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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...

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...

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...

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...

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....

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...

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...

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...

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...

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...

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...

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 ...

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...

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...

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...

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...

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...

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.com  reports 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...

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...

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, offering up to $67 million to settle their costs from the breach.

In April, Target tried settling with MasterCard for $19 million, though MasterCard rejected the offer the following month. The two companies are still trying to reach an agreement.

Earlier still, in March, Target offered to pay $10 million to settle a class action suit brought by individual cardholders harmed by the breach, subject to judicial approval; a federal judge eventually approved Target's offer.

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...

Small businesses not yet ready for new secure card payment system

Wells Fargo survey finds just 31% have installed new EMV chip card readers

October 1 is an important date for businesses that accept credit cards. That's when a new rule takes effect, shifting the liability for fraudulent credit card purchases from the banks to the business making the sale, if it has not installed EMV chip card technology.

Unfortunately, a survey by Wells Fargo shows small businesses, by and large, are not only unprepared – they aren't aware of what's coming.

In its quarterly Small Business Index Survey, just 49% of small business owners who accept point-of-sale card payments today report being aware of the impending liability shift, when a card issuer or merchant that does not support EMV chip card technology will assume liability for any fraudulent point-of-sale card transactions.

Financial institutions have been sending their customers new EMV chip-enabled credit and debit cards. These cards are designed to protect against fraudulent transactions by encoding cardholder information within an encrypted microchip and data that changes with each transaction.

For the cards to work, merchants must convert to new card readers or add EMV capability to their existing magnetic stripe card reader payment terminals. That costs money.

Only 31% compliance

With only three months remaining before the deadline, Wells Fargo and Gallup, which conducted the survey, found that only 31% of small business owners said that their existing credit card processing system accepts chip-enabled cards.

When asked if they plan to upgrade their point-of-sale credit card terminals to accept EMV chip cards, just 29% said they would before the Oct. 1 deadline. Another 34% said they will at some point in the future after October. Twenty-one percent said they never plan to upgrade.

"While our industry has made great progress in the last year informing and preparing small business owners for the EMV liability shift, the survey findings show us that we have more work to do," said Debra Rossi, head of Wells Fargo Merchant Services.

The bank said it is trying to build awareness, prepare small businesses for the EMV liability shift, and encourage business owners to adopt EMV chip-card technology. It has been providing EMV-capable equipment to customers since 2012.

It said all new and re-issued Wells Fargo Business Credit Cards and Business Elite Cards provided to customers are chip-enabled.

Card issuers take the lead

In fact, card issuers have been well ahead of businesses in adopting the EMV technology. Visa and Mastercard announced last year that they had formed a “new cross-industry group focused on enhancing payment system security” to spearhead adoption of the new technology, which has been in use in Europe for years.

Despite the split between businesses that intend to upgrade their payment terminals to accept EMV chip cards and those that don’t, small business owners seem to agree on one thing: when consumers buy something, they told the Wells Fargo survey takers, they prefer customers pay with cash or a check.

October 1 is an important date for businesses that accept credit cards. That's when a new rule takes effect, shifting the liability for fraudulent credit c...

How transparent are those credit card offers?

Study gives Capital One high marks but finds credit unions fall short

If you're like most consumers you probably receive plenty of credit card offers in the mail. If you're satisfied with the cards you have, you probably never even open them.

But if you are in the market for a credit card, what are the attributes you look for? Card companies have gotten a lot more competitive, offering incentives beyond interest rates to sign up new customers.

If you go online to research a credit card issuer, you may get a clear understanding of the offer. Then again, you might not.

Credit card comparison website CardHub.com has completed an evaluation of online credit card applications from the websites of ten large national banks, as well as ten of the most popular credit unions. The study scored each website based on how clearly they spelled out the terms.

Things to look for

For example, if a card offers rewards, then consumers should be able to easily figure out what they are – how to earn them and what they're worth.

Is there an annual fee? If so, how much is it?

Sometimes a card will offer reduced finance charges on new purchases during an introductory period. If you carry a balance, that's a nice feature. But what are the terms and are they easy to understand?

Some cards offer low or no interest for a specific period if you transfer a balance from another card. Most of the time there's a fee involved. The terms should be clear without referring to pricing disclosures, fine print, or a different page.

Winners and losers

So how do the cards stack up? When it comes to transparency, CardHub says Capital One, State Employees Credit Union, and Boeing Employees Credit Union have the clearest overall credit card applications. It's the sixth straight year that Capital One has emerged on top in the bank category.

On the other end of the scale, the study finds Barclaycard US and Navy Federal Credit Union had the least clear applications. On a relative basis, Chase and USAA lost the most ground since the last study, falling two positions.

Meanwhile, Citi and US Bank experienced the biggest improvements in relative rank, each rising by two positions.

In something of a surprise, CardHub found credit unions lag slightly behind big banks when it comes to overall website transparency. The biggest deficiency, the study found, was in how rewards earning and redemption rates are characterized.

Focus of improvement

The area where all institutions need to improve is in disclosure of balance transfer fees and rewards redemption value. While paying no interest on your credit card balance for several months will save you money, most cards carry a 3% to 4% balance transfer fee that eats into that savings.

This month another financial website, Magnify Money, issued its list of the eight best balance transfer cards. Topping the list is the Chase Slate card. You can transfer a balance and receive 0% interest for 15 months and – best of all – not pay a transfer fee.

If you're like most consumers you probably receive plenty of credit card offers in the mail. If you're satisfied with the cards you have, you probably neve...

Texas consumers carrying large credit card debt

San Antonio, Dallas and Houston are in the top 5

Texas' economy may be booming, but consumers in two of its leading cities lead the nation in credit card debt.

When CreditCards.com established a formula to determine which major U.S. cities were home to the highest credit card balances, it found San Antonio and Dallas/Fort Worth occupied the top two positions. Houston is not far behind, in fifth place.

While Texas ended up with 3 of the 5 highest debt burdens in the nation, the Northeast fared very well. The region boasted 5 of the 7 lowest debt burdens in the country.

The formula

To compile the list, the authors of the study compared the average credit card debt in the 25 largest U.S. metro areas with each area's median income. It assumed that 15% of median income would go toward credit card debt each month, instead of consumers just making the minimum payment.

Using those parameters, the study determined how long a consumer would have to make those monthly payments in order to reach a zero balance; researchers also took into account how much interest consumers would have to pay to get there. Under that formula, the average San Antonio consumer would take 16 months to pay off the balance and would spend $448 during that time in interest charges.

Here's how the 5 most-indebted metros shape up:

  1. San Antonio (16 months, $448 interest)
  2. Dallas/Fort Worth (14 months, $382 interest)
  3. Atlanta (14 months, $376 interest)
  4. Miami/Fort Lauderdale (14 months, $351 interest)
  5. Houston (13 months, $363 interest)

Lightest load

Consumers in the San Francisco area seem to be handling their credit card debt a little better. The study found it would take Bay area consumers only nine months to reach a zero balance, spending just $234 in interest.

Here are the 5 markets with the lightest credit card burden:

  1. San Francisco/Oakland/San Jose (9 months, $234 interest)
  2. Boston (10 months, $267 interest)
  3. Washington, DC (10 months, $286)
  4. Minneapolis/St. Paul (11 months, $266 interest)
  5. New York City (11 months, $293)

"It's interesting that the metro areas with the highest average credit card debt don't necessarily have the highest debt burdens when adjusted for income," said Matt Schulz, CreditCards.com's senior industry analyst. "For example, Washington, D.C. has the nation's highest average credit card debt, but since it has the highest median income in the U.S., its debt burden is lower than all but two metros."

Pay more than the minimum

Unfortunately, many consumers with significant credit card balances don't pay 15% of income but only pay the minimum due each month. Under that payment plan, getting to a zero balance takes much longer.

