Credit Card News

If you run a small or medium-sized enterprise (SME), you may well find that the line between your personal and business lives is hard to define. That often applies to financial matters, too. Many see money flowing between personal and business accounts on a regular (sometimes alarmingly regular!) basis. Rewards credit cards with added flexibility Citi recently recognized this, and on May 2 announced revisions to its ThankYou rewards program that could prove useful for some SME owners. However, to take advantage of the new deal, you have to have either a CitiBusiness Streamlined Checking account or a CitiBusiness Flexible Checking account, and to conduct at least two online bill payments or pay two checks each month.

Chase announced on May 1 that it had teamed up with LivingSocial to launch the LivingSocial Rewards Visa Card. In a press release, the companies promised that the product is going to "provide LivingSocial users with additional value on purchases made everywhere and special cardholder-only benefits and offers." Rewards credit cards go local If you're not already familiar with LivingSocial, it is an online service that connects consumers with businesses -- especially small ones -- in their area. In big cities, that area might as small as a neighborhood. The idea is that local merchants can connect with nearby potential customers through daily deals and other promotions. With luck, those potential customers eventually become regulars. The company claims to have 60 million members in 20 countries on six continents.

Freddie and the Dreamers may be history, but the Freddie Awards are back! Okay, among the avalanche of awards ceremonies that hit each of us every year, you may not have noticed they ever went away. Or, indeed, ever existed in the first place. But actually the Freddies -- which honor the best programs in the travel loyalty industry -- may be one of the more worthwhile backslapping ceremonies.

This is a news blog. But it's doubtful many readers will be shocked by the revelation that credit card companies are spectacularly good at finding loopholes in regulations, including those in the Credit CARD Act of 2009 that are supposed to protect students and other young people from aggressive marketing techniques. Credit cards too available to the young? What is new is that anecdotal evidence of failures in such regulations is now for the first time backed up by an empirical study. Trailing publication of his full report in the fall, Professor Jim Hawkins of the University of Houston Law Center comments in an Apr. 24 press release: "Based on this survey and study, I found that many of the CARD Act's student and young consumer provisions have not affected credit markets in the ways the Act's proponents had hoped."

The FINRA Investor Education Foundation published a report on April 11 that made startling reading. In summary, it suggested that on average women pay more for their credit cards than men do. Can that be right? It seems so, although it has nothing to do with discrimination on the part of credit card companies. The problem seems to be that there are more women in the population whose financial literacy is challenged. Credit cards and negative behavior FINRA listed five "negative behaviors" and used data from the huge, coast-to-coast, 28,000-strong National Financial Capability Study, which was conducted in 2009, to identify any gender biases in those behaviors. In only one (using cards to get cash advances) did men score worse than women, and then by only 1 percent, which may well be within the study's margin of error. Here are the other four: Carried forward balances (revolved credit): 55 percent of men, but 60 percent of women. Made minimum payments: 38 percent of men, but 42 percent of women. Paid late fees: 23 percent of men, but 29 percent of women. Paid over-the-limit fees: 15 percent of men; 16 percent of women. (Again, this may be within the margin of error.)

Suppose, the day before your loved ones have you committed to the sort of institution that employs very large "caretakers" and dresses them in white uniforms, you decide to apply for a First Premier Bank credit card. What sort of deal would you find on the bank's website? Here (at least at the time of writing) is what's on offer: A credit limit of, perhaps, $300. That's the sum used by the site for its example scenarios. An APR of 36.0 percent. A first year's annual fee of $75 with no monthly fees. In the second and subsequent years, an annual fee of $45, plus monthly fees totaling $75 per year A fee for subsequently increasing your credit limit of 25 percent of that increase. A cash advance cap of 10 percent of your credit limit for the first 3 months, which may then rise to as much as 50 percent -- if you're a good girl or boy. A one-time processing fee of $95 for setting up the account. Credit card regulation fails Hang on. What was that last one? A one-time processing fee of $95 for setting up the account? How does that work? Surely the Federal Reserve, implementing the Credit CARD Act of 2009, capped the amount of fees that could be charged during the first year a card account is opened at 25 percent of the credit limit. A $75 annual fee plus a $95 processing fee comes to $170. That's over 56 percent of $300, more than twice the cap.

Very recently, your blogger wrote in "Rewards credit cards: What do people really want?" about a fall in customer satisfaction levels among those who have rewards credit cards. Citing recent research from the Capital One Rewards Barometer, IndexCreditCards.com reported: Back in November 2011, when consumers were asked whether they ranked their ability to earn rewards quickly as "very good" or "excellent," 52 percent said yes. That fell to 47 percent in February [2012]. Similarly, 55 percent rated in those top two categories the value of the rewards they received in November, but only half did in February.