This Week in Credit Card News–Importance of Cash, Annoying Convenience …

by Shelton on November 13th, 2012

filed under Student Credit Cards

Scramble for Cash in Sandy’s Wake

Banks hustled to make cash available as persistent power outages in New York, New Jersey and Pennsylvania from superstorm Sandy kept hundreds of ATMs offline just as the same woes left many businesses demanding cash payments. Bank of America, Wells Fargo and JP Morgan Chase deployed temporary ATMs to parts of New York and New Jersey as they worked to get branches reopened, though in some cases they were delayed by signal problems and other storm-related woes. The demands for cash post-Sandy have come from customers who have fewer withdrawal options thanks to power outages and storm damage, and businesses that are accepting cash only due to communications woes that leave them unable to accept debit and credit cards. [Wall Street Journal]

The Dangers of Convenience Checks

It is very common to receive convenience checks from your credit card issuer. These promotional checks look like free money, with 0 percent offers in bold print. These offers may seem like a tempting way to pay for holiday shopping, but consumers need to read the fine print to know exactly what you are getting. The convenience check is linked to your credit card account. The promotional letter describes the checks as an easy way to get cash, transfer balances, or make a purchase that you have been putting off. It all can be yours if you just sign the check. But these convenience checks can be a very costly way of borrowing money. []

Consumer Credit Growth Cools, Credit Card Use Sags

Growth in US consumer credit cooled in September as households appeared to use their credit cards more sparingly, Federal Reserve data showed on Wednesday. Consumer credit grew $11.36 billion in September. But the reading was lower than the $18.39 billion in credit growth registered the prior month, according to revised figures. Revolving credit, which mostly measures credit card use, dropped $2.90 billion in September. Nonrevolving credit, which includes student and auto loans, rose $14.27 billion. [Reuters]

AMEX Now Offers Special Deals Via Xbox

American Express cardholders who link their cards to their Xbox Live account starting today will receive offers and coupons both in and out of games. The partnership between American Express and Microsoft is similar to other deals the credit card company has made over the past year or so. For example, American Express holders can link their account to their Foursquare, Twitter or Facebook accounts to unlock offers. But this marks the first time American Express has entered the interactive TV space. [All Things D]

HSBC Fears US Money Laundering Fines to Top $1.5 Billion

A US fine for violating federal anti-money laundering laws could cost HSBC Holdings significantly more than $1.5 billion and is likely to lead to criminal charges as well, Europe’s biggest bank said. HSBC said the US investigation had damaged the bank’s reputation and forced it to set aside a further $800 million to cover a potential fine for breaches in anti-money laundering controls in Mexico and other violations. The provision was on top of $700 million it put aside in July. [Reuters]

Consumer Reports: Americans See Major Decline in Financial Difficulties

The Consumer Reports Index, an overall measure of Americans’ personal financial health, revealed a major decline in the financial difficulties faced by consumers and a rise in consumer sentiment ahead of the election and winter holidays. The Trouble Tracker, a gauge of financial difficulties, was at its lowest level since first measured in April 2009, declining from 50.2 last month to 38.7. The largest improvement was among those earning $50,000 or more, although lower-income Americans also saw modest improvement. The level of stress that consumers reported was virtually unchanged from last month (57.8 from 58.0). [Consumer Reports]

The Importance of Elizabeth Warren

One of the most important results on Tuesday was the election of Elizabeth Warren as United States senator from Massachusetts. Her victory matters not only because it helps the Democrats keep control of the Senate but also because Ms. Warren has a track record of speaking truth to authority on financial issues-both to officials in Washington and to powerful people on Wall Street. Senator Warren is well placed, not just to play a role in strengthening Congressional oversight but also in terms of helping her colleagues think through what we really need to make our financial system more stable. We need a new approach to regulation more generally-and not
just for banking. We should aim to simplify and to make matters more transparent, exactly along Senator Warren’s general lines. We need a new trust-busting moment. And this requires elected officials willing and able to stand up to concentrated and powerful corporate interests. Empower the consumer-and figure out how this can get you elected. [New York Times]

Substantial Decline in College Credit Card Agreements

A report recently released by the Consumer Financial Protection Bureau showed the number of college credit card agreements between issuers and institutions of higher learning or alumni organizations dropped dramatically in 2011 versus 2010. The data revealed a 20.6 percent decline in the number of agreements from 1,005 in 2010 to 798 in 2011. In addition, the amount of revenue paid by issuers to institutions or alumni groups fell 15 percent from $73.5 million in 2010 to $62.4 million in 2011. []

MasterCard and ING Test Hybrid Online and Mobile Payment System

MasterCard and the Dutch banking group ING are testing a payments system that takes advantage of the secure element in NFC smartphones, without using the NFC short-range communications technology itself. The trial is based around the MasterCard PayPass app being used in two scenarios: firstly, shopping online with a smartphone, secondly, using a PC or tablet, according to NFC World. [Wall Street Journal]

Visa Signs Credit Card Deal with Three Myanmar Banks

Visa said that it will partner with three banks in Myanmar, allowing Visa’s ubiquitous branded credit cards to be issued and accepted in the nascent market-a move designed to bring the long-isolated Southeast Asian country closer to global financial integration. Visa signed licensing agreements with three local banks, Kanbawza Bank, Myanmar Oriental Bank and Co-Operative Bank, following an announcement in August that it will start training workshops for banks in the country. In September, competitor MasterCard signed a similar licensing agreement with CB Bank-one of Myanmar’s largest private banks, set up in 1992-and said it, too, was preparing ATMs and point-of-sales machines to accept credit cards issued by foreign banks. [Wall Street Journal] Weekly Credit Card Rate Report

Based on the 1000+ cards in the Complete Credit Card Index, the average advertised APR for credit cards is 14.29 percent, slightly higher than last week’s average of 14.27 percent. Six months ago, the average was 14.26 percent. One year ago, the average was 14.17 percent. []

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