volume.

Before the CARD Act, widespread back-end pricing practices racked up costs for consumers through hidden fees and other gotchas. The intent of the CARD Act was to create a fairer and more transparent market by protecting consumers against unexpected interest rate hikes, excessive late fees, and hard-to-avoid over-limit fees.

The report finds that, generally, consumers are paying less for their credit cards than they did before the law, and those costs are easier to predict before they are incurred. In addition, credit availability has continued to expand for consumers. Specifically, the report found that since the CARD Act:

  • Consumers have avoided more than $9 billion in over-limit fees
  • Consumers have saved more than $7 billion in late fees
  • Total cost of credit is roughly 2% lower than before the CARD Act
  • Available credit has increased 10% since 2012
  • More than 100 million credit card accounts offer consumers free access to their credit scores

Continued concerns

While the CARD Act addressed many problematic practices in the market, the CFPB has outstanding areas of concern from the report, including:

  • Deferred-interest promotions that can hit consumers with back-end pricing
  • Subprime credit card companies charging much more for credit
  • Rewards programs containing obscure and incomplete terms and conditions
  • Debt collection practices that pose risks to consumers
  • Agreements that are still long and complex

It's nice to know that every now and then a government action really does what it's supposed to do -- more or less. Case in point, the Credit Card Accounta...

Target pays $39.4 million in settlement over 2013 data breach

There is still more work to be done, but the company is closer to putting the breach behind them

Due to its website going down, Target had a disappointing Cyber Monday this year; losing precious hours of shopping time means big money at this time of the year. This is nothing, though, when compared to the fiasco that the company went through in 2013 when a data breach compromised personal information for over 70 million consumers.

That debacle may finally be coming to a close soon. Target has agreed to pay $39.4 million to banks, credit unions, and lenders who are seeking reimbursement for issuing new debit and credit cards, as well as settling fraudulent charges made on consumer accounts during the 2013 holiday season.

The 2013 data breach was rather large in scope; Target estimated that at least 40 million credit cards were compromised and as many as 110 million consumers had their personal information stolen. As a result, they have beefed up security in recent years – including the installation of microchip-enabled readers at all locations.

Looking forward

Wednesday's settlement was not the first that the company reached as a result of the data breach. It reached an agreement with Visa Inc. card issuers earlier this year, paying out over $67 million. An additional $10 million dollars was paid out to shoppers as well.

Just last week the company spent $290 million in expenses related to the breach, $90 million of which it hopes will be reimbursed by insurers. Molly Snyder, a spokeswoman for Target, said that the company is “pleased that the process is continuing to move forward.”

Looking forward, the company will continue to work with financial institutions to settle all matters related to the data breach. “Financial institutions should not always have to bear the burden of extensive costs related to merchant data breaches over which they have no control,” said Charles Zimmerman and Karl Combronne, lawyers for several plaintiffs seeking a settlement.

Due to its website going down, Target had a disappointing Cyber Monday this year; losing precious hours of shopping time means big money at this time of th...

Most merchants still haven't adopted chip card technology

Holiday shoppers likely to encounter the old swipe card readers

With the holiday shopping season now in full swing, retailers are braced for the heaviest shopping days of the year.

However, the results of a recent 2015 Merchant Survey, conducted by Fattmerchant, has found that 72% percent of business owners have not yet adopted EMV-compliant technology, putting them at risk for fraudulent activity.

Since October 1, merchants have been liable for credit card fraud, a change from when the credit card companies were on the hook.

200% fraud rates

With fraud rates reaching 200% of the average rate on Christmas Eve and Christmas Day alone, Fattmerchant says businesses without EMV technology will be held financially responsible for fraudulent transactions, making these stats particularly alarming.

While there has been a lot of education and information for business owners about making the switch to EMV equipment, Fattmerchant says 36% of business owners still do not know anything about what the switch really means.

The National Retail Federation (NRF) has also expressed concern that so many retail businesses are exposed. But the trade association has also pushed hard for a revision in the EMV card system by asking that a PIN be added. Without it, the more secure chip cards can still be used if they are lost or stolen because the user just has to provide a signature, says the NRF.