At the prodding of regulators, credit card companies have raised the amount of minimum payments so that a consumer paying just the minimum won't be stuck in an indefinite debt trap. Still, it is always best to pay as much as possible each month.

One method to stay on top of a credit card debt is to pay the amount of the interest – plus as much extra as possible. That way a consumer not only pays the interest each month but starts whittling down the balance.

Texas' economy may be booming, but consumers in two of its leading cities lead the nation in credit card debt.When CreditCards.com established a formul...

Hack attack: Latest payment card breach hits two dozen zoos across the country

Malware infected point-of-sale systems for over three months

Bad news for fans of zoos – it looks like hackers managed to breach the payment card point-of-sale (POS) systems operated by Service Systems Associates, which serves restaurants and gift shops at zoos and other cultural centers across the country.

Security expert Brian Krebs reports that his sources in the banking industry have detected a pattern of fraudulent charges on payment cards sharing a common point of purchase: all had been used at a zoo gift shop with a Service Systems Associates POS.

SSA confirmed the problem in a written statement. “The violation occurred in the point of sale systems located in the gift shops of several of our clients. This means that if a guest used a credit or debit card in the gift shop at one of our partner facilities between March 23 and June 25, 2015, the information on that card may have been compromised.”

Cities affected by breach

The company did not name the exact locations affected by the hacking, but Krebs' sources think the breach hit facilities in at least two dozen cities across the nation (list alphabetized by state):

Birmingham, Alabama
Tucson, Arizona
Fresno, Palm Desert, Sacramento, and San Francisco, California
Colorado Springs, Colorado
Miami, Florida
Honolulu, Hawaii
Boise, Idaho
Fort Wayne, Indiana
Louisville, Kentucky
Baltimore, Maryland
Battle Creek, Michigan
Apple Valley, Minnesota
Cincinnati, Ohio
Tulsa, Oklahoma
Pittsburgh, Pennsylvania
Columbia, South Carolina
Dallas, El Paso, and Houston, Texas
Nashville, Tennessee
Salt Lake City, Utah

If you visited a zoo in one of those cities between March 23 and June 25 of this year, and used your card to pay, check your balance more carefully than usual to see if you can spot any fraudulent charges.

Bad news for fans of zoos – it looks like hackers managed to breach the payment card point-of-sale (POS) systems operated by Service Systems Associates, wh...

European Union accuses MasterCard of gouging tourists

The card giant's "artificially high" interbank fees are being investigated

The European Union's quibbles with Google are well-known and now it's taking on another symbol of American domination -- MasterCard. EU regulators say the credit card giant overcharges travelers for their purchases.

The EU for two years has been conducting an antitrust investigation into whether MasterCard stifles competition by charging "arrtificially high" interbank fees that stifle competition (and tourism) by driving up the total cost of purchases made by tourists.

The fees are not paid directly by tourists but are passed on to retailers, who in turn build them into the prices paid by consumers, even those who pay with cash.

"We currently suspect MasterCard is artificially raising the costs of card payments, which would harm consumers and retailers in the EU," said competition commissioner Margrethe Vestager, according to Courthouse News Service. "We have concerns both in relation to the rules MasterCard applies to cross-border transactions within the EU, as well as the fees charged to retailers for receiving payments made with cards issued outside Europe. MasterCard now has an opportunity to respond to our charges."

MasterCard said it is "working with the European Commission on the issue" and promised to release a formal response soon.

The European Union's quibbles with Google are well-known and now it's taking on another symbol of American domination -- MasterCard. EU regulators say the...

Chase slapped for selling zombie debt, illegally robo-signing court documents

The bogus debt sales led to collection efforts against consumers

JPMorgan Chase faces more than $200 million in penalties and refund payments for selling "zombie debts" and illegally robo-signing court documents as a result of enforcement actions by the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and 47 states.

Chase allegedly sold bogus debts to third-party debt buyers -- accounts that were inaccurate, settled, discharged in bankruptcy, not owed, or otherwise not collectible. Many of the debt buyers then began hounding consumers in an attempt to collect the non-existent debts.

“Chase sold bad credit card debt and robo-signed documents in violation of law,” said CFPB Director Richard Cordray. “Today we are ordering Chase to permanently halt collections on more than 528,000 accounts and overhaul its debt-sales practices. We will continue to be vigilant in taking action against deceptive debt sales and collections practices that exploit consumers.”

The order requires Chase to document and confirm debts before selling them to debt buyers or filing collections lawsuits. Chase must also prohibit debt buyers from reselling debt and is barred from selling certain debts. Chase is ordered to permanently stop all attempts to collect, enforce in court, or sell more than 528,000 consumers’ accounts.

Chase will pay at least $50 million in consumer refunds, $136 million in penalties and payments to the CFPB and states, and a $30 million penalty to the Office of the Comptroller of the Currency (OCC) in a related action.

The CFPB found that Chase violated the Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibitions against unfair, deceptive, or abusive acts and practices. Chase sold faulty and false debts to third-party collectors, including accounts with unlawfully obtained judgments, inaccurate balances, and paid-off balances.

Chase also sold debts that were owed by deceased borrowers. Chase also filed misleading debt-collections lawsuits against consumers using robo-signed and illegally sworn statements to obtain false or inaccurate judgments for unverified debts.

JPMorgan Chase faces more than $200 million in penalties and refund payments for selling "zombie debts" and illegally robo-signing court documents as a res...

Hackers may have stolen customer payment card data at Trump hotels

Unconfirmed security breach may date back to February 2015

It looks like customers of Trump Hotel Properties might be the latest victims of hackers who were able to steal credit card and other information from the company. A security breach has recently been discoverd that dates back to at least February.

Security expert Brian Krebs reports that sources at various banks and financial institutions are investigating a pattern of fraudulent charges on debit and credit cards which all seemingly share one trait in common: they'd all been used at a Trump hotel, presumably during or after February 2015. Affected locations may include Trump properties in New York, Miami, Las Vegas, Los Angeles, Chicago, and Honolulu.

The breach has not yet been confirmed, and the company has not commented on the matter. But if there is indeed a breach, it would be the third major hotel-chain customer-card hacking discovered this year alone. In March, the Mandarin Oriental Hotel group confirmed discovery of a breach that probably started just before Christmas 2014; in April the White Lodging Services Corporation (which owns and operates hotel franchises under brand names including Marriott, Sheraton, Renaissance and Courtyard) discovered hackers had planted malware on the point-of-sale systems used not in the hotels themselves, but in the bars and restaurants attached to them.

If you have stayed at a Trump hotel at any time since February, check your payment card account activity more closely than usual to see if there are any fraudulent charges.

It looks like customers of Trump Hotel Properties might be the latest victims of hackers who were able to steal credit card and other information from the ...

Possible payment card breach at Pennsylvania's Hershey Park

Be wary if you visited the park from mid-March through late May

If you visited Pennsylvania's Hershey Park between March and May of this year, be warned: it looks like hackers might've breached Hershey Park security and stolen customer payment-card data.

Security expert Brian Krebs said that his sources at “multiple financial institutions” have been investigating a pattern of fraudulent transactions on cards which apparently share one trait in common: they'd all been used at various Hershey locations earlier this season, including ticket stations, the Hershey Lodge, and food and beverage outlets. The affected cards appear to have been used at those locations between mid-March and late May 2015.

A Hershey Park spokeswoman said:

We have received reports from some of our guests that fraud charges appeared on their payment cards after they visited our property. We take reports like this very seriously. While our company does have security measures in place designed to prevent unauthorized access to our network, we immediately began to investigate our system for signs of an issue and engaged an external computer security firm to assist us. The investigation is ongoing.

If you visited Pennsylvania's Hershey Park between March and May of this year, be warned: it looks like hackers might've breached Hershey Park security and...

