Card Issuers

Congress gave credit cards a much-needed overhaul, aimed at ending some of the industry's worst practices and providing consumers with more information about the plastic in their pockets. One year later, the new Consumer Financial Protection Bureau is bringing together industry insiders, consumer advocates and academics today to determine whether it worked. And it's likely to get a mixed earful. Consumer advocates give the law a thumbs up, while industry experts say it has contributed to a bump up in interest rates on cards and less available credit for high-risk consumers.

The Consumer Financial Protection Bureau has revised rules on the 2009 CARD Act, paving the way for non-working spouses and partners to qualify for credit cards. The Credit Card Accountability Responsibility and Disclosure Act was designed to rein in some of the egregioius practices of card issuers, such as handing out lines of credit to college students who didn't even have jobs. The banks counted on mom and dad to step in if junion got in over his head. One of the provisions of the law, though, was that a card company had to make sure consumers had the ability to pay before issuing them a credit card or raising their credit limit.

For years, consumers deep in debt turned to counseling agencies to negotiate repayment plans with credit-card issuers. But consumers are now in such dire straits, some can't even afford repayment plans despite concessions from card companies. So the National Foundation for Credit Counseling, a trade group for credit counselors, approached card issuers about making even more concessions for consumers without the resources to repay under a regular plan. The group announced last week that the top 10 card issuers, including Capital One, Bank of America, Chase Card Services, Discover and American Express, signed on. Of course, it is in the interest of credit-card companies to be more lenient, even though they will collect less in fees and interest.

Students across the country are headed back to college, and millions of them will get financial aid disbursed on a debit card. The cards are convenient and save money for the schools. But these debit cards can be expensive for students, who could see their financial aid eaten up by fees. This month, the Federal Deposit Insurance Corp. announced it had ordered the nation's largest player in campus debit cards — Higher One — to return about $11 million to roughly 60,000 students related to fees the company charged for insufficient funds.

NEW YORK -- Back to school, for the modern student, means back to charging up a storm on credit cards. More than half the 9 million full-time college undergraduates have cards today, Visa reports. They're issued even to students who have no credit history and little income.Many students use their cards responsibly. Assuming you're not a serial shopper, it pays to get a card when you're in school. You'll never again be accepted for credit on such easy terms.But some students go so far into debt at so early an age that they ruin their credit history even before they graduate.

After years of pretending it was immune from the forces of the marketplace, the credit card industry has embraced price competition like a long-lost friend.Perhaps it had no choice, considering another important development that has affected card issuers. Call it the end of the 1980s, the maturing of the baby boom generation or the fallout from the recession, but people are using credit cards more carefully -- charging less, keeping lower balances and paying off accounts faster.The wiser use of credit and increased competition have made the choices of low-interest-rate and no-fee cards greater than ever, leaving people with even average credit histories no excuse for paying 18 percent or 19 percent on a credit card.

BOULDER, Colo. -- Holders of bank credit cards are beginning to shop around for better deals on interest rates. The problem is that it might be too late for many card holders to swap out of high-rate cards.Credit card issuers -- usually banks, but also such big companies as American Telephone & Telegraph Co. -- are turning down 60 percent to 70 percent of their applications, industry observers say. No change to that policy is likely, especially if interest rates fall farther."Issuers absolutely are judging applicants on tighter standards," said Denny Dumler, vice president of operations for Rocky Mountain Bankcard System, the largest issuer of Visa and MasterCard in the region.

Even as a growing number of people can't pay their credit card bills, major banks are jacking up interest rates and clamping down on credit limits. But two new bills in Congress are taking aim at what many consider credit card abuses, and legislators should act quickly to make them law. The House and Senate bills would prohibit banks from raising interest rates on existing balances, something banks and credit card companies have been doing with increasing...

Don't automatically shred those credit card offers arriving in your mailbox. They just might contain an attractive rewards program. Card issuers grew stingy with rewards during the credit crunch and while they waited to see how much federal card reforms would hurt their bottom line, card experts say. But now that those matters are behind them, banks have been reviving rewards to make their cards stand out. "They are back, and they are back...

Could a sign of economic recovery be in your mailbox? Synovate, which tracks credit card solicitations, reported last week that card offers mailed to consumers dropped about 6 percent from the first to second quarter this year, a far milder decline than in recent quarters. And some big issuers, such as Bank of America and Citibank, have actually increased their offerings. "That's the flattening out or bottoming out," says Anuj Shahani, director of competitive tracking services with Synovate's financial services group.