Pushing for a PIN

The NRF says law enforcement also advocates a PIN for the new chip cards. The attorneys general of Connecticut, Illinois, Maine, Massachusetts, New York, Rhode Island, Vermont, Washington state and the District of Columbia recently wrote to the credit card companies urging the addition of a PIN.

“The chip-and-PIN approach is considered by many to be the gold standard currently for payment card security,” the letter said. “Countries that have implemented chip-and-PIN cards have seen significant reductions in fraudulent transactions.”

Not only have many retailers not installed the new chip card readers, many consumers are still using the old magnetic strip cards. Credit card companies have several more months in which to issue the new cards with an embedded chip.

With the holiday shopping season now in full swing, retailers are braced for the heaviest shopping days of the year.However, the results of a recent 20...

Attorneys general join push for PINs with new chip cards

Nine state officials say new chip cards need added protection

The nations retailers aren't letting up in their campaign to force credit card processors to add a PIN to the new chip credit cards. Now, they have some reinforcements to their cause.

Attorneys general of eight states and the District of Columbia have signed a letter to the nation’s top credit card companies and banks, calling for the use of personal identification numbers rather than signatures to approve purchases made with new chip-based credit cards.

“This is further proof that top law enforcement officials and security experts agree that continued reliance on an illegible scrawl isn’t good enough to protect American consumers when the technology of a secret, secure PIN is readily available,” said Mallory Duncan, Senior Vice President and General Counsel of the National Retailers Federation (NRF). “Banks and credit card companies should heed the advice being given them and immediately implement chip-and-PIN. That’s the standard used around the world and U.S. consumers deserve nothing less.”

Gold standard

In the letter, the state officials said the chip-and-PIN approach is considered by many to be the gold standard currently for payment card security.

“Countries that have implemented chip-and-PIN cards have seen significant reductions in fraudulent transactions,” the attorneys general said in the letter.

NRF says the chip-and-PIN system is used in approximately 80 countries from Asia to Europe. But they point out that the new chip cards being issued in the United States use chip-and-signature instead.

“There can be no doubt that this is a less secure standard since signatures can easily be forged or copied or even ignored,” the attorneys general said. “Unlike signatures, PIN numbers can be changed easily and as frequently as needed by the consumer. Absent this additional protection, your customers and our citizens will be more vulnerable to damaging data breaches. This is something we cannot accept.”

Connecticut example

The letter says that in Connecticut alone, there were 515 data breaches reported in the last fiscal year. It says about 2.5 million Connecticut residents were affected by breaches of their personal data. Half were said to involve credit and debit cards.

"Over the last few years, breaches at major retailers that involved credit and debit card information have really shown a giant spotlight at the inherent weakness and vulnerability of magnetic strip cards even when the cards are lost or stolen," said Connecticut Attorney General George Jepsen. "We know, based on experiences in other countries, that chip and PIN cards offer greater security to consumers – security that I believe far outweighs any initial burden or confusion that always comes when we need to get used to a new way of doing things, like using a credit card.”

In their letter, the attorneys general downplayed claims that using a PIN would be a hassel for consumers, noting that consumers already use PINs with debit cards. The attorneys general made clear they were not seeking legislation requiring PINs, but rather calling on card companies and banks to make the change “as good corporate citizens.”

The nations retailers aren't letting up in their campaign to force credit card processors to add a PIN to the new chip credit cards. Now, they have some re...

Airbnb, American Express announce points-sharing deal

Amex points also usable on Uber

American Express took a hit earlier this year when Costco ended the companies' exclusive relationship, but it's been making up for it through deals with fast-growing sites like Uber and Airbnb.

The Airbnb arrangement, announced today, lets AmEx card holders sign into Airbnb using their AmericanExpress.com ID and password and use their loyalty points to book Airbnb stays, all without leaving the Airbnb site.

"We're creating a frictionless and valuable way for [card members] to take advantage of everything Airbnb has to offer," said Leslie Berland, executive vice president, Global Advertising, Marketing & Digital Partnerships at American Express.

The partnership also lets Airbnb users verify their identities with their AmEx cards, eliminating the need to use driver's licenses or other documents.

AmEx has a similar arrangement with Uber, offering double loyalty points to card members who pay for Uber rides with their card.