Customer-card security breach at Fred's Super Dollar

Hackers planted malware on POS systems; full extent of the breach not yet known

Southern and Midwestern shoppers beware: it looks like Fred's Super Dollar, a discount pharmacy and general merchandise retailer, is the latest business to lose customer payment-card data after hackers planted malware on the point-of-sale (POS) systems used in checkout lanes at Fred's locations.

Security expert Brian Krebs reports that he contacted the company last week, after “about a pattern of fraud on customer cards indicating that Fred’s was the latest victim” of malware planted on POS systems.

Fred's Inc. responded in a formal statement on Friday, admitting that:

Fred’s Inc. recently became aware of a potential data security incident and immediately launched an internal investigation to determine the scope of the issue. We retained Mandiant, a leading independent forensics firm, to examine our data security systems.

We want to assure our customers that protecting their information is one of our top priorities and we are taking this potential incident very seriously. Until this investigation is completed, it will be difficult to determine with certainty the scope or nature of any potential incident, but we will continue to work vigilantly to address any potential issues that may affect our customers.

Scope unknown

So far, that's the only information available: Fred's had a security breach, and hired investigators to look into it. The scope of the breach has not yet been determined: how long ago did the hackers plant the malware? How long were the hackers then able to monitor any transactions on those infected POS systems? And how many Fred's locations were affected?

Krebs' sources are “unclear” on that last bit, but said “the pattern of fraudulent charges traced back to Fred’s stores across the company’s footprint in the Midwest and south, including Alabama, Arkansas, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Tennessee and Texas.”

So if you are or have been a Fred's shopper in any of those states, and paid with a card rather than in cash, check your card statement extra-closely to see if you can spot any fraudulent charges.

Southern and Midwestern shoppers beware: it looks like Fred's Super Dollar, a discount pharmacy and general merchandise retailer, is the latest business to...

Retail point-of-sale hacking affects winery customers in northern California

Transaction data stolen from April 2015

Oenophiles be warned: hackers have apparently breached security and managed to steal customer payment-card data from Missing Link Networks, Inc., a card processor and point-of-sale (POS) vendor serving a number of wineries primarily in northern California.

The hackers were able to steal information about payment card transactions during the month of April 2015.

Security expert Brian Krebs first investigated such claims earlier this week, when one of his sources at an unnamed Sonoma winery told him that the winery's POS processor, provided by Missing Link, had been breached. Today, Missing Link CEO and founder Paul Thienes released a statement confirming the problem:

Beginning on May 27, 2015, we began notifying our winery customers that eCellar Systems, our consumer-direct sales platform, had been breached during the month of April, 2015 by an unknown intruder. To that end, each of our winery clients will be sending out notice of this event to their customers and it is likely that individual consumers may receive a similar notice from multiple wineries.

Anytime you hear about a single hacking incident affecting many different businesses (such as wineries) rather than a single company, that usually indicates a POS rather than a database breach. Rather than break into a company's database to steal whatever information might be in its computer files, the hackers will somehow manage to plant malware on the point-of-sale systems that handle electronic payments, and can then steal whatever information is used to conduct further transactions on the affected systems.

Think of it as the business-payment-systems equivalent of keylogging malware on a regular computer: it can't read your previously saved files, but it does read and record everything you type from the point of infection onward.

Regarding the POS breach at Missing Link Networks, Thienes went on to say that the hackers “gained access to customer names, credit/debit card numbers, the related billing addresses, and any dates of birth in our system during the window of April 1st through 30th this year,” but “did not have access to any driver license numbers, Social Security numbers, CVV verification numbers, or PIN numbers (data which we would typically not collect anyway).”

Oenophiles be warned: hackers have apparently breached security and managed to steal customer payment-card data from Missing Link Networks, Inc., a card pr...

Bank of America fined $30 million for violating servicemembers' rights

Credit card defaults and overdraft fees at issue

Bank of America has been ordered to pay $30 million for violating the Servicemembers Civil Relief Act (SCRA), which protects active-duty military personnel from abusive lending and collection practices.

The Office of the Comptroller of the Currency (OCC) levied a $30 million penalty against Bank of America and ordered it to make remediation payments to about 73,000 customers.

The bank said the action resulted from a "small number" of credit card and overdraft payments that were in default and were not handled properly under SCRA provisons. 

“We have taken significant steps over the last several years, and will take further steps now, to ensure we have the right controls and processes in place to meet – and exceed – what is required by law and what our military customers deserve and expect,” said Andrew Plepler, Bank of America Global Corporate Social Responsibility and Consumer Policy Executive.

"The issues were discovered by reviews that began in 2011; since that time, Bank of America enhanced its collections litigation and sworn documents processes and enhanced controls around SCRA across the company," the bank said in a prepared statement.

The OCC’s enforcement action also directed the bank to improve its SCRA-compliance policies and procedures for determining whether military personnel are eligible for requested SCRA-related benefits, for ensuring that the bank calculates the SCRA benefits correctly, and for verifying the military service status of servicemembers prior to seeking or obtaining default judgments on non-home loans. 

Bank of America has been ordered to pay $30 million for violating the Servicemembers Civil Relief Act (SCRA), which protects active-duty military personnel...

ATM debit-card theft soars to highest levels in 20 years

Fraud crackdowns in one area lead to increased criminal activity elsewhere

Cracking down on data theft is kind of like squeezing a balloon: press down on a bulge in one area, and it'll only swell somewhere else.

So perhaps it's no surprise that today's Wall Street Journal reports the distressing statistic that, while brick-and-mortar merchants have been cracking down on data fraud at the checkout counter, criminals responded by attacking automatic teller machines, targeting not just bank-owned ATMs but the independently owned “cash kiosks” common in shopping malls, restaurants and other businesses.

(And that's not even counting the prevalence of hidden “skimmers” used to steal data from any ATM card swiped through them.)

Relatively easy

For a thief equipped with the right tools, it's relatively easy to steal debit card information and make counterfeit debit cards, which are then used to steal money from ATMs. The Journal said that according to FICO, the credit-scoring and analytics firm, the period spanning from January to April 9, 2015 saw more debit-card ATM attacks than any previous period in the past 20 years:

Debit-card compromises at ATMs located on bank property jumped 174% from Jan. 1 to April 9, compared with the same period last year, while successful attacks at nonbank machines soared by 317%, according to FICO. … The company declined to disclose the total number of such incidents, citing contractual restrictions with its customers.

ATM fraud has been growing overseas, too. Just last week, we reported the discovery of a new form of ATM fraud plaguing banks in Britain: thieves armed with nothing more than an iPod and a piece of plastic can spy on would-be ATM customers, steal their passcode and arrange for the machine to “eat” their cards – which are then retrieved and used to drain money from the account while the victim contacts bank personnel about their apparently faulty ATM. However, that form of fraud involves stealing and using legitimate ATM cards, not making counterfeit cards as reported by FICO.

It's important to remember that from an individual cardholder's perspective, debit card fraud is much worse than credit card fraud, because debit cards withdraw money directly from your savings accounts, whereas credit card purchases essentially borrow money from the credit card company.

This means that even if your debit-card fraudulent-charge complaint is ultimately settled in your favor, with the bank ultimately making full restitution to you – you still have to go without your money while the matter is being resolved.

If you do have a debit card, even if you're convinced that your account numbers are safe from thieves, you still need to check your account activity on a regular basis, whether you've used the card recently or not, so that if fraudulent withdrawals do occur, you can report them to your bank as soon as possible.

Cracking down on data theft is kind of like squeezing a balloon: press down on a bulge in one area, and it'll only swell somewhere else.So perhaps it's...

Newest ATM security threat: one iPod plus a little plastic equals a big problem for banks

Be especially wary if an ATM “eats” your card; that's how this scam starts

British police have uncovered the latest security threat to ATM cardholders, a threat so simple from a thief's perspective that it's pretty much guaranteed to come to America — if it hasn't already.

