This Week In Credit Card News: Card Hacks Not Hurting Stores, Your APR Could Rise In 2015

Shoppers Just Don’t Care About Credit Card Hacks

If Target and Home Depot are still reeling from the collective breach of 96 million customers’ debit and credit cards, it didn’t show in either company’s earnings reports. Target posted $17.73 billion in revenue, beating one Wall Street consensus forecast by $17 million. Home Depot’s rosy earnings report, which showed store sales in the U.S. climbed by 5.8% in the third quarter. [Time]

Credit Card Rates are Likely to Rise in 2015

Many credit cards use the prime rate (the lowest rate of interest at which banks lend money) as their benchmark. Since December 2008, the prime rate has been stuck at 3.25%. That’s all about to change. [CNBC]

Warren Buffett Loves Credit Cards and GM

Warren Buffett is a fan of credit cards these days. The legendary investor increased his stakes in Visa and MasterCard last quarter by 20% and 16%, respectively. The move is likely a bet that consumers are ready to spend again as the economy picks up steam. Both companies reported a jump in credit card volume last quarter, especially in the U.S. [CNN Money]

Merchants Get PayPal, Square Loans to Ready for Holidays

Small businesses preparing for the most lucrative time of year have found a new source of capital: digital-payment providers PayPal and Square. The companies have extended more than $275 million in financing to about 40,000 merchants over the past year, with demand for loans spiking when businesses need to build up inventory for the holidays. In the process, PayPal and Square are encroaching on the turf of banks and other lenders. The practice highlights a growing side business for PayPal and Square, which can use data they collect in processing transactions to find new business opportunities. [Bloomberg Businessweek]

Debts Canceled by Bankruptcy Still Mar Consumer Credit Scores

Tens of thousands of Americans who went through bankruptcy are still haunted by debts long after–sometimes as long as a decade after–federal judges have extinguished the bills in court. Paying no heed to the courts, the banks keep the debts alive on credit reports, essentially forcing borrowers to make payments on bills that they do not legally owe. The practice, a subtle but powerful tactic that effectively holds the credit report hostage until borrowers pay, potentially breathes new life into the pools of bad debt that are bought by financial firms. [The New York Times]

The Federal Reserve Meets with Big Banks, Regulators on Libor Alternatives

The Federal Reserve met with big banks and international regulators on Monday to discuss alternatives to the current London interbank offered rate, or Libor, in the wake of a rate-rigging scandal that has called the widely used benchmark into question. Fed Gov. Jerome Powell said the Fed’s aim is to “start the process of choosing a risk-free rate” as an alternative to Libor. [The Wall Street Journal]

Google Wallet Will No Longer Process In-App Purchases

Google Wallet recently announced that it will no longer be processing in-app payments as of March 2015. The company has not provided recommendations for any replacement services for merchants to use. The company says, “To preserve your user experience, we highly recommend removing your integration and migrating to another payment processing solution as soon as possible.” []

Federal Agents Arrest Debt Collectors in Crackdown

The government is putting debt collectors on notice. Federal agents in Georgia arrested the founder of debt collection agency Williams, Scott & Associates along with six other employees morning for allegedly running a $4.1 million debt collection scam that targeted more than 6,000 people across the United States. It appears to be the first time federal authorities have taken coordinated action against debt collectors, and could be the beginning of a broader crackdown. [CNN Money]

4 Ways You’re Accidentally Committing Credit Card Fraud

Credit card fraud law covers a wide range of activity, and the terms and conditions of credit cards are lengthy and difficult to understand. Committing credit card fraud, whether it’s on purpose or by accident, can carry legal and financial consequences and might impact your ability to obtain future credit or even open a bank account. Keep the law on your side by knowing what to watch out for. [Huffington Post] Weekly Credit Card Rate Report

Based on the 1,000+ cards in the Complete Credit Card Index, the average advertised APR for credit cards is 14.49%, slightly lower than last week’s average of 14.50%. Six months ago, the average was 14.47%. One year ago, the average was 14.42%. []

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This Week In Credit Card News: New Protections For Prepaid Cards, How Thieves Steal Gas

New Consumer Protections for Prepaid Cards

The Consumer Financial Protection Bureau is extending many of the financial protections of bank accounts to prepaid cards. New rules proposed Thursday by the federal regulator would require that prepaid card users be protected against fraudulent charges and provided with free monthly billing statements. Consumers have gone from loading less than $1 billion onto their cards in 2003 to nearly $100 billion through 2014. [Associated Press]