AmEx announced last month that it was making Apple Pay available in certain markets to American Express ard members using an iPhone, Apple Watch or iPad.

American Express took a hit earlier this year when Costco ended the companies' exclusive relationship, but it's been making up for it through deals with fa...

Chase will pay $50 million to consumers for debt collection abuses

Wrongdoing included obtaining default judgments against active-duty military

JPMorgan Chase will pay $100 million to settle allegations that it committed debt-collection abuses against tens of thousands of its credit card holders, California Attorney General Kamala D. Harris announced today.

The settlement specifically addresses debt collection wrongdoing that includes collecting incorrect amounts, selling bad credit card debt, and running a debt collection mill that involved illegally “robo-signing” thousands of court documents and improperly obtaining default judgments against military servicemembers.

As part of the settlement, Chase will pay $50 million in restitution to consumers nationwide, including an estimated $10 million to California consumers, and significant restitution to servicemembers in California, some of whom were on active duty when Chase obtained illegal default judgments against them. 

Chase will also pay $50 million in penalties and other payments to California, through the Office of the Attorney General. The judgment includes injunctive terms that fundamentally change Chase’s credit card debt-collection practices to prevent similar misconduct in the future, and is subject to court approval.

“Abusive and illegal debt collection practices will not be tolerated in California,” Harris said. “This settlement provides real relief to tens of thousands of Californians, including servicemembers, and prevents JPMorgan Chase from continuing  these deceptive and illegal debt collection practices.”

Robosigners

Between 2009 and 2013, Chase filed more than 125,000 credit card collection lawsuits against California consumers relying on illegally robo-signed sworn documents and provided an additional 30,000 robo-signed sworn statements in support of lawsuits filed against California consumers by third-party debt-collectors, Harris said. 

Chase also made systematic calculation errors regarding the amounts owed, and sold “zombie debts” to third-party debt-collectors that included accounts that were inaccurate, settled, discharged in bankruptcy, not owed, or otherwise not collectable, she said.

The Attorney General’s investigation and litigation further revealed that Chase sent letters to consumers that contained illegal threats and were signed by attorneys who did not review the accuracy of the information, determine if litigation was appropriate, or intend to follow through on some of the threats made.

Chase also filed false declarations regarding military service and improperly obtained default judgments against servicemembers on active duty, in violation of the Servicemembers Civil Relief Act and the California Military and Veterans Code.

JPMorgan Chase will pay $100 million to settle allegations that it committed debt-collection abuses against tens of thousands of its credit card holders, C...

Small businesses “overwhelmed” by new chip cards

National Retail Federation renews push to add PINs to new card system

Just weeks after new rules went into effect for the use of credit cards with embedded security chips, the National Retail Federation (NRF) complains small businesses are being pressured to make an expensive investment without receiving the full level of security that could be provided.

NRF arranged for a small business owner to testify before Congress this week. Keith Lipert, owner of The Keith Lipert Gallery, a single-location, three-employee store in Washington, told lawmakers small businesses are being overwhelmed.

“Overwhelmed”

“The EMV transition is overwhelming and expensive for an independent, small retailer,” Lipert said. “Small retailers are entirely at the mercy and whims of the big players. We have no say and no way to use the marketplace to make our objections heard and our concerns valued.”

Retailers say the EMV cards, which have an embedded computer chip, don't go far enough to promote security. NRF wants the system to an include a PIN, which would make it less likely a lost or stolen card could be used.

Consumers may have noticed that many retail locations, especially small businesses, are still using the old “swipe” card readers, not the new “dipping” readers.

Unresponsive banks


“EMV is all new to me, and banks and the networks are not contacting small businesses to help the transition in any way,” Lipert said. “No one from my bank, processor or existing supplier even contacted me about the need to add a new EMV device, let alone a deadline by which to do so.”

The House Small Business Committee is investigating how Europay MasterCard Visa cards will affect small businesses. The hearing followed this month’s deadline set by the card industry for merchants to install chip-card readers be on the hook for fraudulent card usage.

Seven times more secure

Lipert said the EMV cards being issued by banks are chip-and-signature cards, instead of the chip-and-PIN cards used in nearly all other countries where EMV cards are used. He pointed to Federal Reserve data showing that a secure, secret PIN to approve transactions is seven times more secure than an easily forged and often-illegible signature.

