Credit Card News: Regulator Wants Your Views

According to yesterday’s Washington Post: “the Federal Reserve wants to know what consumers think” about its latest proposals for future credit card regulation, which it published earlier this month. Regulations covered credit card rates, fees, and terms. The Fed wants your views? Yeah, right.

Navigating the Fed’s website is never easy, but finding a way to comment on the new proposals defeated this writer completely. True, it’s not too hard to find a press release that says: “Comments on the proposal must be submitted within 30 days after publication in the Federal Register, which is expected shortly.” And that press release has a link to a dense, 43-page Federal Register PDF extract on the proposed credit card rules. But, personally, finding a way to actually to comment proved impossible.

Credit Card Consumer Consultation in Action

So it was back to the Post to learn:

If you want to comment on the proposals, send an e-mail to regs.comments@federalreserve.gov. Include “Docket No. R-1384″ in the subject line. You can also comment by fax to 202-452-3819; remember to include the docket number. Comments must be received on or before April 14.

Very consumer-friendly. A cynic might almost wonder if the Fed really wants to hear from those who actually use credit cards, or whether it would rather just receive comments from the credit card companies’ lawyers.

Credit Card Companies Fed’s Priority?

You can find such cynics among the New York Times’s editorial staff. The paper carried a leader Monday that said: “The Fed has a long history of putting the credit card industry first and consumers far behind, and a draft of the rules released this month is disturbingly weak.”

And the Times isn’t alone in thinking that the Fed’s ties to credit card companies are too close. Earlier this month, Rep. Barney Frank (D-MA), who is chairman of the House Committee on Financial Services, issued a statement in which he said:

I do not support housing the Consumer Financial Protection Agency in the Federal Reserve. I continue to vigorously support the House-passed bill that establishes an independent agency with strong rule-writing authority and enforcement powers to implement consumer protections… My main objection to housing this critical function in the Federal Reserve has been the central bank’s historical failure to implement consumer protection as a central part of its mission and role.

Have Your Say on Credit Cards

If you want to have your say on credit card rates, terms, fees, and so on, the Consumers Union can help. Its creditcardreform.org site has a form that allows you easily to submit your views to the Fed.

Credit Card News: Regulator Wants Your Views

According to yesterday’s Washington Post: “the Federal Reserve wants to know what consumers think” about its latest proposals for future credit card regulation, which it published earlier this month. These cover credit card rates, fees, terms, etc. The Fed wants your views? Yeah, right.

Navigating the Fed’s web site is never easy, but finding a way to comment on the new proposals defeated this writer completely. True, it’s not too hard to find a press release that says: “Comments on the proposal must be submitted within 30 days after publication in the Federal Register, which is expected shortly.” And that press release has a link to a dense, 43-page Federal Register PDF extract on the proposed credit card rules. But, personally, finding a way actually to comment proved impossible.

Credit Card Consumer Consultation in Action

So it was back to the Post to learn:

If you want to comment on the proposals, send an e-mail to regs.comments@federalreserve.gov. Include “Docket No. R-1384″ in the subject line. You can also comment by fax to 202-452-3819; remember to include the docket number. Comments must be received on or before April 14.

Very consumer-friendly. A cynic might almost wonder if the Fed really wants to hear from those who actually use credit cards, or whether it would rather just receive comments from the credit card companies’ lawyers.

Credit Card Companies Fed’s Priority?

Such cynics can be found among the New York Times’s editorial staff. The paper carried a leader Monday that said: “The Fed has a long history of putting the credit card industry first and consumers far behind, and a draft of the rules released this month is disturbingly weak.”

And the Times isn’t alone in thinking that the Fed’s ties to credit card companies are too close. Earlier this month, Rep. Barney Frank (D-MA), who is chairman of the House Committee on Financial Services, issued a statement in which he said:

I do not support housing the Consumer Financial Protection Agency in the Federal Reserve. I continue to vigorously support the House-passed bill that establishes an independent agency with strong rule-writing authority and enforcement powers to implement consumer protections… My main objection to housing this critical function in the Federal Reserve has been the central bank’s historical failure to implement consumer protection as a central part of its mission and role.

