Credit Card Lowdown

Businesses can get access to consumers' new credt card numbers

Reissuance of card numbers to combat identity theft, heavy promotion of no-fee balance transfers from one card to another, and bank mergers has led to consumers' credit-card accounts changing more rapidly than ever. According to recent figures released by Visa USA, more than 55 percent of Visa cards changed their account details in 2003. So, where does that leave businesses? Itmanagement.earthweb.com reports:

Even if your business does manage to gain authorization from your customers to automatically charge their credit cards, the majority of your customers' cards will cease to be auto-billable only one year later. Credit-card issuers in the U.S. have recently come up with a novel solution, however. Almost any business that asks for it can now learn a consumer's new credit-card account number -- whenever it may have changed.

Read more: Get Consumers' New Credit-Card Numbers

Beware of bankruptcy trap

Debt seems to have become a national bugbear with record numbers of consumers filing for bankruptcy every year. And some unscrupulous companies seem to be making a killing on this trend. The Federal Trade Commission has often warned consumers to be wary of advertisements that offer seemingly quick fixes to debt problems.

Problem is not everyone who is in debt needs to file for bankruptcy. While bankruptcy is definitely one of the options to deal with financial problems, it should be tried only if you have exhausted all your other avenues. Not only does a bankruptcy stay on your credit report for 10 long years, it also can make it difficult for you to get credit, a job, or even a house. This is something these shady companies will not tell you. They promise you the sky and then involve you in bankruptcy proceedings. What you can do is try other means like talking to your creditors or contacting a credit counseling service

Credit card debts & solutions

Credit card debt is one of the most common types of debt people face. The resulting debt may cause more than just a pinch on your resources. Nowadays, credit card issuers ask their customers to call them up for debt counseling services and even debt workout programs. Sounds quite a bit like being the cause of a sickness and then providing the cure for it. Anyways, credit card companies offer various options to customers like reducing minimum payments, reducing interest rates, and many more such services. There is only one niggling doubt – how effective are these services?

According to some consumer activists, cardholders have found that informing the credit card issuer could work to their detriment. In some cases, consumers found that their interest rates had been raised after they informed their card issuers about their present situation.

So what can be done in such a situation? If you are facing a bad debt problem, it is best to first contact a good credit counseling agency that will give you a lowdown on your options.

Here too, be on your guard. Before you sign up with a counseling agency it is good to know more about their services, fees and the extent to which they can help you. Otherwise you may end up paying through your nose for a service you may not need. It is also very important to check other facts like your counselor’s qualifications, how the payment is made and if there is any chance to waive the fees.

Don’t rush into a debt management program until you have a good idea of the avenues available to you. And most importantly, don’t call your bank until you are absolutely ready with your options.

‘Good credit card practice thanks to supervision’

Federal Reserve Chairman Ben Bernanke said recently that the U.S. central bank had managed to achieve good practice in credit card disclosure. This he said, was thanks to the supervisory tools that it already has in hand. Reuters.com reports:

"We've found that through guidance and supervisory oversight, we've been able to get satisfactory practices from the banks that we supervise," he told the U.S. Senate Banking Committee during testimony on financial literacy.

Read more: Supervision begets good credit card practice-Bernanke

Pet-friendly credit card from BofA

It seems like the credit card industry has run out of gimmicks to draw in new customers. How else do you explain Bank of America’s new offering? Well if you have pets, then you are probably gonna love this new card that will allow you to display photos of your pets on the card. These PetRewards Visa cards carry no annual fees; gather reward points for pet-related expenses and donations to participating animal shelters.

This is the latest move by the Charlotte-based bank to expand its affinity-card program. This program has been on in full force since BofA acquired Delaware-based credit-card giant MBNA Corp in June. But I somehow find it difficult to believe that somebody would go in for a credit card just so they can stick on pictures of their pets on them. At the end of the day, these cards are still credit cards which carry with them the inherent problems associated with such cards. Bizjournals.com reports:

Cardholders get two reward points for every dollar spent at participating veterinary clinics, pet retailers, farm and feed stores and pet-specialty stores. They also receive one point for every dollar spent for other purchases.

Read more: BofA to launch customized credit card

Reward cards

What is it about cash-back reward cards that has people gunning for them? It probably is simple human nature. Not many people can say no to rewards that are offered for doing what you like to do most – shop. And the market for these cards is growing enormously – at last count, over 32 million people across the country were using reward cards!

So, why is the credit card industry, which is not known for its generosity, making such a magnanimous gesture? When any credit card company offers a cash-back or reward scheme for using its credit card, customers are known to usually use this particular card more than the regular ones. So now you have companies like Discover giving away almost $500 million in 2005 alone. Discover was the company that introduced the cash-back scheme nearly two decades ago. Soon other credit card companies like American Express, Citibank, Visa, and many others were offering reward cards and business was booming.

