By Liz Morris

Home loan company Countrywide Financial announced today the launch of a new credit card that will essentially double your points when points are used toward Countrywide mortgage payments.  The Countrywide Rewards Platinum Visa offers one point per dollar, making it on par with most rewards cards that offer the equivalent of 1% cash back or penny-per-point redemption value when put toward merchandise rewards.  However, when points are used toward payments on Countrywide loans, the points essentially double, as every 2,500 points equals a $50 credit against a cardholder’s Countrywide loan.

The new Countrywide credit card is being issued through a partnership with First USA, a division of credit card giant Chase.

By Liz Morris

Online shoe buyers must be rejoicing today as popular retailer Zappos.com last week announced the launch of the Zappos Rewards Visa, which will reward cardholders with points toward future Zappos purchases.  Cardholders will earn two points per dollar for purchases from Zappos and one point per dollar for purchases elsewhere.  Every time 2500 points are accumulated, cardholders will get a $25 gift certificate for Zappos merchandise, which includes mostly shoes but also accessories such as handbags.

The Zappos Rewards Visa has no annual fee, and new cardholders will get a $25 statement credits after their first card purchases. The card also offers interest-free purchases for the first six months for most card customers. The Zappos credit card is being issued through a partnership with Chase.

Zappos.com was launched in 1999 and has become one of the success stories from a dot-com boom that went bust for the vast majority of early online retailers.

By Seth Harbison

Angry over a recent law that forces them to accept credit cards and pay the transaction fees related to these payments, taxi drivers in Philadelphia last week threatened to randomly “strike” by refusing to take passengers who wished to pay by credit card.  The Pennsylvania Parking Authority said that drivers who refuse credit card passengers would be cited and could eventually lose their driver’s certificates for repeat offenses.

Philadelphia equipped its roughly 1600 cabs with credit card processing equipment and mandated that drivers accept credit cards as payment beginning this past January. But the drivers say it’s unfair to ask them to take on transaction fees of up to 5% when they are already struggling.  They also say that it can take weeks to get the money from credit card payments deposited into their bank accounts, causing serious cash flow crunches.

Unfortunately for the drivers, it doesn’t appear they have much leverage in the situation. The city’s parking authority says the machines will stay and the drivers must decide if they will comply or give up their rights to taxi passengers to and from the airport.

By Justin McHenry

Discover launched a new consumer credit card this week, the Discover Motiva Card, that rewards balance-carrying customers whenever they make on-time payments for six straight months. Cardholders who meet that criteria will get one month’s credit card interest charges refunded back to them, essentially allowing them to have an interest-free month as often as twice per year. There is no limit to how many times Motiva cardholders can take advantage of the interest refund, and the interest refunds are on top of the traditional Cashback Bonus that Discover is known for.

According to Discover, the Motiva card is in response to customer feedback that showed cardholders who were “good” customers in terms of on-time payments felt the card companies only give substantial rewards to the biggest card spenders.

Like all Discover cards, the Discover Motiva Card has no annual fee.

By Seth Harbison

Fast food chain Taco Bell and MasterCard announced yesterday a test of MasterCard’s “contactless” PayPass system of credit card acceptance. Assuming the trial is successful, Taco Bell plans to offer the payment technology at all of its 1200+ company-owned Mexican restaurants and many franchisee-owned restaurants as well.

About 100 Taco Bell locations will begin accepting MasterCard PayPass in the fourth quarter of 2007, with more added based on the results of the trial. Taco Bell will accept the credit card payments at both the drive-through or via the counter for dine-in customers.

PayPass works through radio frequency identification (RFID), which allows cardholders to tap the cards against PayPass-enabled readers, leading to quicker transaction times than traditional card swiping. For purchases under $25, which would probably cover most Taco Bell purchases, customers do not have to sign a credit card receipt.

Taco Bell will continue to accept traditional swiped credit cards regardless of whether the PayPass rollout is successful.

By Justin McHenry

A group of Democrats led by North Carolina’s David Price introduced a bill in the House of Representatives this week that would require credit card companies to offer more information on the costs associated with making only the minimum required credit card payment each month.

In specific, the card companies would have to show how long it would take to pay off the credit card if only the minimum payment was made each month, and how much overall interest would be paid under that same scenario.