Have Your Say on Credit Cards

If you want to have your say on credit card rates, terms, fees, and so on, the Consumers Union can help. Its creditcardreform.org site has a form that allows you easily to submit your views to the Fed.

Capital One announced yesterday the launch of the Venture Card, a travel rewards Visa credit card that offers double miles on all card purchases, with no restrictions on which types of purchases qualify for miles, and no restrictions on how and when miles are used — miles are good on any airline at any time, with no blackout dates. In this post Credit Card Act world, however, there is one feature consumers may not enjoy quite as much — an annual fee (waived for the first year, but $59 thereafter).

In addition to two miles per dollar charged, Venture Card customers can also get 10,000 bonus miles when they spend at least $1,000 in purchases with the card in the first three months of having it. Like all Capital One credit cards — and unlike almost all competitors’ cards — there are no extra transaction fees on purchases made outside of the United States.

The process for redeeming miles with the Venture Card may be a bit different than some consumers are used to, but in keeping with Capital One’s “no hassle” theme, it is straightforward. Cardholders pay for their travel purchases with the Venture Card, then contact Capital One via phone or over the Internet to redeem their miles against those purchases. Miles are essentialy worth a penny each in this formula — for example, a $300 travel purchase would require 30,000 miles if a cardholder wanted to completely pay with miles.

Interested consumers can apply for the Capital One Venture Card at http://www.capitaloneventure.com.

Credit Card Companies Wooing the Creditworthy

Last week, this column explored the theory that credit card companies are trying to lure the best customers from competitors by offering valuable new services and benefits at extra cost. Well, as everyone knows all too well, some of those extra costs are already in place. And CNN reported Friday that the wooing has already begun with a number of credit card rewards programs being enhanced.

For example:

• The Chase Freedom credit card now pays five percent (instead of three percent) cash back on certain types of purchases
• Citibank’s American Airlines-branded card has increased its reward from a mile for every dollar spend to 1.2 miles per dollar
• JPMorgan Chase’s co-branded Marriott and British Airways cards have had their rewards schemes upgraded

Credit Card Rewards–Why They’re Getting Better

As card issuers find their profitability squeezed by writing off bad loans, and new credit card regulation, they’re searching around for business models that deliver more to their bottom lines. Right now, attracting new, creditworthy customers is their favorite strategy.

And, as CNN points out, credit card rewards programs have three key advantages for the companies:

1. They build customer loyalty
2. They attract people who are unlikely to default
3. They expand transaction volumes, so increasing the “interchange fees” (the charges levied on merchants) benefits issuers by between one and two percent of the value of each purchase

Secured Credit Cards–an Innovation

Usually, the cheapest credit card rates are reserved for those with secured cards. That’s because the lender holds sufficient collateral to cover the balance, so the risk of default is close to zero. And now a company has come up with a novel idea that could give a whole meaning to the phrase “gold credit cards.”

Earlier this month, Gold Solutions Marketing, Inc. unveiled plans for secured credit cards that would be backed by gold bullion. The idea is that you would deposit your gold coins or bars in the company’s insured vaults, and then would be permitted to borrow up to 75 percent of their value. Any balances that are carried over would then accrue interest at a rate of eight to 13 percent APR, which is certainly competitive when compared with most unsecured credit cards.

Some Limits

One potential drawback is that the price of gold fluctuates. That shouldn’t affect credit card rates under the scheme, but it does mean that your credit limit could rise or fall as the price changes. As a general rule, the price of gold drops as the economy improves, so–if the current recovery is sustained–it’s likely that those holding these cards eventually find their spending power curtailed.

But Jeff Silver, who’s one of the company’s vice presidents (and who has one of those amazing, job-appropriate names), sees–unsurprisingly–only positives. He says:

The Gold Bullion Card is the ultimate win/win/win situation for the consumer, the bank and the economy. The consumer finds a new source of credit from assets he may already have, the bank issues credit cards to individuals without the bank incurring any risk of default, and into the economy pours a new source of credit and liquidity.

