By Liz Morris

Discover Card recently announced the categories to be included in its 5% cash back “Get More” program for the final three months of 2006. From October through December, Discover Card customers can earn a 5% Cashback Bonus at all restaurants, movie theaters, movie rental stores, and at Amazon.com, Barnes & Noble, Borders, Circuit City, Crutchfield, Napster and Waldenbooks.

The Get More program is free to Discover cardholders, but cardholders must sign up for it; it is not automatic. Foir each three-month period of the year, the Get More program offers a 5% Cashback Bonus in specific categories, with the idea that the categories chosen are aligned with likely shopping patterns for that time of year. The theme for this quarter’s program is “Make the Holidays More Entertaining.”

By Justin McHenry

Would you choose generic drugs over brand-name drugs to earn extra credit card points? Drug plan provider Caremark plans to find out. Caremark and Bank of America announced today the upcoming launch of the Caremark Visa with WorldPoints, a card that gives cardholders reward points for “making beneficial decisions related to their use of prescription medications, including choosing generic and preferred drugs.”

Like other rewards credit cards, the Caremark Visa will offer one point per dollar in card purchases, with points used toward WorldPoints program rewards such as merchandise, gift cards and travel. In addition, Caremark Visa cardholders can earn extra points for a variety of habits that Caremark wishes to encourage. For example, cardholders will earn points for choosing generic drugs or drugs that are “preferred” by the drug plan, for refilling prescriptions via the Caremark Web site or automated phone system, and for updating their Caremark.com profiles with the credit card’s account number.

“We think the new Caremark credit card represents an excellent way for plan sponsors to encourage their members to choose clinically appropriate and cost-effective prescription drugs,” said Mac Crawford, Caremark Chief Executive Officer. “This card program also adds to the extensive array of tools and services that Caremark offers to help consumers take greater responsibility for managing their pharmaceutical costs.”

Caremark Rx, Inc. provides drug benefit services to corporate health plans, managed care organizations, insurance companies and other funded benefit plans. It also provides drug benefits to eligible beneficiaries under the Medicare Part D program. The Caremark Visa will only be offered to those whose health plans are served by Caremark.

By Liz Morris

ATA Airlines, which pulled its branded credit card from the market earlier this year, is back with a new card offering, the ATA Airlines Visa Signature Card. The new card will offer one point for every three dollars in card purchases and a first-use bonus of an additional 3,000 points.

On the surface, the point system for the ATA Visa seems stingy compared to other airline credit cards, but when you consider that a domestic coach ticket can be earned at just 6,000 points, the card offering appears much more generous.  The standard for most airline frequent flyer programs is 25,000 points to earn a free trip.

The new ATA Visa Signature Card is being issued by Barclays (formerly Juniper Bank).

By Tim Castleman

Chase and online broker optionsXpress yesterday announced the launch of the optionsXpress Platinum Visa, which allows cardholders to earn cash that will be deposited into their optionsXpress accounts.

The optionsXpress credit card offers a cash back program that is similar to many others on the market, rewarding cardholders with 1% back on their credit card purchases. The specifics of the card require cardholders to earn 1,500 points to reach an award level. At 1,500 points, $15.00 is deposited into the cardholder’s optionsXpress account.

optionsXpress is an online broker specializing in equity options trading.

By Justin McHenry

The New York Times is reporting today on an experiment by a University of Massachusetts professor and graduate student that used a cheaply-made card reader to decode the supposedly encrypted information on credit cards equipped with radio frequency identification technology (RFID). RFID credit cards allow cardholders to pay for purchases by just tapping their cards on readers at retail locations. No swiping is necessary and no signature is required for the smaller purchases that the technology is intended to encourage.

Companies that make and issue the RFID cards were guarded in their responses to the experiment. A Visa spokesman said the experiment did not translate to real-world card usage, implying that the experiment was not easily duplicated in a place where the cards might actually be used. A MasterCard spokesman criticized the sample size, saying that finding a few cards without RFID encryption was not akin to an industry-wide problem. The article states that the banks issuing the cards can choose how high a level of security to embed in a card.

The Times noted that the radio waves of the cards could only be intercepted by someone in close proximity to the card, but noted that the experiment showed cards being read even through a wallet or envelope.

RFID cards have come under attack by some consumer advocates and security experts, and an article such as the one in today’s Times is sure to keep the heat on. Whether it will affect the rollout of RFID credit cards, or affect the acceptance of such cards from consumers, remains to be seen.

By Tim Castleman

In response to merchant demands for greater transparency in credit card interchange fees, Visa USA has posted a five-page document showing fee schedules for different types of merchants (found here).  While the document won’t tell new merchants the exact interchange fees to expect, it does provide a guideline, and the document allows existing merchants that accept Visa to see how the specific rates they pay stack up to the published rates.  Much of this information was available to merchants in the past, but certain groups have complained that Visa and MasterCard are raising rates to unreasonable levels, and they believed that having the rates publicly available would help their case.