Lipert also said small businesses are seeing “significant delays” in obtaining chip card readers or getting them certified once they are installed. He says small businesses just aren't a priority for hardware manufacturers.

Chip card terminal can cost as much as $2,000 when installation, software and other expenses are included.

Just weeks after new rules went into effect for the use of credit cards with embedded security chips, the National Retail Federation (NRF) complains small ...

FBI weighs in on safety of new chip card

An improvement, the agency says, but a PIN system would make it better

The FBI has joined the discussion of the new EMV, or chip cards that are replacing credit and debit cards in the U.S.

“While EMV cards offer enhanced security, the FBI is warning law enforcement, merchants, and the general public that these cards can still be targeted by fraudsters,” the Bureau said in a public service announcement.

The EMV cards replace the traditional magnetic strip on the back with a small chip that holds encrypted data. It allows merchants to verify a card’s authenticity, providing the cardholder greater security and making the EMV card less vulnerable to hacking while the data is transmitted from the point of sale (PoS) to the issuing bank.

But the FBI says that may not be enough. It says EMV cards can be counterfeited using stolen card data obtained from the black market.

Prefers a PIN system

The FBI says the best defense is for consumers to use a PIN instead of a signature when making purchases.

“Merchants are encouraged to require consumers to enter their PIN for each transaction, in order to verify their identity,” the FBI said. “If a consumer uses a signature, merchants should ask to also see a government-issued photo identification card to verify the cardholder’s identity.”

This was music to retailers' ears, since they delivered an almost identical warning to Congress this week.

“What the FBI is saying is what the rest of the world already sees as common sense,” Mallory Duncan, National Retail Federation vice-president said. “It’s the right thing to do, and we hope the banks are listening.”

Leaving the back door open

Not using all of the card's potential security features, says Duncan, is like locking the front door but leaving the back door wide open.

“Retailers have long-argued that PINs are essential to providing cardholders with the security that they deserve,” said Brian Dodge, executive vice president of the Retail Industry Leaders Association (RILA), another retail industry trade group. “The FBI’s alert should be a wake-up call to the banks and card networks that continue to stand in the way of making PIN authentication the standard in the U.S. just as it has been around the world for years.”

The retailers complain that virtually all of the chip cards being issued in the United States are chip-and-signature rather than chip-and-PIN, leaving consumers without the option to use a PIN. By contrast, EMV cards used in 80 countries around the world for 20 years or more are routinely chip-and-PIN.

“They’re encouraging consumers to use PIN and they’re encouraging merchants to request PIN – the only thing missing is to encourage the banks to issue PIN cards,” Duncan said.

The FBI has joined the discussion of the new EMV, or chip cards that are replacing credit and debit cards in the U.S.“While EMV cards offer enhanced se...

Best credit cards for travel in 2015

Some will give you hundreds of dollars in statement credits just for signing up

When oil prices started to dive about one year ago, no one thought they would go this low and stay this low for this long.

As a result, gasoline prices and competitive air fares have made travel more affordable than it's been in some time. To make it even more affordable, consumers who used a rewards credit card geared to travel can save even more.

According to personal finance website CardHub’s latest Credit Card Landscape Report, some cards offer consumers sign-up bonuses worth up to $625 and various other perks. The key to landing these perks, of course, is to have an above-average credit rating.

CardHub compared more than 1,000 credit card offers – and in the interest of full disclosure, some originate from CardHub advertising partners – in order to identify the best travel deals.

Best Initial Bonus

The survey found the value of initial rewards bonuses consumers can reap just by signing up appears to have stabilized near record highs during the third quarter. That said, bonuses offered in the form of points or miles have more than doubled in value over the last five years.

In the category of “Best Initial Bonus,” CardHub selected two cards; the Citi Thank You Premier Card and the Chase Sapphire Preferred Card.

The Citi card will award you 50,000 bonus points if you spend $3,000 during the first three months of card activation. You can then trade those points for a $625 statement credit that will go to pay travel-related charges that post to your account.