WaMu's new gold debit card not a hit

Is WaMu's switch from Visa to MasterCard for their debit cards inconveniencing people? If initial reports are anything to go by, this new ‘gold’ debit card has failed to please and is not at all what it was touted to be. Seattlest.com reports:

Then we heard from Spud. And TypePad. And a few other places. And each time we had to go mess around in our account preferences and change the credit card number on file.

Read more: WaMu's New Gold Debit Card Proves Inconvenient

Cybercriminals on the prowl...Are you safe?

Your identity is under attack. Millions of Americans and people across the world are now falling prey to cyber criminals who are using the Internet to get away with virtual murder. Recently the US law enforcement officials had something to cheer about, briefly. Ukrainian police had managed to arrest a person who was supposed to be the kingpin of a dangerous group of cyber criminals. Dimitry Ivanovich Golubov who is supposed to be a part-time student at Mechnikov University in Odessa, however managed to get away even as the U.S. Attorney's office for the Central District of California charged Golubov with a number of cyber crimes, including credit-card fraud in January 2006.

Golubov was supposed to be the Godfather of an international ring of computer hackers and Internet fraudsters. These cyber criminals have been trafficking in millions of stolen credit card numbers and financial information. And how did these criminals conduct their operations? According to information gleaned from the authorities, they supposedly meet in underground forums on the Internet, which have names like theftservices.com, which leave nothing to imagination. They trade tips and data and sometimes, even coordinate scams that have global effects. Imagine a group of people sitting in a East European country and playing havoc with the websites of bigwigs like JPMorgan Chase, Walmart. According to a FBI Computer Crime Survey, annual losses to all types of computer crime including credit card fraud, stood at $67 billion a year!

And what happened to this Golubov guy, how did he manage to escape the authorities' clutches? The problem was that Golubov hadn't been caught by the US officials and in Ukraine, some politicians managed to vouch for his honesty and get him released! It is really scary if a person can be allowed to go free after committing a crime with international ramifications. It may have helped if we had some kind of international policing to catch cyber criminals across the world and bring them to justice immediately

Your credit card debt’s up for sale

Have you ever wondered what happens to the credit card debt that you don’t pay off? Of course, your credit score goes down, you have bill collectors breathing down your neck, and over time, you will be staring bankruptcy in the face. But what happens to the actual debt that you couldn’t pay off?

When you and thousands of others don’t pay up your debt, the bank is saddled with huge debts. Banks don’t have either time or money to follow up on these debts and collect them. So, they use the services of loan brokers like the National Loan Exchange who sell these debts to collection agencies. The present going rate is five to 10 cents to the dollar. These collection agencies then assume the burden of collecting debt from you.

Foreclosures on rise

As the prices of homes plateau, and mortgage rates rise, there has been an almost corresponding increase in the number of foreclosures, especially in the Midwest region. A recent survey shows that there has been an upsurge across the United States in foreclosure rates and mortgage delinquencies. Madison.com reports:

Nationally, the number of mortgage loans that entered some stage of foreclosure - the process by which banks can ultimately take back the properties that secure mortgages - rose to 117,259 in February, up 68 percent from the same month a year ago, according to Irvine, Calif., online foreclosure data service RealtyTrac.

Read more: Home mortgage foreclosures on rise

The Indiana Jones school of debt management

You’ll be surprised to know that you can learn a lot about personal finance and credit card management from the movies. For instance you just have to watch the Indiana Jones series to learn a few important lessons in personal finance. Investopedia.com reports:

When confronted by a gang of armed guards, Indy instinctively follows bar brawl rules: take out the biggest guy first and work your way down from there. The idea is to remove the most dangerous enemy while you still have the energy. Your approach to debts should be the same: prioritize and then eliminate. How do you decide which debt goes first?

Read more: The Indiana Jones Guide to Getting Ahead

Beware… your card’s never safe

Imagine yourself sitting at your desk in your office in say, Texas. And suddenly you get a call from your credit card company asking you if you were trying to make some big purchases in Italy. This is just a routine check by the card company, but you are all shaken. You check your wallet, and your card is lying snug in there. So how can someone in Italy try to do you in?

Credit card fraud is assuming scary proportions. Thanks to the internet, your personal data is never safe from ID thieves who are busier than ever before. Don’t believe me? Check these stats: According to federal and state authorities, ID theft is the country’s fastest-growing white-collar crime. It rose to prominence or should we say notoriety in the past decade. Federal Trade Commission statistics show that the number of people victimized annually stood at around 10 million. The federal Bureau of Justice Statistics reported in 2004, that at least one member of 3 percent of all U.S. households were victims of identity theft. And nearly three-quarters of these incidents involved credit and debit card frauds.

