By Justin McHenry

Theatregoers on Broadway now have the ability to pay for their intermission refreshment via credit card—as long as their credit card is a Visa. Sandbar Concessions, the concessionaire serving the Brooks Atkinson, Gershwin, Lunt-Fontanne, Marquis, Minskoff, Nederlander, Neil Simon and Richard Rodgers Theatres, is now the first in-theatre refreshment service company to accept Visa credit, debit and contactless payments.

In addition, no signatures are required for credit card purchases of less than $25, which presumably will cover the majority of concession purchases.

By Justin McHenry

The Senate Banking Committee held a session this past Thursday titled “Examining the Billing, Marketing, and Disclosure Practices of the Credit Card Industry, and Their Impact on Consumers” in which Chairman Christopher Dodd of Connecticut offered the following warning: “I would like to put the credit card industry, issuing banks and card associations on notice. If you currently engage in any business practice that you would be ashamed to discuss before this Committee, I would strongly encourage you to cease and desist that practice. Irrespective of the current legality of such practices, you should take a long, hard look at how you treat your customers, both in the short term and the long term.” On the other hand, Dodd said he supported the credit card as a financial product and did not advocate against their use.

The hearing gave both credit card industry representatives and consumer advocates the chance to tell their sides of the story.  Consumer advocates complained that credit card companies use a variety of practices to pad fees and deceive consumers, including: universal default clauses that allow them to raise rates if customers are late on bills unrelated to their credit cards, two-cycle billing that allows companies to charge interest on balances that may have been paid in a previous billing cycle, charging late fees on payments received hours after a mid-day cutoff time, and generally giving themselves the ability to change card terms with as little as 15 days notice.

Credit card companies acknowledged that credit card disclosures could be improved, but claimed that it was not in their best interests to have customers who couldn’t pay off balances, and said that in fact very few of their customers carry balances and get hit with the fees described.

More hearings on credit card practices are planned, and the tone of this hearing suggests credit card companies will be expected to make some changes if they want to avoid greater government oversight or legislation that would control their business practices.

By Seth Harbison

Chase Card Services, in an effort to “help customers more easily manage their accounts and personal finances and avoid fees,” is ending its practice of two-cycle billing in calculating credit card finance charges and changing to an average daily balance method. In addition, Chase is offering phone, e-mail or text message alerts that can warn customers when their due date is approaching or when they are approaching their credit limits.

Chase and other card companies that use two-cycle billing have been criticized over the practice, which allows them to charge customers on balances that have not existed since the previous month.  The average daily balance method calculates finance charges only on credit card balances that exist during the same billing cycle.

In practice, here’s how two-cycle billing can harm cardholders: Say a consumer has carried a balance of $2,100 and then pays off all but $100 of that balance.  Then, the following month, the consumer charges nothing.  Instead of being charged a finance charge only on the $100 balance, under two-cycle billing, this consumer would be charged based on having held an average balance far above the $100, because the $2,000 from the previous month would be factored in, even though it had long been paid off.

Under the average daily balance method, only the balances held during the current billing cycle are used in calculating finance charges.  Using the example above, the same consumer would only be charged interest based on the current $100 balance.

While this week’s IndexCreditCards.com Credit Card Monitor recorded a slight increase in credit card rates in some categories, the changes were hardly enough to be called a trend.

The average credit card rate for non-reward consumer credit cards increased to 14.21%, from 14.15%. The average consumer reward card rate remained at 15.58%. Neither of these numbers are much of a departure from those seen six months ago.

Those rates indicate what an “average credit” consumer could expect to be offered, but those with excellent credit are usually offered better rates. For consumers with excellent credit, the average credit card rate stands at 11.02% for non-reward credit cards and 13.14% for rewards credit cards.

Student rates have moved up more significantly, now up to an average APR of 16.64%. This is a full quarter-point higher than the 16.41% average of July.

Business credit card rates also moved up ever so slightly, but again not enough to be worthy of close inspection. The average rate for non-reward small business cards stands at 12.27%, while the average rate for rewards business cards is 14.22%.