In addition, you rack up three points per $1 spent on travel and gas, two points per $1 on dining and entertainment, and one point per $1 on everything else. On the downside, there's a $95 annual fee, but it doesn’t kick in until the second year.

Putting at least $4,000 on a Chase Sapphire card during the first three months your account is open will result in a 40,000-point rewards bonus, which can be redeemed for $500 in travel accommodations booked through Chase's Ultimate Rewards Program or a $400 statement credit.

Best All Around

The Barclaycard Arrival Plus and Capital One Venture Rewards Card share honors for “Best All Around” travel cards.

The Barclaycard gives you a 40,000-mile rewards bonus, redeemable for $400 in travel expenses, but only if you spend $3,000 during the first three months the account is open. You’ll also earn the miles-equivalent of 2% cash back on all other purchases and receive a 5% rebate on miles redeemed for travel.

Spending $3,000 in the first three months will also get you 40,000 bonus points on the Capital One card. These points can be used to receive a $400 statement credit to pay for any travel-related expenses. The ongoing reward rate is two miles per $1 spent, with no limits or expiration dates.

This card also charges a $59 annual fee, but it is not assessed during the first year.

Other categories include “Airline Rewards,” “Hotel Rewards,” and “Road Trip Rewards.” After selecting the right credit card, the authors say the next step is to use it. In addition to the rewards, Credit cards offer $0 fraud liability guarantees, the lowest possible currency conversion rates, and complementary rental car insurance coverage.  

When oil prices started to dive about one year ago, no one thought they would go this low and stay this low for this long.As a result, gasoline prices...

Retailers push back against new chip card system

National Retail Federation says cards won't stop fraud without addition of a PIN

Since late last week some consumers have been dipping their plastic instead of swiping and, from most reports, have encountered little difficulty in the switch-over to the EMV chip card system.

Retailers, on the other hand, are not completely sold. In a message to Congress, the National Retail Federation (NRF) said any new chip-and-signature credit cards that do not also require a PIN will not stop data breaches. The trade group says small businesses should not be pressured to install the equipment to accept the new cards at the expense of more effective technology.

“The new EMV equipment does not stop breaches,” NRF Senior Vice President for Government Relations David French said in prepared testimony before the House Small Business Subcommittee. “Indeed, in many cases it provides no significant benefits either to the business or to the business’ regular customers. It is merely an additional expense small businesses are being told to bear.”

Additional expenses that will ultimately be passed along to consumers in the form of higher prices.

Could pre-empt mobile payment

The NRF warns that if small businesses are pushed to adopt EMV technology, alternatives such as near-field communication contactless payment, mobile wallets, and other smartphone-based technology “may effectively be locked out of the market.”

“These are important considerations that businesses of all sizes must carefully ponder,” French said. “It would be inappropriate to prejudge their decision-making and stampede businesses into the adoption of solutions less protective for businesses and consumers than what has existed throughout the industrialized world for more than a generation.”

While many consumers have received new credit cards in the mail, containing chips to hold encrypted data, just as many haven't. They're still using the old magnetic strip cards that still work.

Liability shift

The only real change that occurred on October 1 was liability in case of fraud shifted from credit card companies to retailers that have not moved over to the new system.

Banks are still in the process of issuing new cards containing a computer microchip that will eventually completely replace cards’ easily copied magnetic stripe to store data. But French said retailers are concerned the new security measures don't go far enough. He says the cards also need a secure personal identification number, or PIN, which would eventually replace easily forged signatures.

French says the chips make the cards more difficult to counterfeit but do nothing to protect lost or stolen cards. If the chip cards also required a pin, he said that would prevent both types of fraud.

If you haven't seen many of the new chip card readers in your recent shopping trips, it might not be much of a surprise. Many retailers have yet to install them.

French says chip card readers and installation can vary from “a few hundred dollars to thousands of dollars” per terminal. The industry average is around $2,000.

Since late last week some consumers have been dipping their plastic instead of swiping and, from most reports, have encountered little difficulty in the sw...

Consumers go from swiping to dipping their plastic on Thursday

But for most consumers, little else will change with the switch to chip cards

Thursday marks a significant shift for consumers who use plastic to buy things. Then again, it might not.