Security-savvy ATM users have known for years now to watch out for illegal “skimmers” — electronic devices placed over a legitimate ATM-card reader to steal personal identification numbers (PINs) and other information from any swiped cards.

Many of these skimmers are small and thin enough to escape a typical ATM user's notice (unless that sharp-eyed user knows exactly what to look for) — but a thief hoping to use a skimmer generally needs either technological ability sufficient to build his own, or criminal “connections” sufficient to buy one.

No barriers

However, as Security Affairs reported yesterday, the latest criminal threat to ATM security has no such barriers to entry. An off-the-shelf iPod hidden behind a panel with a pinhole drilled in it is all it takes to make a pinhole spy camera capable of recording the PINs of anyone who visits that particular ATM.

Though there's a little more to the scam than that. Apple's iPods have been on the market for years, but only last January was the first such incident of this particular iPod-based ATM spy camera scheme discovered in Gatley, Stockport (a suburb of Manchester, England). As the oft-sensationalist Daily Mail reported last January:

These pictures show the lengths criminal gangs are going to in an attempt to steal card details at ATM machines - as a trick of using hidden iPods as spy cameras continues to spread.

It involves strapping the musical device to the roof of a cash point and setting it to record video of a person inputting their personal identification number (PIN).

The iPod is concealed in a specially-designed fascia with the camera recording through a pinhole-sized gap.

A fascia is simply a long, thin board covering the area where a wall joins a roof or ceiling — the architectural equivalent of a beveled edge, more or less.

Card-eater

So long as the thief has a few minutes of privacy, it's very easy to attach an iPod to the roof or upper wall of an ATM cash point, hidden behind a fascia of the same color. After installing this hidden camera, the fraudsters then slip a thin piece of plastic into the actual ATM card slot.

Now they're ready to pull their scam, which works like this: a victim walks to the ATM, inserts his card and types his PIN, unaware of the hidden camera recording this information. Meanwhile, that piece of plastic in the card slot traps the card inside the ATM. So the victim can't get his card out of the machine, and eventually leaves – most likely to contact the bank and complain about a faulty card-eating ATM.

Once the victim leaves, the thieves go to the ATM, retrieve the card from the slot and the PIN from the video recording, and use these to withdraw cash from the victim's account.

When British police discovered such a setup at a Barclays ATM, they immediately removed the device and informed Barclays, which in turn urged its customers to keep a sharp eye on their accounts and immediately contact the bank if they notice any signs of fraudulent activity.

And if you're an American ATM user, regardless of who you bank with, you need to do the same thing.

British police have uncovered the latest security threat to ATM cardholders, a threat so simple from a thief's perspective that it's pretty much guaranteed...

Judge: AmEx must let merchants encourage customers to use less expensive cards

The court ruled that AmEx policies were anticompetitive and increased costs for consumers

A federal judge has ordered American Express to rewrite its contracts so that merchants are allowed to encourage their customers to use less expensive credit or debit cars.

U.S. District Judge Nicholas Garaufis issued the order last week after ruling that AmEx can no longer enforce its rules that prohibit merchants from offering a discount to customers who use a cheaper card, promoting other cards and telling customers how much more AmEx charges retailers.

He gave AmEx five days to make "reasonable efforts" to notify merchants of the change. He also ordered the company to make quarterly reports to the Justice Department listing merchants whose authorization to accept AmEx cards was revoked.

Acting Assistant Attorney General Leslie Overton of the Department of Justice’s Antitrust Division said she was pleased with the decision.

"These rules have stifled competition among credit card networks by blocking merchants from encouraging their customers to use particular credit cards," Overton said.  "The court’s remedy will benefit merchants, who pay more than $50 billion in credit card ‘swipe fees’ annually, as well as the consumers who ultimately bear these costs."

Antitrust laws

Garaufis ruled in February that AmEx's contracts violated antitrust laws after a seven-week bench trial of a 2010 federal lawsuit brought by several states and business groups. He ruled that the company's policies resulted in higher costs for all consumers who purchased goods and services from merchants who accept AmEx cards.

AmEx said it is still pursuing plans to appeal and said the judge's ruling will "harm competition by further entrenching the two dominant networks." 

A federal judge has ordered American Express to rewrite its contracts so that merchants are allowed to encourage their customers to use less expensive cred...

Senators introduce Data Security Act: banks like it, consumer advocates do not

Law would weaken currently existing levels of consumer and privacy protection, critics argue

This week, Senators Tom Carper (D-Delaware) and Roy Blunt (R-Missouri) introduced the Data Security Act of 2015, which is similar to the Data Security Acts the two senators proposed in 2012 and 2014.

If passed into law, the bill would require that companies who lost customer data to hackers let customers know within 30 days that their credit or debit cards have been compromised, and establish other rules as well.

For the most part, card-issuing institutions such as banks and credit unions support Carper and Blunt's bill, yet privacy and consumer-rights advocates worry that the proposal as currently written would actually weaken the amount of protection consumers currently have, by overriding stronger state-level consumer-protection laws and by eliminating certain national-level protections currently in place.

Weaker in some ways

Card-issuing institution incur massive costs anytime a major hacking compromises their cards en masse. The Credit Union National Association (CUNA) called the Data Security Act “much-needed legislation” that would “protect the sensitive financial information of American people by establishing a national standard for data security, protection and consumer notification.”

Yet that national standard, at least in some respects, would arguably be weaker than some standards which currently exist. For example: the language of the bill, as written, says that companies do not have to disclose security breaches to their customers if the companies discover that “there is no reasonable risk of identity theft, economic loss, economic harm, or financial fraud.” Currently, companies must notify consumers of data breaches, whether they cause financial harm or not.

Representative Jan Schakowsky (D-Illinois), speaking against the bill, told theWashington Post. “Fifty-one states or territories have some sort of data protection legislation on the books -- 38 would see the data protection breach notification diminished in some way because this is a preemption law.”

Yet that patchwork of varying state- or territorial-level laws is exactly why the bill's supporters want a single unifying national standard. Rep. Peter Welch (D-Vermont), one of the bill's co-sponsors, said that right now, if a customer in one state is affected when hackers breach security at a company based in another state, it's not certain which state actually has jurisdiction. “I am usually, almost uniformly opposed to preemption — but this is an instance where unless you have a national standard you won't have protection,” he said.

On the other hand, under the current standard, companies in such situations generally adhere to the stronger of the two states' laws, which again hearkens back to the argument that this proposed bill would actually weaken consumer protections.

This week, Senators Tom Carper (D-Delaware) and Roy Blunt (R-Missouri) introduced the Data Security Act of 2015...

Target offers $19 million to MasterCard issuers to settle 2013 data breach

Separate settlement with Visa issuers still in the works

Target continues sweeping up the fallout from the massive data breach which compromised the credit or debit card information of 40 million Target customers in late 2013.

On April 15 the retailer agreed to reimburse a total of $19 million to various financial institutions who issued MasterCard-branded cards compromised in the breach.

The company is negotiating a separate settlement with the issuers of Visa-branded cards.

This is not the first payment Target has incurred over the hacking. Last month, the company offered to pay $10 million to settle a class action suit brought by individual consumers who lost time and/or money after their cards were compromised at Target.

The current settlement offer with various MasterCard issuers is meant to cover the costs incurred by having to cancel and re-issue compromised cards.

(According to the Credit Union National Association, as of late 2014, the average cost for an issuing institution to replace a card was $8.02, which includes re-issuing the card itself, paying for fraudulent charges, and paying the additional staff costs required to monitor customer accounts, notify customers as necessary, and related costs.)