Credit Card Thieves Take Gas in ‘Pump and Dump’ Scheme

The man in the white shirt was pumping gas into an ordinary-looking white van. But he was no ordinary customer. In the 17 minutes he was at the pump, he used two stolen credit cards to pump 95 gallons of diesel fuel. What happened at this gas station outside Atlanta is part of a crime wave around the country. It’s called “pump and dump.” Thieves use stolen credit cards to get gas and then sell it at cut-rate prices to truckers and gas stations that are part of the scheme. [CNN]

$450 Credit Cards: Should You Pay for Premium Plastic?

Banks are pitching credit cards with annual fees more aggressively this year. Before you sign up, consider whether it makes sense to pay up to $500 a year for the perks that come with premium plastic. The stiff price tags on high-end cards might be worth it if you are a frequent traveler or spend significant sums on dining or entertainment. But cardholders should be sure that they won’t ramp up their purchases just to justify paying the annual fee—particularly if spending more would increase the odds that they wouldn’t pay the credit card bill in full each month. [The Wall Street Journal]

Debit Cards Decline in Popularity

A new report indicates debit cards are dropping in popularity, even though they remain the most common form of payment in America. The decline is primarily motivated by security fears from the number of data hacks that retailers have suffered this year. The report found 43% of the respondents preferred using debit cards to make payments, compared to 49% last year. []

Costco Weighs Dropping AmEx as U.S. Card Partner

Costco, the retailer that replaced American Express as its credit card issuer in Canada, is considering a similar move with its larger U.S. portfolio, according to two people familiar with the matter. New York-based AmEx could be among firms bidding for the contract. [Bloomberg]

Square Rolls Out New Reader for Chip-Based Credit Cards

You can now pre-order the Square Reader for chip cards. The new reader, which will ship in spring 2015, is the first Square device to deal with EMV technology, meaning it has the ability to process payments made with credit cards embedded with computer chips. The $29 reader will accept both magnetic-stripe and chip cards, and can be used with iPhones, iPads and Android devices. [Entrepreneur]

Apple Pay’s Biggest Competitor Could be a Totally New Credit Card

American Express will replace credit card numbers with unique tokens which can be used to complete transactions online, from a mobile app or in-store with a mobile near field communications-enabled device. The card will have an embedded EMV chip that will generate a unique token for each transaction. Then, that token will be passed to a payment terminal via near field communications, much the same way that Apple Pay makes a transaction. In addition, issuers are developing fingerprint identification for credit cards. MasterCard is already working on a fingerprint ID system in their cards. The system would be similar to Apple’s TouchID system where your fingerprint would need to be verified by the card before it can be used. If these two security features are incorporated into a credit card, then the argument that Apple Pay is somehow more secure than credit cards will be a moot point. []

5 Holiday Spending Mistakes That Can Kill Your Credit

Companies are pulling out all the stops to get us to spend. But watch out: there are some fairly common holiday spending behaviors that can do a number on your credit score. Here’s what the experts say you need to avoid. [Time]

Younger Generation Faces a Savings Deficit

After a flirtation with thrift after the recession, young Americans have stopped saving. Adults under age 35–the so-called millennial generation–currently have a savings rate of negative 2%, meaning they are burning through their assets or going into debt. That compares with a positive savings rate of about 3% for those age 35 to 44, 6% for those 45 to 54, and 13% for those 55 and older. A lack of savings increases the vulnerability of young workers in the postrecession economy, leaving many without a financial cushion for unexpected expenses, raising the difficulty of job transitions and leaving them further away from goals like eventual homeownership–let alone retirement. [The Wall Street Journal] Weekly Credit Card Rate Report

Based on the 1,000+ cards in the Complete Credit Card Index, the average advertised APR for credit cards is 14.50%, slightly below last week’s average of 14.51%. Six months ago, the average was 14.45%. One year ago, the average was 14.45%. []

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This Week In Credit Card News: The Costly Home Depot Breach, Are Chip-And-PIN Cards Safe?