Credit Card Companies Wooing the Creditworthy

Last week, this column explored the theory that credit card companies are trying to lure the best customers from competitors by offering valuable new services and benefits at extra cost. Well, as everyone knows all too well, some of those extra costs are already in place. And CNN reported Friday that the wooing has already begun with a number of credit card rewards programs being enhanced.

For example:

• The Chase Freedom credit card now pays five percent (instead of three percent) cash back on certain types of purchases
• Citibank’s American Airlines-branded card has increased its reward from a mile for every dollar spend to 1.2 miles per dollar
• JPMorgan Chase’s co-branded Marriott and British Airways cards have had their rewards schemes upgraded

Credit Card Rewards–Why They’re Getting Better

As card issuers find their profitability squeezed by writing off bad loans, and new credit card regulation, they’re searching around for business models that deliver more to their bottom lines. Right now, attracting new, creditworthy customers is their favorite strategy.

And, as CNN points out, credit card rewards programs have three key advantages for the companies:

1. They build customer loyalty
2. They attract people who are unlikely to default
3. They expand transaction volumes, so increasing the “interchange fees” (the charges levied on merchants) benefits issuers by between one and two percent of the value of each purchase

Secured Credit Cards–an Innovation

Usually, the cheapest credit card rates are reserved for those with secured cards. That’s because the lender holds sufficient collateral to cover the balance, so the risk of default is close to zero. And now a company has come up with a novel idea that could give a whole meaning to the phrase “gold credit cards.”

Earlier this month, Gold Solutions Marketing, Inc. unveiled plans for secured credit cards that would be backed by gold bullion. The idea is that you would deposit your gold coins or bars in the company’s insured vaults, and then would be permitted to borrow up to 75 percent of their value. Any balances that are carried over would then accrue interest at a rate of eight to 13 percent APR, which is certainly competitive when compared with most unsecured credit cards.

Some Limits

One potential drawback is that the price of gold fluctuates. That shouldn’t affect credit card rates under the scheme, but it does mean that your credit limit could rise or fall as the price changes. As a general rule, the price of gold drops as the economy improves, so–if the current recovery is sustained–it’s likely that those holding these cards eventually find their spending power curtailed.

But Jeff Silver, who’s one of the company’s vice presidents (and who has one of those amazing, job-appropriate names), sees–unsurprisingly–only positives. He says:

The Gold Bullion Card is the ultimate win/win/win situation for the consumer, the bank and the economy. The consumer finds a new source of credit from assets he may already have, the bank issues credit cards to individuals without the bank incurring any risk of default, and into the economy pours a new source of credit and liquidity.

Credit Card Companies Wooing the Creditworthy

Last week, this column explored the theory that credit card companies are trying to lure the best customers from competitors by offering valuable new services and benefits at extra cost. Well, as everyone knows all too well, some of those extra costs are already in place. And CNN reported Friday that the wooing has already begun with a number of credit card rewards programs being enhanced.

For example:

• The Chase Freedom credit card now pays five percent (instead of three percent) cash back on certain types of purchases
• Citibank’s American Airlines-branded card has increased its reward from a mile for every dollar spend to 1.2 miles per dollar
• JPMorgan Chase’s co-branded Marriott and British Airways cards have had their rewards schemes upgraded

Credit Card Rewards–Why They’re Getting Better

As card issuers find their profitability squeezed by writing off bad loans, and new credit card regulation, they’re searching around for business models that deliver more to their bottom lines. Right now, attracting new, creditworthy customers is their favorite strategy.