October 1 is the deadline for retail merchants to install and begin using card readers that scan an embedded chip in the card, rather than the data on the magnetic strip on the back. It's called EMV, a security feature to cut down on – if not virtually eliminate – fraud.

But you may have noticed the corner deli and the drug store you frequent are still using the same card readers they always have. And it's possible your credit and debit cards have not been replaced with new ones containing chips.

Don't worry, National Retail Federation Vice President of Retail Technology Tom Litchford says the cards will still work after October 1. All that really changes is liability.

Retailers assume liability

Currently, when a credit card is stolen and used to make a fraudulent purchase, the consumer's liability is limited and the lender takes the loss. After Thursday, if a chip card is used for fraud and the retailer has not installed the updated chip reader, the retail merchant is on the hook. Consumers' liability is still limited.

“Honestly, the biggest, or most notable, change for the consumer is that the 'swipe' goes away,” Litchford said. “With a chip card you now have to 'dip' or insert it into the reader, similar to an ATM, and leave it until instructed to remove it.

And despite the October 1 deadline, the change over will actually take place over a number of months, even years. In the meantime, consumers' old magnetic strip cards will work just fine.

“You’ve probably noticed the chip cards being issued today still have the magnetic stripe on the back,” said Litchford. “Fuel pumps at convenience stores don’t have to be ready until 2017. Even banks’ own ATMs don’t have to be ready this October. It’s probably safe to say the migration process will still be going on for three to five years or more.”

As of October 1, Litchford said he expects about 70% of consumers will have at least one chip card, although only about 40% of total cards will be chip cards. Estimates on merchant readiness range from as low as 40% to as high as 75%, with larger retailers more likely to have made the switch.

Not sold on EMV

EMV is widely used in the rest of the world and is praised as a much more secure card system. But Litchford argues that the technology does not protect credit card numbers from being stolen and counterfeited for fraudulent use.

“If any of the retailers who were breached in recent years had EMV implemented before their breach, how many of the millions of credit card numbers would have been lost?” he asked. “The answer is all of them. EMV chip cards only prevent the cards from being counterfeited. They don’t stop data from being hacked in the first place.”

Litchford predicts that if chip cards reduce in-store credit card fraud, fraudulent activity will shift to online transactions.  

Thursday marks a significant shift for consumers who use plastic to buy things. Then again, it might not.October 1 is the deadline for retail merchants...

Visa designs biometric security for new chip card systems

But it's not clear how many merchants will be using new chip system on October 1

Ready or not, change is coming to the checkout counter October 1. That's when U.S. retailers and credit card companies will switch over to the chip based EMV system.

EMV stands for Europay, MasterCard, Visa, and uses chips embedded in the front of the plastic cards instead of the the strip on the back. The system is in use in much of the rest of the world because it's more secure and less vulnerable to hacking and fraud.

Consumers might not notice big changes October 1. Some retailers – and surveys suggest it will be many – will still be using the old system. But on October 1, the onus shifts to merchants, who will be on the hook in the event of a fraudulent transaction.

Payment Source, a publication covering the credit industry, reports a majority of merchants it has surveyed “have little to no knowledge” of the new technology that is going into effect in two weeks.

The National Retail Federation says its research shows 62% of consumers don't think the new chip card system provides enough security. 

Adding biometrics

Meanwhile, Visa unveiled what it believes will be the next step in card security this week – a new specification to use biometrics with chip card transactions. The specs can work with palm, voice, iris, or facial biometrics. The system is designed to work with the EMV chip industry standard to help ensure open and seamless solutions.

Using biometrics – a unique human characteristic to verify identity --is intended to prevent fraud, as well as make it easier to make a secure payment. Visa says its architecture enables fingerprints to be securely accepted by a biometric reader, encrypted, and then validated.

Match-on-card

The specification supports “match-on-card” authentication where the biometric is approved by the EMV chip card and never exposed or stored in any central databases. As an option, processors can validate the biometric data within their secure systems for transactions occurring in their own environments, such as their own ATMs.

Visa says it used the EMV chip standard as a foundation so its biometric cardholder verification can be easily integrated with the technology used by 3.3 billion chip cards around the world – and shortly, in the U.S.