Once you realize how open our society has become thanks to the electronic revolution, you’d understand how these crimes are rising. Today we live in a world where everything including our tax records to Social Security numbers and credit card data are recorded on databases. These can easily be hacked and used unscrupulously by enterprising individuals.

Thieves find it quite easy to target the information embedded in ATM, debit and credit cards. They just need to break into or even compromise the equipment and systems that are used for processing payments. And the results are there for all to see. Credit card companies like Citibank and Visa that have been hit are reissuing their cards or using some other methods to counter this fraud.

Texas’ card-based child support program underway

A debit card plan rolled out recently will make it easier for parents who receive child support through the state of Texas. The plan is expected to be in place statewide by September. Called the Texas Debit Card, this card is convenient for people who don't have checking accounts or worry about checks getting lost or stolen. The good thing about this program is that it eliminates checks and deposits money into an account administered by Wells Fargo Bank.

The card is affiliated with the worldwide Visa card network. So you can access the money from ATM machines, places where Visa cards are honored and also at Wells Fargo branches. In the initial stages, state officials plan to target nearly 40,000 parents in nine southeast Texas counties. Most of the people who are being targeted still get checks in the mail rather than by direct deposit. Dfw.com reports:

A bank account is not required, there is no credit investigation and people who apply for the card get it automatically. They must have court-ordered child support obligation and a case with the attorney general's office.

Read more: State unveils child support debit card program

Less is more theory of credit card security

Want to prevent identity theft? Learn one of the guiding principles of doing so –Less is more. If there isn’t too much of your personal information floating around, you enjoy a lot more security. Sfgate.com reports:

Many Californians may have noticed that the credit-card numbers have -- by law -- already been truncated or eliminated on the receipts they get at an ATM machine or gas station. Bowen's SB1699 would extend that law to the merchants' copies of receipts.

Read more: Credit-card security

Don’t skim over your credit-card agreement; READ it

Credit card companies can be very smart cookies. They don’t actually dupe you but bury you in so much information that you fail to see the bit that could matter to you. In short, they ensure that you have information overload so you miss the important point. Don’t believe me? Well here’s the case of a guy who got a letter from his card company. While the cover letter spoke about new special services like ‘same day payments’, etcetera, another document showed how the the terms of his credit agreement had changed. Fees for late payments, going over the credit limit, had been raised. And this was just the beginning!

And the worst part is that we cannot do much when these companies arbitrarily change the terms of their agreement with you. When you accept your credit card, you are asked to sign an agreement that allows the issuer to change the terms of the contract anyway they please, as long as you are properly notified. And how do they notify you? They ensure that these updated card agreements are typically full of fine print and go unread.

Keep sight of your credit card to avoid getting cheated

You’ve gotta give it to these guys. Every time the cops bust one method of credit card fraud, the scamsters are at the game again and find some other way of cheating people out of their cards and money. The latest one involves a man who is wanted for allegedly handing off customer credit cards to an accomplice. This accomplice then used a small, hand-held scanner to copy the card number and expiration date.

Now the Washington County Sheriff’s Office Fraud and Identity Theft team has issued a secret indictment for a former waiter at the Beaverton Azteca restaurant, who is possibly behind the fraud. Though not a widespread problem yet, if you do fall into this guy’s trap, you may end up in a lot of trouble. So it is best to keep an eye on your credit and debit cards at all times. Oregonlive.com reports:

"Paying cash may be making a comeback in popularity," WCSO Sgt. David Thompson said. "If the waiter has to take your card away from your view for processing, there is a chance it could be compromised." If a server is taking a particularly long time and going to excessive lengths to be out of sight, it’s all right to become suspicious.

Read more: Keep credit cards in sight, police caution

Stormy weather ahead for credit card companies

Card issuers and their partner banks are not in such good humor these days. Rather it would be more correct to say that they are in a state of panic. And why so? The reason is not apparent on the surface at least. I mean, at present, credit cards are having the run of the market. Consumers are indiscriminately using cards for all kinds of purchases and card companies, especially Visa and MasterCard have a steady flow of revenue thanks to the $800 bn credit card debt that Americans owe them. And MasterCard is especially on a roll as it gets ready to go public. So, what’s bothering them?

To know the answers, you need to scratch under the surface. Visa and MasterCard are today facing problems from all fronts. These range from the ongoing merchant lawsuit against hidden interchange fees, to competition from new card issuers. In case you didn’t know about the interchange fee fracas, well here’s the lowdown. Retailers and merchant have filed a lawsuit against Visa and MasterCard wherein they allege that they have been losing profits from sales in order to process card transactions. The main reason for these losses is the high rates for the fees, which are set by the card companies and issuing banks.