And, as CNN points out, credit card rewards programs have three key advantages for the companies:

1. They build customer loyalty
2. They attract people who are unlikely to default
3. They expand transaction volumes, so increasing the “interchange fees” (the charges levied on merchants) benefits issuers by between one and two percent of the value of each purchase

Secured Credit Cards–an Innovation

Usually, the cheapest credit card rates are reserved for those with secured cards. That’s because the lender holds sufficient collateral to cover the balance, so the risk of default is close to zero. And now a company has come up with a novel idea that could give a whole meaning to the phrase “gold credit cards.”

Earlier this month, Gold Solutions Marketing, Inc. unveiled plans for secured credit cards that would be backed by gold bullion. The idea is that you would deposit your gold coins or bars in the company’s insured vaults, and then would be permitted to borrow up to 75 percent of their value. Any balances that are carried over would then accrue interest at a rate of eight to 13 percent APR, which is certainly competitive when compared with most unsecured credit cards.

Some Limits

One potential drawback is that the price of gold fluctuates. That shouldn’t affect credit card rates under the scheme, but it does mean that your credit limit could rise or fall as the price changes. As a general rule, the price of gold drops as the economy improves, so–if the current recovery is sustained–it’s likely that those holding these cards eventually find their spending power curtailed.

But Jeff Silver, who’s one of the company’s vice presidents (and who has one of those amazing, job-appropriate names), sees–unsurprisingly–only positives. He says:

The Gold Bullion Card is the ultimate win/win/win situation for the consumer, the bank and the economy. The consumer finds a new source of credit from assets he may already have, the bank issues credit cards to individuals without the bank incurring any risk of default, and into the economy pours a new source of credit and liquidity.

Credit Card Companies Wooing the Creditworthy

Last week, this column explored the theory that credit card companies are trying to lure the best customers from competitors by offering valuable new services and benefits at extra cost. Well, as everyone knows all too well, some of those extra costs are already in place. And CNN reported Friday that the wooing has already begun with a number of credit card rewards programs being enhanced.

For example:

• The Chase Freedom credit card now pays five percent (instead of three percent) cash back on certain types of purchases
• Citibank’s American Airlines-branded card has increased its reward from a mile for every dollar spend to 1.2 miles per dollar
• JPMorgan Chase’s co-branded Marriott and British Airways cards have had their rewards schemes upgraded

Credit Card Rewards–Why They’re Getting Better

As card issuers find their profitability squeezed by writing off bad loans, and new credit card regulation, they’re searching around for business models that deliver more to their bottom lines. Right now, attracting new, creditworthy customers is their favorite strategy.

And, as CNN points out, credit card rewards programs have three key advantages for the companies:

1. They build customer loyalty
2. They attract people who are unlikely to default
3. They expand transaction volumes, so increasing the “interchange fees” (the charges levied on merchants) benefits issuers by between one and two percent of the value of each purchase

Secured Credit Cards–an Innovation

Usually, the cheapest credit card rates are reserved for those with secured cards. That’s because the lender holds sufficient collateral to cover the balance, so the risk of default is close to zero. And now a company has come up with a novel idea that could give a whole meaning to the phrase “gold credit cards.”

Earlier this month, Gold Solutions Marketing, Inc. unveiled plans for secured credit cards that would be backed by gold bullion. The idea is that you would deposit your gold coins or bars in the company’s insured vaults, and then would be permitted to borrow up to 75 percent of their value. Any balances that are carried over would then accrue interest at a rate of eight to 13 percent APR, which is certainly competitive when compared with most unsecured credit cards.

Some Limits

One potential drawback is that the price of gold fluctuates. That shouldn’t affect credit card rates under the scheme, but it does mean that your credit limit could rise or fall as the price changes. As a general rule, the price of gold drops as the economy improves, so–if the current recovery is sustained–it’s likely that those holding these cards eventually find their spending power curtailed.

But Jeff Silver, who’s one of the company’s vice presidents (and who has one of those amazing, job-appropriate names), sees–unsurprisingly–only positives. He says:

The Gold Bullion Card is the ultimate win/win/win situation for the consumer, the bank and the economy. The consumer finds a new source of credit from assets he may already have, the bank issues credit cards to individuals without the bank incurring any risk of default, and into the economy pours a new source of credit and liquidity.