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

Our twice-yearly check on average credit card late fees and over-the-limit fees shows no change since the middle of 2006. The average credit card late fee remains at an even $35, while over-the-limit fees check in at $32.24. Using data from a cross-section of major and minor card issuers, IndexCreditCards.com found that late and over-the-limit fees ranged from $0 to $39. However, most nationwide issuers charged between $29 and $39 in both categories.

As a frame of reference, the $35 average late fee is roughly equivalent to the monthly finance charge you’d pay if you carried a $2,100 balance at 14% interest.

While over-the-limit fees aren’t quite as high, many cardholders find them more galling, as logic would suggest that a card would simply be rejected if it hits the limit. Instead, it may or may not be rejected, but the fee will always be applied.

IndexCreditCards.com surveys the terms and conditions of a cross-section of cards every six months to determine the average fees listed here. The next update of these numbers will take place in July of 2007.

By Justin McHenry

Chase is targeting a specific niche with its latest small business credit card, launching the Chase Contractor Cash Rewards Visa Signature Card this week.  In addition to offering 2% cash back on up to $20,000 of construction-related purchases per month (and 1% on any other purchases), the card has no pre-set spending limit and offers 0% financing for 60 days on construction-related purchases of over $1,000.

Chase believes this combination of flexible spending limits, same-as-cash purchases and competitve rewards will be enticing enough to get contractors to pay invoices with a credit card instead of through other check writing.

Chase calls the Contractor card the first in a series of small business card launches seeking to shift invoice-paying to credit cards, leading to the assumption that Chase will continue to target specific small business types and craft cards that are attractive to those particular customers.

By Liz Morris

Citizens of Detroit are going to have a new option when they pay for parking.  Over 1,000 traditional parking meters have been torn out from the city’s streets, replaced by 175 multi-space meters that accept credit cards as well as cash. While credit card-enabled parking meters have debuted previously in a few other cities—most notably Las Vegas—Detroit’s installation represents one of the largest in the United States.

The meters are being installed through a partnership between hardware provider Duncan Solutions, and payment transactions company Peppercoin.  The companies estimate that 300,000 credit and debit card transactions will take place in the first year of the meters’ deployment in Detroit.

Peppercoin recently commissioned a survey which found that 9% of respondents had used credit card-enabled parking meters, but that 28% said they would if given the opportunity. According to Peppercoin, the disparity between the two numbers means there are 38 million Americans who today do not have access to card-enabled meters that would use them if they were available.

By Liz Morris
TJX Cos., the parent company of retailers T.J. Maxx and Marshall’s announced yesterday that hackers have successfully stolen customer credit card information from the company’s computer system. The company was not able to provide a precise number of customers whose card numbers—and in some cases, driver’s license numbers—may have been taken or exposed, although it could potentially be millions.

Thus far TJX does not know of any customers whose information has been used fraudulently.

By Justin McHenry

The New York Times is reporting today that Citigroup will likely rebrand its entire operations under the Citi name. While this may not seem earth-shattering, Citigroup has been using differing names and logos for different parts of its business, and CEO Charles Prince believes consolidating the brand under a single name will provide more cohesion. In all likelihood, the red umbrella of Citigroup will disappear in favor of the Citi name under a red arc, as is currently used for the Citi credit card division and other parts of the banking giant.

According to today’s article, the rebranding may signal a shift from the years of growth through acquisitions to a period of internal growth.

By Justin McHenry

AT&T and Citibank today announced a “long-term” extension of the agreement that allows Citi to continue issuing its two popular AT&T-branded credit cards, the AT&T Universal Platinum Card and the AT&T Universal Rewards Card.

The AT&T credit cards double as prepaid phone cards, and each offers the ability to earn free phone minutes each month.  The AT&T Universal Platinum Card is a more basic low interest card (currently with an 11.84% interest rate), while the AT&T Universal Rewards Card offers the ability to earn points toward merchandise and travel rewards, but at higher interest rate (currently 13.84%).