And here’s the biggest worry of them all – increasing numbers of consumers are actually getting rid of their cards! And guess what, people are no longer flocking in droves to get new credit cards. So there are not many new customers for these companies. Then there is the problem of increasing interest rates. All these problems seem to have come together, or they were probably brewing on the horizon for quite some time and have now decided to create a much-delayed storm.

Troubled times for credit card companies

It’s payback time for credit cards especially Visa and MasterCard. After having the run of the market for so many years, these two companies are now facing innumerable detractors whoa re filing merchant lawsuits against them. Consumeraffairs.com reports:

The lawsuit filed by retailers and merchants against Visa and MasterCard over "interchange" fees was recently amended to include debit cards as well as credit cards. The lawsuit deals with the processing fees merchants have to pay to card companies and issuing banks when customers buy goods using plastic.

Read more: Credit Card Companies Fear "Perfect Storm"

Dumb email doing the rounds

Have you by any chance received an email that proposes a very unique method of avoiding identity theft? The user is advised not to sign the back of his/her credit card! If you ask me, somebody ought to be really foolish out there to heed such advice. Wtopnews.com reports:

It is important that consumers understand that credit card theft is not identity theft. Identity theft involves a whole lot more.

Read more: Sorting Out Myth From Fact When It Comes to Credit Cards and ID Theft

Facts about credit card debt consolidation

Too many credit cards leading to debt from various sources and causing confusion? There’s an easy way out. Just consolidate all your credit card debts into one big loan. A simple and easy method of bringing some semblance of order into your debts. Or is it?

While consolidating your credit card debt may be a good idea, you can never be sure unless you know everything there is to know. What I mean is if you think it is good for you, then go in for consolidation by all means but only after you’ve weighed the pros and cons. For instance, do you know that once you’ve consolidated, you cannot transfer your credit balance to another credit card provider who may be offering you better terms than your present one. 1031exchangearticles.com reports:

Although it may seem like a good idea to extinguish an old credit card if a better offer comes along, one downside with this is you also extinguish the records of one of your oldest credit histories.

Read more: Is Credit Card Debt Consolidation Right For You?

With cards, debit is better than credit

If your credit card company is trying to subtly push you into using debit cards, then it is no coincidence. In the past couple of years, America has seen a subtle shift in consumer preferences. People are now opting to use debit cards as the electronic alternative to paying with cash or checks. The best thing about these cards is that they can be used anywhere a credit card is accepted. And unlike credit card users, customers can keep better track of their spending habits as every purchase and ATM withdrawal is posted on the monthly statement. Another added advantage is that debit card users need not pay any finance charges and will not have to worry about mounting debts as in the case of credit card users.

Now it is natural for you to think that if it was so beneficial, why are more people not being encouraged to use debit cards over credit cards. Well, realizing that making people use debit cards is more worthwhile, an increasing number of banks are now offering reward programs similar to those available to many credit card customers.

Is your card company trying to make you switch from credit to debit?

I’m sure many people feel a bit like novices when it comes to paying with credit cards. I mean, you’ve probably used credit cards for a long time and yet when you try to swipe your card, you sometimes end up doing something stupid like forgetting to press the ‘credit’ button. Seattletimes.nwsource.com reports:

A big reason customers have to scan their cards everywhere from department stores to fast-food restaurants is because retailers want us to pay with debit rather than credit. Stores are charged less by credit-card companies for debit transactions.

Read more: Taking a swipe at card readers

The CBFC route to getting a good credit card

Credit cards are an absolute necessity and most of us cannot do without them. I mean, I cannot remember a day when I left home without my cards. I’m sure you too feel lost without them. And yet, we seem to be so blind to simple credit card facts that will help us make our lives easier. Here is the CFBC rule to credit card land.

The first rule when you are ready to get yourself a credit card is to ‘Choose well”. Find those cards that offer the lowest interest rates and best services possible. Here’s a piece of advice: If you want lower fees and more importantly, lower penalty rates than banks, then go in for cards from credit unions. For those who are too lazy to do their research, try the Bankrate website to find cards with the lowest interest rates.

Many a time, you are taken in by the show and fail to see what lies beneath. In other words, you don’t notice the ‘Fine print’. Always watch the fine print for notification about changes in interest rates and fees. What often happens is that since these notifications come mixed in with other promotional material you could easily oversee it.

The next step in getting a good deal on your credit card is to stand your ground. Don’t let your credit card issuer get away after hitting you with a late fee or a rate hike. Negotiate for ‘Better terms’. You can even ask for a waiver. Many a time, issuers back off out of fear of losing your business.

And lastly, in case you feel you are being cheated in anyway, don’t hesitate to enquire or file a ‘Complaint’ against your credit card issuer. You can direct your inquiries to the U.S. Office of the Comptroller of the Currency at (800) 613-6743.