Representative Price introduced similar legislation previously in the then-Republican-controlled House. Given the transfer in power to the Democrats, and given recent Senate hearings that have also put pressure on card companies, this bill may have a greater chance of eventually becoming law.

By Justin McHenry

Credit card companies found themselves in the Senate’s hot seat again yesterday, as representatives from Bank of America, Chase, and Citi all were asked to justify various card industry practices that senators deemed harmful to consumers.

One of the more dramatic pieces of testimony came from an Ohio man whose balance ballooned to more than double its original amount after Chase continued to hammer him with late fees even while he was making payments to try to trim the balance.

Senator Carl Levin of Michigan accused card companies of “nickel-and-diming tens of millions” of consumers through fee and interest policies that were difficult to understand or buried in the fine print of credit card agreements.

It’s unclear how far the Senate is prepared to go to regulate card practices, but the frequent and public floggings of card companies by the senators may prove to be enough to change the industry’s ways. In late February, Chase announced it would eliminate two-cycle billing, a practice of calculating interest over a two-month period that made it possible to charge interest on already-paid balances. Last week Citi announced it would drop a clause nicknamed “universal default” which allowed them to raise card rates on customers who were late on bills completely unrelated to their credit cards.

By Justin McHenry

Citi announced last week its intention to remove clauses in its credit card contracts that have made it easy to jack up rates at any time, sometimes to the bewilderment of cardholders. Citi will drop the clause in its card agreements that previously gave them the right to increase card interest rates when cardholders were late on payments unrelated to their credit cards, such as utility bills—a practice referred to as “universal default.” In addition, Citi will give up the right to simply raise rates “at any time for any reason,” saying it will now only raise rates at card renewal times, unless a cardholder is late for a payment, over the card’s limit, or if a check bounces.

While the number of cardholders who have ever been subjected to universal deafult or other sudden interest rate increases is a small percentage of the whole, the change in interest rates can be drastic, in some cases more than doubling the previous rate. In addition, these interest rate hikes disproportionately affect poorer cardholders, those who already are having trouble making payments.

Practices such as universal default and two-cycle billing (calculating interest on the average balance over two months instead of only the current month) have recently come under increased scrutiny by the newly-elected Democratic Congress. Citi’s changes, as well as Chase’s abandonment of two-cycle billing last month, may be an attempt by card companies to clean up the more egregious clauses in their contracts in order to avoid increased regulation of the industry.

By Liz Morris

American Express is heaping more rewards on its high-end Platinum card for consumers and businesses—but it’s coming at a price. American Express is increasing the annual fee on its consumer Platinum card to $450, up from $395, while the annual fee on its Platinum Business card will increase from $300 to $395. Here’s what American Express Platinum cardholders are getting for their extra money:

• Up to 4 free coach-class airline companion tickets per year when airline tickets are purchased via American Express
• For consumers, special food, wine and golf “experience” rewards created exclusively for American Express customers
• For business customers, free membership in the Regus Executive Club, which provides access to more than 950 Internet-equipped business lounges in 400 cities worldwide
• Increased hotel reward options
• Increased baggage insurance
• Increased assistance options in the case of medical emergencies away from home

For most cardholders, the complimentary companion tickets are probably the big draw, with the special experience rewards being valuable to consumers, and the access to work space while traveling being valuable to business customers. Are the upgrades enough to make the increased fees worthwhile? American Express will know soon enough, as new cardholders are already being charged the higher fees and existing cardholders will see them upon card renewal.

By Justin McHenry

Bank of America and pharmacy benefits management company MedImpact have announced a partnership to offer MedImpact’s customers a suite of health-related services, including a Bank of America credit card that will offer double reward points when used to pay for medical services and pharmaceuticals.

The co-branded credit card includes Bank of America’s well-known WorldPoints program, allowing points to be used for merchandise, travel rewards, or cash back. In addition, however, this card will also allow reward money earned to be deposited into a Health Savings Account, or HSA, an investment vehicle with funds earmarked for future medical expenses.

The credit card is part of an overall package of offerings MedImpact is introducing in conjunction with Bank of America, including HSAs, Flexible Spending Accounts, Health Reimbursement Arrangements, debit cards, account and claims administration, marketing, communication and education services.