As off press time, Target's $19 million offer has not formally been accepted; acceptance is contingent upon approval of 90% of eleigible account holders. (On a similar note, last month's $10 million offer to settle a class-action suit is also pending approval, this time from a federal judge.) In order for the $19 million MasterCard deal to go through, Target will need approval to make payment on or before May 20.

Target continues sweeping up the fallout from the massive 2013 data breach...

Understanding credit reports is key to building wealth

But survey finds wide knowledge gaps among consumers

Access to credit allows you expand the power of your money. Having $25,000 in cash won't pay for much of a house but it might allow you to borrow enough to pay for a very nice home. As long as you appear to a lender to be a good risk.

Credit often gets a bad rap because it is easily misused. When people take on more debt than they can repay, they end up in a downward financial spiral that can end in bankruptcy.

That's why it is important to know what is contained in your credit report, maintained by the three credit reporting agencies Trans Union, Experian and Equifax, and the three-digit number that makes up your credit score.

Don't know

A survey by Chase Slate has found that 39% of U.S. consumers admit to not knowing their credit score and 52% were not aware that not paying bills on time has the largest impact on their credit score.

“Having healthy credit could mean the difference between achieving major life goals, such as buying a home or starting a small business, and never realizing those dreams,” said Pam Codispoti, President of the Mass Affluent Business for Chase Card Services. “Yet too many Americans don’t have access to information and tools that empower them to properly plan for the future and manage their credit health.”

Under federal law, every consumer can get free access to their credit reports once a year. You can access these reports by going to a single website – www.annualcreditreport.com. You can download the credit reports from Experian, Equifax and Trans Union all at once or one at a time throughout the year.

The reports will show what credit accounts are open in your name and whether these accounts are current. In addition to making you aware of your financial health, these reports will show if someone has stolen your identity and opened accounts in your name.

FICO credit scores aren't free

While access to your credit report is free, access to your credit score is not. The website CreditKarma.com advertises that it will provide a credit score at no charge, which is true. But the score is a proprietary one generated from data in your credit report. Your actual FICO score costs money.

Still, you can keep up with your FICO credit score by paying for it or by receiving a copy from your lender whenever you finance an automobile or home purchase. It's a number worth knowing.

“Your credit score is much more than just a number – it’s a key indicator of credit health that helps you assess where you stand and what’s within reach,” said personal finance expert and Chase Slate financial education partner Farnoosh Torabi. “Checking your score, and checking it regularly, is a simple step you can take now to introduce more positive financial habits into your life. The higher your score, the more likely you are to be deemed eligible for a loan or receive better terms and interest rates.”

For the record, credit scores run from 300 to 850, with the higher the number, the better your credit. A good credit score is generally considered to be 720 and higher. Once your score falls below 660, you are headed into poor to bad credit territory, significantly limiting what you can borrow and how much you'll pay for it.

Raising your credit score

Need to raise your credit score? Here's the best way to do it.

First, pay all your bills on time. If your cell phone provider reports your payment as delinquent, that's going to drag down your credit score.

Next, focus on paying down your credit card balances. The gap between your credit limit and the amount you owe should be as wide as possible. If you have an account with a $5,000 credit limit and a $4,400 balance, that doesn't look good.

Refrain from opening new credit accounts unless it is absolutely necessary. When checking out and the cashier asks if you'd like to open a store credit card to get $10 off your purchase, it's best to decline. Not worth it.

Some consumers with credit score issues they're unable to resolve themselves may benefit from legal representation. To learn more, visit our credit repair companies guide.

Finally, bite the bullet and pay down your debt instead of moving it to another credit card. There are times when moving a balance from a high interest credit card to one offering 0% interest might make sense, but it can also ding your credit score.

Access to credit allows you expand the power of your money. Having $25,000 in cash won't pay for much of a house but it might allow you to borrow enoug...

Credit card breach at Mandarin Oriental hotels

Breach probably dates back to pre-Christmas 2014

Add the Mandarin Oriental Hotel Group to the list of companies who've had hackers breach their customer credit card numbers.

Security expert Brian Krebs reported that financial industry sources investigating a recent string of fraudulent payment-card charges noted that the compromised cards all shared a common point of purchase: they'd all recently been used to pay at Mandarin hotels. A company spokesperson confirmed in a statement that:

…. Mandarin Oriental has been alerted to a potential credit card breach and is currently conducting a thorough investigation to identify and resolve the issue …. The Group has identified and removed the malware and is coordinating with credit card agencies, law enforcement authorities and forensic specialists to ensure that all necessary steps are taken to fully protect our guests and our systems ….

Though the company would not offer specific details, Krebs' sources think the breach affected “most if not all” Mandarin hotels in the United States, and probably started sometime just before last Christmas.

Add the Mandarin Oriental Hotel Group to the list of companies who've had hackers breach their customer credit card numbers....

American Express, Costco ending their exclusive relationship

It's not yet known what will replace Amex at U.S. Costco stores

For years, Costco members have had to use an American Express card to make purchases at one of the firm's giant warehouses. Those who didn't have an Amex could apply for a free co-branded Costco Amex.

But, as long rumored, that deal is coming to an end.

American Express confirmed today that the exclusive agreement will end on March 31, 2016, but it's not yet known what will happen then. There's been no word from Costco on its plans. 

There have been reports that Costco is negotiating with Capital One to accept its MasterCard, something that has already happened at Costco's Canadian stores.

“Taking a very disciplined approach, we began discussions on a possible renewal with Costco well in advance of the contract expiration," said Kenneth I. Chenault, Chairman and Chief Executive Officer of American Express. "However, we were unable to reach terms that would have made economic sense for our Company and shareholders. Instead, we will focus on opportunities in other parts of our business where we see significant potential for growth and attractive returns over the moderate to long term.”

The decision is a blow to Amex and will reportedly wipe out 8% of worldwide annual spending on its cards, roughly $80 billion, according to a Reuters report.

What it means

Consumers rate Costco

Costco has been one of the few retailers that accepts only the Amex card, declining to take MasterCard, Visa or Discover. The member-only chain caters to a more affluent customer base than Walmart or Target; American Express also pitches its products to better-off consumers so the lash-up worked well for most shoppers.

Most of Costco's customer base probably already has a MasterCard or Visa but it's possible that whatever deal Costco finally works out will require its members to have a card issued by a particular bank, possibly Capital One. 

The impact on customers is thus likely to be slight, although there may be some inconvenience for those who want to ditch their Amex entirely and convert to MasterCard or whoever Costco chooses. 

The current agreements with Costco are set to end on March 31, 2016. Until that time, all American Express credit cards will be accepted at Costco warehouse stores in the U.S and on Costco.com. All co-branded cards from American Express and Costco can be used any place American Express cards are accepted through March 31, 2016.

For years, Costco members have had to use an American Express card to make purchases at one of the firm's giant warehouses but, as long rumored, that deal ...

Five indicted in alleged Manhattan identity-theft ring

One dishonest insider is all it takes to steal hundreds of peoples' identities

“All it takes is a single insider at a company … to set an identity theft ring in motion.” That comment from Manhattan District Attorney Cyrus Vance illustrates how easy it is to have your identity stolen — or how impossible it is to avoid it.

Vance's office announced today that it had indicted five people on a total of 394 counts, for allegedly belonging to an identity theft ring that stole the identities of patients at a Manhattan dental office, and used them to fraudulently buy Apple gift cards which in turn were used to buy Apple merchandise.

According to the indictment, Annie Vuong spent six months in 2012 working as a receptionist in a dentists' office. During that time, she allegedly copied the personal identifying information of more than 250 patients, including their names, brithdays, addresses, and Social Security numbers.

Vuong then allegedly emailed the information to Devin Bazile, a former sales associate at Apple, who allegedly used the data to apply for and receive “instant credit.” The indictment also claims that three additional employees from Apple stores helped take part in the scheme.