Credit Card Companies Wooing the Creditworthy

Last week, this column explored the theory that credit card companies are trying to lure the best customers from competitors by offering valuable new services and benefits at extra cost. Well, as everyone knows all too well, some of those extra costs are already in place. And CNN reported Friday that the wooing has already begun with a number of credit card rewards programs being enhanced.

For example:

• The Chase Freedom credit card now pays five percent (instead of three percent) cash back on certain types of purchases
• Citibank’s American Airlines-branded card has increased its reward from a mile for every dollar spend to 1.2 miles per dollar
• JPMorgan Chase’s co-branded Marriott and British Airways cards have had their rewards schemes upgraded

Credit Card Rewards–Why They’re Getting Better

As card issuers find their profitability squeezed by writing off bad loans, and new credit card regulation, they’re searching around for business models that deliver more to their bottom lines. Right now, attracting new, creditworthy customers is their favorite strategy.

And, as CNN points out, credit card rewards programs have three key advantages for the companies:

1. They build customer loyalty
2. They attract people who are unlikely to default
3. They expand transaction volumes, so increasing the “interchange fees” (the charges levied on merchants) benefits issuers by between one and two percent of the value of each purchase

Secured Credit Cards–an Innovation

Usually, the cheapest credit card rates are reserved for those with secured cards. That’s because the lender holds sufficient collateral to cover the balance, so the risk of default is close to zero. And now a company has come up with a novel idea that could give a whole meaning to the phrase “gold credit cards.”

Earlier this month, Gold Solutions Marketing, Inc. unveiled plans for secured credit cards that would be backed by gold bullion. The idea is that you would deposit your gold coins or bars in the company’s insured vaults, and then would be permitted to borrow up to 75 percent of their value. Any balances that are carried over would then accrue interest at a rate of eight to 13 percent APR, which is certainly competitive when compared with most unsecured credit cards.

Some Limits

One potential drawback is that the price of gold fluctuates. That shouldn’t affect credit card rates under the scheme, but it does mean that your credit limit could rise or fall as the price changes. As a general rule, the price of gold drops as the economy improves, so–if the current recovery is sustained–it’s likely that those holding these cards eventually find their spending power curtailed.

But Jeff Silver, who’s one of the company’s vice presidents (and who has one of those amazing, job-appropriate names), sees–unsurprisingly–only positives. He says:

The Gold Bullion Card is the ultimate win/win/win situation for the consumer, the bank and the economy. The consumer finds a new source of credit from assets he may already have, the bank issues credit cards to individuals without the bank incurring any risk of default, and into the economy pours a new source of credit and liquidity.

Credit Card Companies Wooing the Creditworthy

Last week, this column explored the theory that credit card companies are trying to lure the best customers from competitors by offering valuable new services, and benefits at extra cost. Well, as everyone knows all too well, some of those extra costs are already in place. And CNN reported Friday that the wooing has already begun with a number of credit card rewards programs being enhanced.

For example:

• The Chase Freedom credit card will now pay five percent (instead of three percent) cash back on certain types of purchases
• Citibank’s American Airlines-branded card has increased its reward from a mile a dollar to 1.2 miles a dollar
• JPMorgan Chase’s co-branded Marriott, and British Airways cards have had their rewards schemes upgraded

Credit Card Rewards–Why They’re Getting Better

As card issuers are finding their profitability squeezed by the writing off of bad loans, and new credit card regulation, they’re searching around for business models that will deliver more to their bottom lines. Right now, attracting new, creditworthy customers is their favorite strategy.

And, as CNN points out, credit card rewards programs have three key advantages for the companies:

1. They build customer loyalty
2. They attract people who are unlikely to default
3. They expand transaction volumes, so increasing the “interchange fees” (the charges levied on merchants) that benefit issuers by between one and two percent of the value of each purchase

Secured Credit Cards–an Innovation

Usually, the cheapest credit card rates are reserved for those with secured cards. That’s because the lender holds sufficient collateral to cover the balance, so the risk of default is close to zero. And now a company has come up with a novel idea that could give a whole meaning to the phrase “gold credit cards“.