Interchange fees are the fees that merchants pay in order toaccept credit cards.  These fees go to processors such as Visa, MasterCard, American Express and Discover, as well as to the financial institution that issue the cards used. Fees usually range from 1% to 3% of each credit card transaction. While buyers do not notice this, it means that for every dollar consumers charge on a credit card, the merchant gets 98 cents or so after interchange fees are subtracted.

As reported previously, merchant groups have been pushing Congress to step in and regulate the fees they can be charged, saying that the card processors are colluding to keep fees higher than necessary.  Visa’s publication of interchange fees on its Web site, which follows a similar move by MasterCard, may be a response intended to show Congress that further regulation is not needed.

By Justin McHenry

In a report succinctly titled, “Credit Cards: Increased Complexity in Rates and Fees Heightens Need for More Effective Disclosures to Consumers”, the Government Accountability Office (GAO) noted that while credit card companies offer interest rates that are on average significantly lower than in the past, these same companies have increased late fees significantly and are offering disclosure statements that leave consumers confused about rates, fees, and card policies.

The report, requested by Michigan Senator Carl Levin, suggests that the Federal Reserve “should ensure that such disclosure materials more clearly emphasize those terms that can significantly affect cardholder costs, such as the actions that can cause default or other penalty pricing rates to be imposed.” According to the report, the Fed generally agrees with that recommendation.

In creating the report, the GAO used information on 28 of the most-issued cards from the top 6 credit card issuers, and they also interviewed over 100 cardholders to gauge their abilities to understand the typical credit card disclosure statement.

The report found that credit card rates have come down from a past era in which rates were over 20% as a standard, but many different rates are now applied to different transactions, from purchases to balance transfers to cash advances. This can create confusion. The report also found that credit card late fees have increased to an average of almost $34, up from $15 in 1995, and over-the-limit fees have increased to an average of $31, up from $13 in 1995. (In June, IndexCreditCards.com reported the average late fee at $35, and the average over-the-limit fee at $32.24.)

By Liz Morris

Already teamed up on a consumer rewards credit card, American Express and Starwood Hotels have now deepened their relationship with the launch of the Starwood Preferred Guest Business Credit Card. The new Starwood business credit card will offer Starpoints with each purchase, good for stays at Starwood hotels including Sheraton, Westin, W hotels, St. Regis, The Luxury Collection, Le Méridien and others. In addition, Starpoints can be converted to frequent flyer points on 30 major airlines, most on a one-to-one basis.  Cardholders transferring Starpoints to frequent flyer points also can get a 5,000-point bonus when they transfer 20,000 Starpoints within most airline programs (i.e., 20,000 Starpoints equals 25,000 frequent flyer miles).

The Starwood Preferred Guest Business Credit Card will offer one Starpoint per dollar on all card purchases, but double points on purchases at Starwood hotels and resorts. In addition, new cardholders get a 10,000-point bonus after using the card for the first time. There is no fee on the card for the first year; in subsequent years a $30 annual fee applies.

Along with the launch of the Starwood business credit card, American Express and Starwood announced that the consumer version of this card has been upgraded to include all the same features as those described above.

While average rates on consumer credit cards haven’t moved much recently, there has been a slight decrease as a few card companies tweak their offerings. According to this week’s IndexCreditCards.com Credit Card Monitor, rates have fallen for both non-reward and reward consumer credit cards.

The average credit card rate for non-reward consumer credit cards decreased to 14.10% from its previous 14.14%. For those with excellent credit, the average rate fell to 11.18% from 11.23%. The average consumer reward card rate fell to 15.59%, from the previous 15.62%. Those with the highest credit scores can expect an average rate of 13.13% on reward cards, down from 13.19% previously.

The biggest driver of these interest rate changes were new pricing from Capital One and Bank of America’s ongoing tinkering as it melds MBNA into its business.

Unfortunately the news isn’t as good for students. The average student credit card rate continues to rise, up to 16.59% this week, from 16.54% previously.

Same story for business customers, who had seen rates hold steady earlier in the year while consumer rates were on the upswing. The average non-reward business credit card rate stands at 12.21%, up slightly from 12.18%, while the average rate for business reward cards increased to 14.19%, from 14.16% previously.

Financial institutions represented in the survey include Advanta, American Express, Bank of America/MBNA, Capital One, Chase, Citi, Discover, National City, Providian, Pulaski Bank, U.S. Bank, Wells Fargo and more.

By Justin McHenry

Visa announced today that it intends to restructure its operations to create a new company, Visa Inc., which will then have an initial public offering (IPO) to become a public company. Visa Inc. will be created through a series of mergers involving Visa USA, Visa Canada and Visa International, which includes the operating regions of Asia Pacific; Latin America and the Caribbean; and Central and Eastern Europe, Middle East and Africa. (Visa Europe will retain its current, member bank-owned association structure.) Visa said a majority of the shares in the reorganized company will be sold to the public.

If the proposed restructuring is approved, a board of directors and a new CEO will need to be named. Visa says a search for the people to fill these positions is already underway.

Visa’s biggest competitor, MasterCard, had a very successful public offering in May of this year, raising $2.4 billion. The new Visa Inc. may be twice the size of MasterCard, leaving the door open to an IPO that could rank among the very largest in history.