One of the largest business expenses for Santoni's Supermarket in Highlandtown is interchange fees — what the grocer pays a bank to process customer's credit card transactions. Even so, Santoni's has no plans to charge shoppers more for paying with plastic. "That would be retailer suicide," says Rob Santoni Jr., the grocer's chief financial officer. Merchants haven't been allowed to add a surcharge to credit card purchases, but that would change under a proposed settlement announced last month to resolve a seven-year legal battle over interchange fees.

The Consumer Financial Protection Bureau has been accepting consumer complaints about credit cards for close to a year. Today, the agency made a database of those complaints available online. You can see the names of the card issuers griped about, the gist of the complaint and company's response and the consumer's zip code. The CFPB says it has received 16,840 credit card complaints, with the most common complaint involving billing disputes. The agency sent 84 percent of those complaints to the card issuers, while the rest went to other regulators or were incomplete.

Many consumers will resolve to pay off their credit cards for the new year, and their intentions are in the right place. But according to a recent study, how they go about it is likely to be wrong. Mathematically, consumers are best off eliminating the debt on the card with the highest interest rate first. But researchers found that many of us tend to pay off the card with the smallest balance first, even if it carries the lowest interest rate. By not tackling the most expensive debt first, we end up paying more in the long run. So why do we do it?

Don't automatically shred those credit card offers arriving in your mailbox. They just might contain an attractive rewards program. Card issuers grew stingy with rewards during the credit crunch and while they waited to see how much federal card reforms would hurt their bottom line, card experts say. But now that those matters are behind them, banks have been reviving rewards to make their cards stand out. "They are back, and they are back...

Gamers: how do you feel about Sony's offer of free stuff after hackers accessed the PlayStation network , compromising information including credit card numbers and birthdates? According to Reuters, "Sony said on Sunday it would offer some free content, including 30 days of free membership to a premium service to existing users and in some regions pay credit card-renewal fees. Compensation would only be paid if users suffered damage, it added, without providing details. " One user in the story mentioned never trusting the network with his information again --- only using prepaid cards to access the system in the future.

American credit cardholders are known for running up debt. Now they are also spending billions of dollars annually to make sure their monthly bill gets paid even if they lose their jobs or some other hardship strikes. But a new government report shows that the price consumers pay for this debt protection may be too much for the benefits they receive. The Government Accountability Office reports that consumers shelled out about $2.4 billion in 2009 to the nine largest credit card issuers for debt protection products.

The Rev. Nathaniel Pierce of Trappe says he transferred his credit card balance to a Chase card a few years ago after getting assurances of a low interest rate and low monthly minimum payments. Now, Pierce accuses Chase of bait and switch tactics. Chase notified Pierce that starting next month, his minimum payment is going from 2 percent to 5 percent of his outstanding balance, roughly raising his monthly payment from $100 to $250. He suspects the shift is tied to credit card reforms that take effect in February.

Question: What do you get when you cross the promotion-happy credit-card industry with the IPO-crazed Internet?Answer: Just about anything you want.American Express Co. weighed in last week with Blue, a new credit card boasting of an introductory rate of 0 percent, online access to account statements and the ability to download into Quicken or Microsoft Money programs.Prefer a traditional rewards program? Club Lycos and Nextcard dole out bonus points for each dollar charged on their cards.

Congress gave credit cards a much-needed overhaul, aimed at ending some of the industry's worst practices and providing consumers with more information about the plastic in their pockets. One year later, the new Consumer Financial Protection Bureau is bringing together industry insiders, consumer advocates and academics today to determine whether it worked. And it's likely to get a mixed earful. Consumer advocates give the law a thumbs up, while industry experts say it has contributed to a bump up in interest rates on cards and less available credit for high-risk consumers.

Some credit card issuers offer payment protection programs that promise to cover or suspend monthly minimum payments if you fall on hard times. Such offers might be tempting in today's economy, where job insecurity remains high or an illness can easily push you over the financial edge. But don't waste your money. Payment protection is expensive and the benefits small. You'd be better off applying the money to reduce your card balance or socking it away for emergencies. Plus, the programs often have so many exceptions that your claim could be denied anyway.