Here’s How the New Chip and PIN Credit Cards Could be DOA

A recent Gallup survey found that 69% of Americans worry “frequently” or “occasionally” about having a credit card compromised by computer hackers. It’s not shocking. Consumers are becoming more educated on the topic, and financial institutions are beginning to do more to combat fraud, including introducing new types of credit cards. One example of the latter is chip-and-PIN technology, which everyone has hailed for its ability to help prevent fraud. But is it the panacea that it’s been made out to be? [Huffington Post]

Home Depot Breach Cost Credit Unions $60 Million

The fallout from the Home Depot data breach is starting to be felt by financial institutions. Credit unions have spent nearly $60 million to reissue cards, deal with fraud and cover other costs as a result of the breach. [Bank Info Security]

Credit Card Companies Cut Swipe Fees in Canada

The Canadian units of Visa and MasterCard announced that they will lower the swipe fees paid by Canadian retailers, in a move to avoid the Canadian government forcing them to instill lower fees amid a debate over credit-card processing costs. Visa Canada and MasterCard Canada said they would reduce their interchange fees, or the rate set by payment networks to process a credit card transaction, to an average of 1.5%. The new rate will be in effect for five years, beginning April 2015. [NACS Online]

Banks on Military Bases Need Greater Transparency for Troops

Many banks on military bases do not offer the protection or transparency soldiers need to make informed decisions about their finances, according to a new report from Pew Charitable Trusts. The report assessed 31 banks and 134 credit unions that operate on 71% of all Department of Defense installations in America. They found that 42% of the banks and 17% of the credit unions do not offer account disclosures online, making it difficult for deployed soldiers to access information about their money. []

Flaw in New ‘Secure’ Credit Card Would Let Hackers Steal $1 Million per Card

According to researchers at Newcastle University, the card system embedded with a microchip and developed by Visa for use in the United Kingdom fails to recognize transactions made in non-UK foreign currencies and can therefore be tricked into approving any transaction up to $999,999.99. [Wired]

7 Times to Use a Debit Card Instead of a Credit Card

Credit cards are renowned for their convenience and security, but they are not the best tool for every job. The biggest problem with credit cards is the fact that cardholders can easily use them to get them into debt, which results in costly interest charges. Here are seven times when a debit card can do the job instead. [Fox Business]

Why Millennials Don’t Like Credit Cards

Cheap, easy credit might have been tempting to young people in the past, but today’s millennials aren’t biting. According to a recent survey, 63% of adults ages 18 to 29 are living without a credit card of any kind, and another 23% only carry one card. Why? Research shows that the environment millennials grew up in might be having an impact on how they view the economy and their finances. Unlike other generations, millennials have lived through economic hardships during a time when their adult lives were just beginning. [U.S. News and World Report]

Why Some Merchants Say No to Apple Pay

Consumers seem to be warming up to the new Apple Pay mobile-payment system on the iPhone 6. Yet a few big retailers are giving it the cold shoulder. Rite Aid and CVS Health disabled technology last month that would allow customers to use Apple Pay in some stores. Industry observers say the reluctance of some merchants to embrace Apple Pay all comes down to one thing: fees. And consumers are likely to remain caught in the midst of this tug-of-war between credit-card networks and merchants for some time. [The Wall Street Journal] Weekly Credit Card Rate Report

Based on the 1,000+ cards in the Complete Credit Card Index, the average advertised APR for credit cards is 14.51%, identical to last week. Six months ago, the average was 14.49%. One year ago, the average was 14.45%. []

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Americans Are Losing Trust in Their Banks

Half of American adults say they have lost trust in their banks over the last few years, according to a recent Harris Poll. By comparison, 49% of the respondents said their trust in credit unions has remained the same in recent years.

Banks were not the only institutions to receive a low rating in the poll. Americans also reported losing trust in Wall Street and mortgage lenders, both seeing a 57% decline.

One out of 13 households are unbanked, based on a 2013 study by the FDIC. This equates to nearly 10 million households.

There are several factors that determine how likely Americans are to trust a financial institution. 66% of poll participants said personal experience is the most important factor, while 56% said they looked at the quality of customer care, quality of products and services, or money charged in fees.

Local banks and credit unions with a smaller area of influence have higher trust levels than nationwide financial institutions. Over three-quarters of those surveyed reported a great deal of trust for local credit unions, while 70% said the same for local branches of a regional bank. Only 50% of Americans trust large national banks.

Online-only banks are fighting a battle in establishing trust with a majority of Americans. Only 39% of the respondents have any trust with online-only banks. Not surprisingly, Millennials and Gen X’ers (42%) have more trust in these institutions than older adults (30%). In addition, consumers in the East and West are more likely to trust online-only banks than respondents in the South or Midwest.