Earlier this month, Gold Solutions Marketing, Inc. unveiled plans for secured credit cards that would be backed by gold bullion. The idea is that you would deposit your gold coins or bars in the company’s insured vaults, and then would be permitted to borrow up to 75 percent of their value. Any balances that are carried over would then attract interest at a rate of eight to 13 percent APR, which is certainly competitive when compared with most unsecured credit cards.

Some Limits

One potential drawback is that the price of gold fluctuates. That shouldn’t affect credit card rates under the scheme, but it does mean that your credit limit could rise or fall as the price changes. As a general rule, the price of gold drops as the economy improves, so–if the current recovery is sustained–it’s likely that those holding these cards will eventually find their spending power curtailed.

But Jeff Silver, who’s one of the company’s vice presidents (and who has one of those amazing, job-appropriate names), sees–unsurprisingly–only positives. He says:

The Gold Bullion Card is the ultimate win/win/win situation for the consumer, the bank and the economy. The consumer finds a new source of credit from assets he may already have, the bank issues credit cards to individuals without the bank incurring any risk of default, and into the economy pours a new source of credit and liquidity.

Credit Card Use to Change?

There are whispers circulating around credit card companies about fundamental changes ahead. A few are forecasting the effective death of the industry, but most predict something less radical.

The majority expect to see a new era in which banks take time to discover what consumers need–and value–in their credit card use, and respond with offers that both cost and deliver more. At the moment, card holders tend to see products as a commodity, and–in all but exceptional circumstances–make buying decisions based exclusively on cost–credit card rates and fees.

The hope is that, by offering (and charging for) new, valuable services, card issuers will move from being “fear-based” enterprises to “value-based” ones. But it’s hard to see how that can work out unless the companies drastically reduce the number of credit cards they issue, and cancel many of the accounts held by less profitable customers.

Credit Card Regulation Behind Move?

The industry would have you believe that recent and proposed credit card regulation is behind the possible changes. And they’d be right, at least in part. Earlier this week, the New York Times reported that JPMorgan alone could “lose income from legislation limiting credit card and overdraft charges, perhaps as much as $1.25 billion.” However, most card issuers are more exposed to unrepayable credit card debt than to regulatory issues, and double-digit rates of “charge offs” (when banks write off debts as uncollectible) have been routine for many card companies for some time.

But obviously it’s easier to rail against the government than come to terms with one’s own past unwise lending policies. And there’s a better chance of lobbyists heading off further regulation if the card companies focus on on the financial impact of the recent Credit CARD Act.

Credit Card Debt Main Driver?

When it comes to higher credit card rates and fees–and to any future structural changes in the industry–it seems likely that the main driver will be poor lending decisions in the past. And it’s not clear that things are getting much better today.

Last Friday, the Federal Reserve published its latest data on consumer debt and, on first reading, it contained good news. Outstanding revolving credit (which mostly comprises credit card debt) stood at $864.4 billion in January. Of course, that’s a huge amount, but it’s $70.7 billion less than it was in the first quarter of 2009, and a whopping $93.7 billion down on its highest recent level in the last quarter of 2008.

So surely that means that Americans have responded responsibly to the credit crunch, and have been paying down their credit card debt. Well, maybe not. Yesterday, the Associated Press ran a story that contained a sobering figure. It said: “In 2009, banks wrote off a record $83.27 billion in credit card debt.”

Credit Cards in the Future

It’s hard to see how that sort of charge-off rate can be sustained. And, if the economy picks up, it won’t have to be. But credit card companies are unlikely to want to put themselves in the same position ever again, so a restructuring of the industry is very much in the cards.

It may be that in the future many fewer Americans will have credit cards, and that those who do will pay more, and receive new and valuable benefits. But, as long as other financial products are created to fill the gaps, that may not be such a bad thing.