“There is increasing demand for biometrics as a more convenient and secure alternative to signatures or PINs, especially as biometrics technologies have become more reliable and available,” said Mark Nelsen, senior vice president of Risk Products and Business Intelligence, at Visa Inc.

Absa Bank, a wholly-owned subsidiary of Barclays Africa Group, will be the first to use Visa’s specs in a trial this fall. Cardholders will use fingerprint readers at select ATMs instead of a PIN.

Ready or not, change is coming to the checkout counter October 1. That's when U.S. retailers and credit card companies will switch over to the chip based E...

Pay attention to credit card update notices, consumer site warns

The benefits your card offers aren't etched in stone; they can disappear overnight

Those "update" notices from credit card issuers that no one ever reads? You should read them to avoid unpleasant surprises, a recent survey finds.

For example, collision damage waiver, and half a dozen other travel and purchase benefits including 2-5% back in points at Sears and Kmart, will be removed from the Sears platinum MasterCard issued by Citi as of October 1, according to Consumer World

Bank of America is eliminating five benefits on its Better Balance Rewards MasterCards as of November 1.  And Discover, as of last month, removed benefits for lost or delayed luggage, travel insurance, and emergency roadside service from its cards.

"Credit card issuers have used a host of benefits to attract customers to their cards, but now they are quietly removing many of them," said Edgar Dworsky, founder of the non-profit consumer site. "Some customers may be in for quite a surprise when they go to use one of these benefits but only then discover that it no longer exists."

Most of the MasterCard changes were made by the card company itself this past January for their standard, gold, and platinum cards, but the cuts are only being implemented now by some individual banks, Dworsky said. 

New core benefits

MasterCard claims it evaluated which benefits cardholders preferred and used most often in deciding what set of core benefits to offer and which to drop. For these basic cards, the new core benefits funded by MasterCard only include Extended Warranty, Price Protection, Identify Theft Resolution, and lost card services.  Individual banks can supplement the core benefits with other perks, or even buy back deleted ones.   

A Visa spokesperson said it had no plans to reduce benefits on its cards. AMEX did not respond to inquiries, according to the Consumer World report.

Before making a critical purchase, cardholders should check with their card issuer to ensure that a particular benefit is still in effect. For example, don't assume you still have automatic collision damage waiver protection when renting a car.

Upper-tier cards like World MasterCard, World Elite MasterCard, and Visa Signature tend to offer more benefits than basic cards. Many of the eliminated benefits are still available on them and on some basic cards that have opted not to adopt the changes.

Those "update" notices from credit card issuers that no one ever reads? You should read them to avoid unpleasant surprises, a recent...

When to use a credit card and when to leave it in your wallet

When you are disciplined enough to pay the balance in full, a credit card is a useful tool

Credit cards can be trouble. Just ask any of the millions of consumers who find themselves deeply in debt. In most cases, a large credit card balance is part of their burden.

But plenty of financial advisors point out the advantages of paying for everything with a credit card instead of cash or a debit card. A credit card is more secure than a debit card and, if you have a card offering rewards based on purchases, you can rack up discounts on future purposes.

The problem occurs when the bill arrives and the consumer doesn't pay the entire balance. The unpaid balance gets rolled over to the next month's bill, which will be larger than the month's before. Pretty soon, the balance is out of control.

Do you lack self control?

“If you have personality traits like a tendency to lack self control, if you’re in the process of repairing your finances, or if you’re not ready for personal responsibility, avoid credit cards until you are mentally and emotionally prepared,” advise the personal finance experts at Forbes.

On the other hand, if you can keep careful track of what you have charged on your card and pay it off each month, a credit card can be a powerful and convenient money management tool. The key is knowing the limits of your financial self-discipline.

Unfortunately, too many consumers get into trouble when they use credit cards. An analysis of federal data by NerdWallet shows U.S. household credit card debt averaged over $15,000 last month. And it may surprise some to learn that older consumers are in much deeper than the youngest consumers.

A survey by online loan marketplace LendingTree found that the older your are, the more reliant you are likely to be on plastic. The survey finds both Gen Xers and Baby Boomers are more cash-strapped and debt-dependent than Millennials.