Common scheme

In all, the group is accused of buying more than $700,000 worth of fraudulent Apple gift cards.

“Using stolen information to purchase Apple products is one of the most common schemes employed by cybercrime and identity theft rings today,” Vance said. “We see in case after case how all it takes is single insider at a company – in this instance, allegedly, a receptionist in a dentists’ office – to set an identity theft ring in motion, which then tries to monetize the stolen information by purchasing Apple goods for resale or personal use.”

Coincidentally, District Attorney Vance's office made the announcement less than one day after the Anthem insurance company admitted that hackers had successfully breached a database holding the personal information of 80 million current and former Anthem customers.

Of course, the Anthem breach impacts exponentially more people than does this small identity-theft ring which allegedly targeted a relative handful of dental patients in Manhattan. (Statistically, there's a good chance at least one of those patients had medical coverage through Anthem, too, because rare indeed is the modern American who only needs to worry about one level of identity theft.)

But those 80 million Anthem customers and couple hundred Manhattan dentists' patients have this in common: their personal information made it into the hands of thieves, yet there was nothing those customers could've done to prevent it. A chain is only as strong as its weakest link, and your personal information is only as secure as the least-secure company that has it.

“All it takes is a single insider at a company … to set an identity theft ring in motion.” That comment from Manhattan District Attorney Cyrus Vance illust...

Hackers may have stolen payment card info from White Lodging's Marriott hotels

Possbly connected to breach from 2013

Travelers beware: it looks like hackers managed once again to steal credit or debit card data from the hotel franchise firm White Lodging Services Corporation, specifically a handful of Marriott properties which White Lodging owns.

Security blogger Brian Krebs said that multiple financial institutions have noticed a pattern of fraudulent charges on cards which appear to share one trait in common: all had been used at a White Lodging-owned Marriott. (White Lodging, meanwhile, says it is investigating, but has found no sign of a new breach.)

If confirmed, this security breach would be the second one to be discovered at White Lodging properties in a little over a year. In January 2014, information came to light suggesting that hackers had managed to lift customer information from various White Lodging properties throughout most of 2013 – not just White Lodging-owned Marriotts, but certain hotels under the names Hilton, Sheraton and Westin, as well.

Now, 13 months later, Krebs' sources in financial institutions are once again seeing evidence of security breaches at many of the same White Lodging-owned hotel properties hit before:

Banking sources say the cards that were compromised in this most recent incident look like they were stolen from many of the same White Lodging locations implicated in the 2014 breach, including hotels in Austin, Texas, Bedford Park, Ill., Denver, Indianapolis, and Louisville, Kentucky.  Those same sources said the compromises appear once again to be tied to hacked cash registers at food and beverage establishments within the White Lodging run hotels. The legitimate hotel transactions that predated fraudulent card charges elsewhere range from mid-September 2014 to January 2015.

Contacted about the findings, Marriott spokesman Jeff Flaherty said all of the properties cited by the banks as source of card fraud are run by White Lodging.

So if you've stayed at a White Lodging-run Marriott hotel in the past few months – or if you merely had a drink in the hotel bar or dined in the hotel restaurant – keep an extra-sharp eye out for indications that the card you used for payment has been compromised.

​Travelers beware: it looks like hackers managed once again to steal credit or debit card data from the hotel franchise firm White Lodging Services Corpora...

CFPB proposes a "Safe Student Account Scorecard"

Colleges too often pave the way for scammy credit offers

Colleges seem trustworthy. After all, we entrust them with our children's education. But, as in most of life, all is not always as it seems. Too often colleges partner with financial institutions that lure students into checking and prepaid card accounts that are anything but attractive. 

The Consumer Financial Protection Bureau (CFPB) would like to level the playing field a little and is proposing a “Safe Student Account Scorecard” that would help colleges to avoid partnering with financial institutions that offer less than desirable deals.

The scorecard would help colleges access upfront information about fees, features, and sales tactics before agreeing to a sponsorship. 

“An important issue for young people is how best to manage their money while they are still in school,” said CFPB Director Richard Cordray. “Because of the influence schools may have on the financial products students choose, we are working to arm them with the information they need to negotiate safe and affordable products for students.”

The idea sounds good to Janet Napolitano, president of the University of California. She said UC "supports transparency and is continuously monitoring its own vendors and financial partners to ensure they comply with UC's high standards and that our students' financial interests are protected."

She said universities "should look to CFPB's new tool as part of their efforts to assess their institutions' financial services arrangements and the impact on their students."

Kickbacks

Many colleges now make deals with financial institutions, where the college helps with or allows the promotion of credit, debit, or prepaid cards, sometimes endorsed with a college logo or linked to a student identification card.

Colleges, either directly or indirectly, typically get a share of the revenue generated from the cards -- a kickback, in other words. The CFPB has identified agreements where financial institutions offer royalty payments for use of college trademarks or bonuses based on the number of student account sign-ups.

The Credit CARD Act of 2009 (CARD Act) restricted financial institutions from using certain types of credit card marketing practices on college campuses and requires that agreements between credit card issuers and colleges be publicly available.

But marketing partnerships between colleges and banks have shifted over the past five years. Agreements to market student debit and prepaid cards have surpassed the number of agreements to market student credit cards. Forty percent of college students attend schools with agreements to provide debit or prepaid cards.

A CFPB analysis of one university system revealed that the school-endorsed financial product received the highest adoption by students receiving financial aid.

 

Colleges seem trustworthy. After all, we entrust them with our children's education. But, as in most of life, all is not always as it seems. Too often coll...

Texas company sued for sham credit card

Consumers were duped into thinking the company was affiliated with unions

When is a credit card not a credit card? According to the Consumer Financial Protection Bureau (CFPB), when it's offered by Union Workers Credit Services.

The agency is suing the  Texas-based company on charges it deceived consumers into paying fees to sign up for a sham credit card. According to the CFPB the company falsely advertises a general-use credit card that -- in actuality -- can only be used to buy products from the company.

Union Workers Credit Services also deceptively implies an affiliation with unions by -- among other things -- using pictures of nurses, firefighters, and other public servants in its advertising, the lawsuit says. The court action seeks compensation for victims, a civil penalty and an injunction against the company.

“The business model for Union Workers Credit Services is built on duping consumers into signing up for a sham credit card,” said CFPB Director Richard Cordray. “Hundreds of thousands of people, including a great many union members who were specially targeted, have been tricked into spending millions of dollars for a so-called credit card that can really only be used to buy the company’s own products. From the misleading photos of nurses and firemen on its website to its bogus credit card, Union Workers Credit Services is illegally deceiving consumers.”

History of deception alleged

The CFPB claims that the company, which has been in operation since roughly 2004, generates the vast majority of the its revenue from selling a buying-club membership card that it falsely advertises as a general-purpose credit card.

Most consumers never use the membership card but cannot recoup their membership fees -- $37 if they apply through the mail or $95 if they apply online. Union Workers Credit Services allegedly has collected membership fees from hundreds of thousands of consumers throughout the U.S., totaling millions of dollars.

According to the lawsuit, Union Workers Credit Services is:

  • Falsely advertising a general-use credit card: The complaint alleges that through direct-mail ads and on its website, the company advertises a credit card that it falsely implies is for general use. The company’s ads suggest to consumers they can receive a pre-approved “platinum card” with a credit limit of up to $10,000 and a 5% annual percentage rate. The offer says consumers do not have to worry if they “have been denied access to a Visa or MasterCard.” Later, many consumers realize what they really bought was a buying-club membership card to purchase only goods from the company itself, rather than from other retailers.
  • Falsely advertising an association with unions: The CFPB also claims that the company deceives consumers by falsely suggesting that it is affiliated with labor unions. The banner of its website has photos of police, firefighters, and medical workers. The online application form asks consumers to select their union membership from a drop-down list.
  • Misusing consumer credit reports: Federal law requires that when companies use consumer credit reports to target certain advertisements to consumers without their advance consent, they must advise those consumers of their right to opt out of receiving such advertising. The lawsuit alleges that Union Workers Credit Services failed to do this.