The poll surveyed 2,537 Americans between August 13-18, 2014.

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This Week In Credit Card News: A Rival To Apple Pay, Why Card Companies Can’t Stop Hacks

Some U.S. Retailers Shun Apple Pay, Eye Rival Payments System

Some large U.S. retailers are refusing to use Apple Pay, Apple’s new electronic payments service. They are working on developing their own payment system, called CurrentC, through the Merchants Customer Exchange (MCX) consortium. It would bolster their profits by eliminating transaction fees on credit cards. Included in this group of nearly 50 big retailers are Walmart, Rite Aid and CVS. [Reuters]

Why Credit Card Companies Couldn’t Stop Hacks at Target and Home Depot

While public outrage over recent data breaches has focused mostly on the retailers that were hacked, several security experts say the credit card industry shares some of the blame. Major credit card companies unveiled a strategy over a decade ago to fight hackers. Those security tests have failed to stop the growing number of cyberattacks against retailers this past year. Two of the biggest retailers to get hacked–Home Depot and Target–say they passed the security tests before hackers stole the debit and credit card data of a combined 96 million consumers from their computer systems. [Huffington Post]

B2B Credit Card Payments Jump

The share of U.S. companies that pay their suppliers by credit card has doubled in the past two years. An estimated 10% of this year’s business-to-business purchases will be made with credit cards. As companies struggled out of the credit crisis, many sought the extra 30-day float and perks that credit cards offer, and wrote fewer checks. Plus, using a business credit card also can increase fraud protection and lower processing costs, especially on small purchases. [The Wall Street Journal]

Coming Next Fall: More Chip and Pin Cards in the U.S.

Americans traveling in other parts of the world are sometimes bewildered to discover that their debit or credit cards don’t work at automated kiosks that use new chip and PIN technology rather than magnetic stripes. EMV cards have been the standard in Canada, Europe and other parts of the world for several years now, but they’re not as widely used in the U.S. That’s likely to change next October, when liability for fraud shifts from U.S. card issuers to merchants if merchants don’t upgrade their payment terminals to properly accept chip-based cards. Some smaller merchants may be slow to adopt the new technology if they feel it’s less expensive to assume the fraud risk than update their payment terminals. [U.S. News & World Report]

China Eases Monopoly on Credit Cards

Foreign companies will be allowed for the first time to apply to set up credit card clearing operations in China. The country will ease restrictions on credit cards in a move that might give Visa, MasterCard and other foreign competitors greater access to the Chinese market. Beijing’s restrictions have given a monopoly on credit card processing to a state-owned entity, UnionPay. All banks are required to participate in UnionPay and all transactions must be processed through it. [Associated Press]

Data Breaches Affected 18.5 Million Californians in 2013

Nearly half of California’s residents were affected by data breaches and cyber intrusions in 2013, a staggering seven-fold increase from the previous year. According to a new report, the personal information of approximately 18.5 million Californians was hacked last year. There were 2.5 million accounts which were hacked in 2012. The state’s Attorney General estimated as many as one-third of those people will become victims of fraud. []

Ex-Googler Sees Opportunity as Credit Cards Lose Magnetic Stripe

In the coming year, Americans will ditch their old magnetic-stripe credit and debit cards for new plastic embedded with chip-and-pin technology. To Osama Bedier, former head of Google’s Wallet mobile payment business, the shift is a once-in-a-lifetime opening. “This is the biggest opportunity in the payment business for decades,” he says. Bedier launched a startup called Poynt Co. and unveiled the company’s first product, a merchant terminal that reads chip-and-pin cards. The unit can handle other payment technologies that have flooded the market in recent years, including Near Field Communication, QR codes, beacons and Apple Pay. [The Wall Street Journal]

6 Ways for New Grads to Tackle Their Student Loans

The six-month grace period for many student loans is about to expire for new college graduates. If the past is any guide, many people will miss their first payment and some will end up defaulting on their loans–even though there’s usually no good reason for that to happen. [Reuters] Weekly Credit Card Rate Report

Based on the 1,000+ cards in the Complete Credit Card Index, the average advertised APR for credit cards is 14.51%, slightly below last week’s average of 14.52%. Six months ago, the average was 14.49%. One year ago, the average was 14.44%. []

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