Debt-averse Millennials

"The millennial generation seems to be more averse to debt as it relates to credit cards, which could be attributed to lasting scars from the financial crisis of 2007-08," said Doug Lebda, founder and CEO of LendingTree. "Older Americans are more reliant on credit cards to maintain their monthly expenses and cash flows when compared to younger generations. It will be interesting to see how this trend develops with the emergence and adoption of new payment methods."

In fact, Millennials are the least likely consumers to feel they even need a credit card. Just 29% believe credit cards are “pretty much required today.” Nearly as many said they “don't need one.” When asked to explain, they said “don't spend what you don't have.”

Millennials who have credit cards also appear to be the best at paying off the balance each month – good news for them but bad news for credit card companies, that depend on monthly interest charges.

The generation that was the worst at paying off credit card balances each month was Gen X. Only 42.12% paid the balance in full each month.

Gen Xers also have the highest percentage of respondents saying they only pay off the minimum balance each month – a sure-fire recipe for never getting out of debt.

Credit cards can be trouble. Just ask any of the millions of consumers who find themselves deeply in debt. In most cases, a large credit card balance is pa...

Discover unseats AmEx in J.D. Power ratings

Rewards and benefits most important to consumers, survey indicates

Discover has unseated American Express to take top place in the J.D. Power,2015 U.S. Credit Card Satisfaction Study, with survey respondents citing rewards and benefits as key drivers of satisfaction.

It's the second consecutive year Discover has ranked highly. It tied with AmEx last year. AmEx was second this year, Chase was third.,

This year, Discover has focused on the customer, improved its reward redemption process and performed well across all six study factors, J.D. Power said.,

The study, now in its ninth year, measures customer satisfaction with credit card issuers by examining six factors (in descending order of importance): interaction; credit card terms; billing and payment; rewards; benefits and services; and problem resolution. Overall satisfaction is at a record high of 790 on a 1,000-point scale, surpassing the previous high of 778 in the 2014 study.

Slightly more than half (52%) of credit card customers indicate they selected their new card for a better rewards program and 24 percent did so for better benefits.

“Reward redemption and benefit use have a tremendous impact on the customer experience,” said Jim Miller, senior director of banking services at J.D. Power. “The fact that Discover ranks highest in satisfaction among all credit card issuers in each of the six factors measured in the study is a testament of the relentless focus and importance the company has placed on the ease of redemption and use of benefits.

"When customers feel the rewards are attractive and when they redeem rewards more frequently, satisfaction improves, they spend more and they are more likely to recommend the card to friends and family,” Miller said.

Reward attractiveness

Consumers rate Discover

When considering the attractiveness of rewards—the desirability of the reward type (i.e., cash, miles and points) and the value received when redeeming rewards—54 percent of customers perceive their rewards as attractive (ratings of ,9 or 10 on a 10-point scale), up from 46 percent in 2014. Customers who rate their rewards as attractive spend more per month—$1,132, on average—than those who consider their rewards unattractive (ratings of 1-5) who spend an average of $744.

Customers redeem their rewards more frequently in 2015, as 53 percent have done so in the past 6 months, compared with 49 percent in 2014. Rewards satisfaction is 128 points higher among customers who have redeemed rewards in the past 6 months (856), compared with those who redeemed rewards 6-12 months ago (828) and those who have never done so (728). Customers who redeem rewards spend an average of $483 per month more than those who do not redeem rewards ($1,128 vs. $645, respectively).

The frequency of using benefits has increased year over year, with 67 percent of customers using at least one benefit in the past year, compared with 57 percent in 2014. Among customers who have used a benefit, satisfaction is 794 vs. 731 when no benefits are used. Customers who use benefits spend an average of $316 more than those who do not use a benefit ($1,107 vs. $791, respectively).

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Discover has unseated American Express to take top place in the J.D. Power,2015 U.S. Credit Card Satisfaction Study, with survey respondents citing rewards...

Target and Visa settle 2013 card breach for $67 million

The company has yet to settle with MasterCard, though

It's been almost two years now since news first broke that hackers had managed to steal up to 40 million customer credit and debit card numbers from Target, and the fallout still hasn't completely settled.

Yesterday, however, the Los Angeles Times reported that Target has come to an agreement with Visa card issuers, offeri