Thousands of consumers have filed complaints with law enforcement agencies and the Better Business Bureau about Union Workers Credit Services, which has also been sued by multiple government authorities, including the New York State Attorney General and the U.S. Postal Service.

In addition to seeking to stop the alleged unlawful practices of Union Workers Credit Services, CFPB has requested that the court impose penalties on the company for its conduct and require compensation be paid to consumers who have been harmed.  

When is a credit card not a credit card? According to the Consumer Financial Protection Bureau (CFPB), when it's offered by Union Workers Credit Services. ...

Sprint faces huge fine for unauthorized charges

It's the latest to be snagged for wireless cramming violations

In October, AT&T Wireless was fined $105 million for billing customers hundreds of millions of dollars for bogus cellphone subscriptions to horoscopes, love tips and other detritus they had never ordered. It was the largest fine in the FCC's history.

Now it's Sprint's turn. The Consumer Financial Protection Bureau (CFPB) today sued Sprint charging it illegally billed wireless consumers tens of millions of dollars in unauthorized third-party charges.

“Today we are suing Sprint for allowing illegal charges to be crammed onto consumers’ wireless bills,” said CFPB Director Richard Cordray. “Consumers ended up paying tens of millions of dollars in unauthorized charges, even though many of them had no idea that third parties could even place charges on their bills. As the use of mobile payments grows, we will continue to hold wireless carriers accountable for illegal third-party billing.”

The Bureau’s complaint alleges that Sprint operated a billing system that allowed third parties to “cram” unauthorized charges on customers’ mobile-phone accounts and ignored complaints about the charges. The CFPB seeks refunds for affected consumers and penalties to deter unauthorized third-party charges in the future.

The practice of billing customers for third-party services they did not order is known as cramming, and it is one of the plagues of the deregulated telecommunications environment. The charges tend to be small -- usually about $10 a month -- and are often missed by consumers when they examine their bills each month.

The charges are for such generally useless services as horoscopes, ring tones, sports scores and other information and features that are widely available at no charge on the Internet. 

The CFPB said that Sprint outsourced payment processing for these digital purchases to vendors called “billing aggregators” without properly monitoring them.

The lack of oversight gave aggregators near unfettered access to consumers’ wireless accounts. Sprint’s system attracted and enabled unscrupulous merchants who, in some cases, only needed consumers’ phone numbers to cram illegitimate charges onto wireless bills. The charges ranged from one-time fees of about $0.99 – $4.99 to monthly subscriptions that cost about $9.99 a month. Sprint received a 30-40 percent cut of the gross revenue from these charges.

Most consumers were targeted online. Consumers clicked on ads that brought them to websites asking them to enter their cellphone numbers. Some merchants tricked consumers into providing their cellphone numbers to receive “free” digital content and then charged for it. Many others simply placed fabricated charges on bills without delivering any goods or communicating with consumers, the suit alleges.

Others charged

Besides AT&T, the FCC has also sued T-Mobile in a case that is still pending. Prosecutors have said they will argue that T-Mobile made hundreds of millions of dollars through similar cramming schemes.

Consumers rate Sprint PCS

The Federal Trade Commission (FTC) and other agencies have gone after the third-party operators who promote the schemes and process the bills. 

Today the FTC said that one of the defendants behind a massive landline cramming operation that placed more than $70 million in unauthorized charges on consumers’ phone bills has agreed to settle charges against him.

Nathan M. Sann, one of the defendants in the American eVoice, Ltd. case has agreed to settle the FTC’s charges related to his alleged participation in the scheme.

In its complaint, the FTC alleged that the operation placed charges ranging from $9.95 to $24.95 per month on consumers’ landline phone bills for voicemail services they never signed up for and never even knew they had.  The case against the other entities and individuals involved in the scheme is on-going.

The settlement contains a monetary judgment of more than $21 million, which represents the amount of consumer injury attributable to Sann during his involvement with the scam.  The judgment will be suspended due to Sann’s inability to pay upon his surrender of certain personal assets.  Under the terms of the settlement, if Sann has misrepresented his financial condition, the full judgment would become due.

In August, the FTC reached a settlement from Andrew Bachman, who with a number of other defendants pitched text message services offering “love tips,” “fun facts,” and celebrity gossip alerts, and placed charges for these services – typically $9.99 a month – on consumers’ wireless bills without their permission.

Bachman, who appears to be typical of the relatively small operators who have turned wireless telecommunications networks into treacherous territory, agreed to surrender more than $1.2 million in assets, including the contents of numerous bank accounts, two luxury cars, shares in a number of startup companies and multiple luxury watches.

Unlike Bachman and other small-time defendants who lose all of their personal assets in negotiated settlements, AT&T, Sprint and other telecom giants simply pay the fines and move on, their executives free of personal liability and virtually never threatened with jail terms for the misdeeds that occurred on their watch.  

In October, AT&T Wireless was fined $105 million for billing customers hundreds of millions of dollars for bogus cellphone subscriptions to horoscopes, lov...

Payment systems breached at U.S. bebe stores

Hackers had access to customer information for most of November

There's bad news for shoppers of bebe clothing stores. On Friday, the company confirmed what security blogger Brian Krebs had reportedthe day before: for most of the month of November, hackers managed to breach bebe stores' payment systems and steal customer data, possibly including their name (as it appears on the card), account number, the expiration date and verification code.

If you shopped with a payment card at a physical bebe store location in the U.S., Puerto Rico or the U.S. Virgin Islands between Nov. 8 and Nov. 26, 2014, your information might be compromised. However, the company said that its website and mobile payment apps, as well as its physical stores in Canada and other international locations, were not affected.

"Our relationship with our customers is of the highest importance," said Jim Wiggett, Chief Executive Officer, bebe. "We moved quickly to block this attack and have taken steps to further enhance our security measures."

As usually happens in such cases, bebe stores is offering customers a year of free credit monitoring protection even though, as Krebs pointed out, such services “do nothing to help consumers block fraud on existing accounts.”

Whether you have professional credit monitoring or not – and, for that matter, even if you've never shopped at a bebe store or any other retailer known to have been hacked, you need to carefully scrutinize your credit-card statements every month, to ensure that you recognize and authorized each and every one of them.

There's bad news for shoppers of bebe clothing stores. On Friday, the company confirmed what security blogger Brian Krebs had reported the day before: for ...

New protections for prepaid credit cards proposed

Loss limitations and risk disclosure are part of the plan

New federal consumer protections for the prepaid credit card market, which include that an issuing company limit consumers’ losses when funds are stolen or cards are lost, are being proposed by the Consumer Financial Protection Bureau (CFPB).

In addition, the issuing companies would be required to investigate and resolve errors, provide easy and free access to account information, and adhere to credit card protections if a credit product is offered in connection with a prepaid account.

New “Know Before You Owe” prepaid disclosures that would provide consumers with clear information about the costs and risks of prepaid products upfront are also being proposed.

“Consumers are increasingly relying on prepaid products to make purchases and access funds, but they are not guaranteed the same protections or disclosures as traditional bank accounts,” said CFPB Director Richard Cordray. “Our proposal would close the loopholes in this market and ensure prepaid consumers are protected whether they are swiping a card, scanning their smartphone, or sending a payment.”

Prepaid products: What are they?

Prepaid products are consumer accounts typically loaded with funds by a consumer or by a third party, such as an employer. Consumers can use these products to make payments, store funds, get cash at ATMs, receive direct deposits, and send funds to other consumers.

Prepaid products are often bought at retail stores or online and are among the fastest growing types of consumer financial products in the United States. For example, the amount of money consumers loaded onto “general purpose reloadable” prepaid cards grew from less than $1 billion in 2003 to nearly $65 billion in 2012. The total dollar value loaded onto general purpose reloadable cards is expected to continue to grow to nearly $100 billion through 2014.

This proposal would apply a number of specific federal consumer protections to broad swaths of the prepaid market for the first time. The proposal would cover traditional plastic prepaid cards, many of which are general purpose reloadable cards. In addition, the proposal would cover mobile and other electronic prepaid accounts that can store funds.

The prepaid products covered by the proposal also include: payroll cards; certain federal, state, and local government benefit cards such as those used to distribute unemployment insurance, child support, and pension payments; student financial aid disbursement cards; tax refund cards; and peer-to-peer payment products.

Prepaid protections

Many consumers use prepaid products as an alternative to traditional checking accounts. Currently, however, there are limited federal consumer protections for most prepaid accounts. The proposal would ensure that most prepaid account consumers would have important protections under the Electronic Fund Transfer Act after registering their account.

The protections are generally similar to those checking account consumers already receive and include:

  • Easy and free access to account information: Under the CFPB proposal, financial institutions would be required to either provide periodic statements or make account information easily accessible online and for free. The proposal would ensure that consumers are able see their account balances and a history of their transactions and fees.
  • Error resolution rights: This proposal would require financial institutions to investigate errors that consumers report on registered accounts and to resolve those errors in a timely manner. If the financial institution cannot resolve an alleged error within a certain period of time, it would be required to temporarily credit the disputed amount to the consumer to use while the institution finishes its investigation.
  • Fraud and lost-card protection: The proposal would protect consumers against unauthorized, erroneous, or fraudulent withdrawals or purchases, including when registered cards are lost or stolen. If consumers lose their prepaid card or find erroneous or fraudulent charges on their prepaid account, the rule would limit their responsibility for transactions they did not authorize and create a timely method for them to get their money back. As long as the consumer promptly notifies his financial institution, the consumer’s responsibility for unauthorized charges would be limited to $50.

Know before you owe: prepaid fees

The proposal also includes new “Know Before You Owe” prepaid disclosures that would provide consumers with standard, easy-to-understand information about the prepaid account. Under the proposal, prepaid consumers would have access to:

  • Standard, easy-to-understand information upfront: The CFPB’s proposal includes two required forms, one short and one long, with easy-to-understand disclosures.
  • Publicly available card agreements: To facilitate comparison shopping, this proposal would require that prepaid account issuers post their account agreements on their websites. Additionally, issuers would be required to submit those agreements to the Bureau for posting on a public, Bureau-maintained website.

Credit protections

The proposal also includes strong protections in connection with credit products that allow consumers to pay to spend more money than they have deposited into the prepaid account. Under the proposed rule, if consumers choose to use a credit product related to their prepaid account, they would be entitled to the same protections that credit card consumers receive today. The protections that would also apply to prepaid credit products include:

  • Ability to pay: Like credit card issuers, prepaid companies would be required to first make sure consumers have the ability to repay the debt before offering credit. For consumers under 21, the companies would be required to assess these consumers’ independent ability to repay the credit.
  • Monthly credit billing statement: Prepaid companies would be required to give consumers the same monthly periodic statement that credit card consumers receive. This statement would detail consumers’ fees, and if applicable, interest rate, what they have borrowed, how much they owe, and other key information about repaying the debt.
  • Reasonable time to pay and limits on late fees: Prepaid companies, like credit card issuers, would be required to give consumers at least 21 days to repay their debt before they are charged a late fee. Additionally, late fees must be “reasonable and proportional” to the violation of the account terms in question.
  • Limited fee and interest charges: During the first year a credit account is open, the total fees for prepaid credit products would not be allowed to exceed 25% of the credit limit. Card issuers generally are prohibited from increasing the interest rate on an existing balance unless the cardholder has missed two consecutive payments. Card issuers may increase the interest rate prospectively on new purchases, but must generally give the consumer 45 days advance notice -- during which time the consumer may cancel the credit account.

The CFPB’s proposal also includes some additional protections to ensure that the prepaid account and the credit product are distinct, such as:

  • Thirty-day waiting period: The CFPB’s proposal would require companies to wait thirty days after a consumer registers the prepaid account before they could formally offer credit to the consumer.
  • Wall between prepaid funds and credit repayment: Prepaid companies could not automatically demand and take credit repayment whenever a prepaid account is next loaded with funds. Further, prepaid companies could not take funds loaded into the prepaid account to repay the credit when the bill is due unless the consumer has affirmatively opted in to allow such a repayment. Even then, companies cannot take funds more frequently than once per calendar month. Payment also cannot be required sooner than 21 days after the mailing of the periodic statement.
New federal consumer protections for the prepaid credit card market, which include that an issuing company limit consumers’ losses when funds are stolen or...

Falling behind in credit card payments can cost a bundle

But it isn't as bad as it was a couple of years ago

There are many things you should not do with a credit card. Among them -- falling behind on payments.

Consider a cardholder who carries a $4,000 balance on a card charging 11.82%. That's the average rate for those carrying a balance, according to the Federal Reserve. At the 28.45% average penalty rate, the cardholder would have to pay an extra $665.20 in interest a year, according to CreditCards.com's survey of 100 U.S. credit cards. In 2012, it would have been worse. The average APR then was 28.60%.

Penalty rates are the often-stratospheric APRs that a bank charges a cardholder for making a major mistake, typically being 60 days or more late with a payment.

Staying current is a must

“This drives home, once again, just how incredibly important it is to pay your bills on time every time,” said Matt Schulz, CreditCards.com’s senior industry analyst. “Debt can grow quickly even with an average interest rate. But when you’re hit with a penalty rate, things can get out of control in a hurry.”

Fortunately for cardholders who carry a balance, the number of issuers using penalty interest rates has decreased dramatically since the passage of the 2009 Credit Card Accountability, Responsibility and Disclosure (CARD) Act. In 2010, 91% of issuers imposed penalty rates. By 2012, the number had fallen to 69%. This year, it was just 60%.

Among card issuers charging a penalty rate, the lowest -- 17.99% -- is assessed by Pentagon Federal Credit Union's Cash Rewards Visa Standard card. 

Survey highlights

  • Sixty of 100 surveyed cards have a penalty interest rate of some kind:  28 have penalty APRs based on the prime rate plus a specified percent. Rates based on the prime rate can move up automatically when that index rises, as it is expected to in 2015; 32 calculate a cardholder's penalty APR based on creditworthiness.
  • Only 23 cards disclose penalty rate information in the card terms and conditions; 77 cards required follow-up phone calls or review of cardholder agreements to confirm penalty rate details.
  • The CARD Act required lenders to revoke the penalty rate if consumers make 6 consecutive on-time payments after the penalty rate is applied, but just 38 of the 60 cards make that clear in their publicly available documents.
There are many things you should not do with a credit card. Among them -- falling behind on payments. Consider a cardholder who carries a $4,000 balance o...

Home Depot: Hackers stole 53 million email addresses in addition to credit card data

It was already the largest data theft on record; now that record will be even harder to break

It keeps getting worse. Two months ago, Home Depot revealed that hackers had stolen 56 million credit- and debit-card numbers. And now, the company says the thieves also made off with at least 53 million customer email addresses. 

It's been over two months now since the initial discovery that hackers had somehow managed to lift massive amounts of confidential customer data from Home Depot. Though Home Depot only announced it in mid-September, the hackers had actually been lifting data for several months by then (although it turned out nobody actually “hacked” into Home Depot's database; instead, somebody somehow managed to plant malware onto the checkout systems in various Home Depot stores).

So far as anyone knows, that malware has since been scrubbe