On July 21, the new Consumer Financial Protection Bureau opened its doors for business, and at the same time launched a portal (via a call center and snail mail as well as online) through which consumers could complain about their credit card companies. In spite of that launch being reported on the IndexCreditCards.com news blog, some people may remain ignorant of the service’s existence, a possibility that might appear likely given that it received only 5,074 complaints up to Nov. 15.

Top credit card complaints

The CFPB broke down complaints into 33 categories (including one called “other”), so it gives us a chance to see the things about credit card companies that bother people most. Perhaps surprisingly, only three of these each made up over 10 percent of the total:

1. Billing disputes: 13.4 percent
2. Credit card rates: 11.0 percent
3. Identity theft/fraud/embezzlement: 10.8 percent

The fourth largest category was that “other” one, and no other (other than “other”) accounted for more than 4.4 percent of all complaints. One interesting observation is the low levels at which the three fee-related categories (late fee, overlimit fee and other fee) appear. When you add them all together, they make up less than 8 percent of all complaints. Before the Credit Card Act was implemented, you might have expected the ultra-high penalty fees that issuers used to charge to have topped the list.

Credit card interest rates

At first sight, consumers’ beefs with credit card rates seem strange. We all know what rates we have to pay on our cards, so what’s the problem? Unfortunately, the CFPB doesn’t provide an answer, but it may be that penalty rates are the issue. These can be triggered by late payments, and often result in a doubling of the APR that a consumer is used to paying. You can see someone being outraged if such a hike were to be imposed (and one usually would be) after they’d provided their credit card issuer with a perfectly reasonable and innocent explanation for a one-off slip.

Of course, credit card interest rates could easily become an increasingly common cause of complaint in the future. Most credit cards today have variable rates, and when these eventually begin to climb–and some believe they might do so steeply once the economy gets fully back on its feet–then many who carry forward significant balances could well find themselves suffering real pain.

Balance transfer credit cards

It was encouraging to see that only 83 complaints (1.7 percent of the total) were received concerning balance transfer credit cards or balance transfer fees. Many see these as important tools that can help them head off financial problems before they get too serious, so it’s important they work well.

However, you have to recognize the limitations of the data. If only 83 balance transfer credit cards were to have been issued during the period the figures covered (an incredibly unlikely scenario) then that would mean that every one of them was a cause of complaint. The thing is, we don’t know how many were issued, so we can’t make more than intelligent guesses about how well they’re performing for cardholders.

There is another weakness in the CFPB report: it provides only a snapshot of the period covered. Of course, that’s inevitable for the first data from any tracking study. What will be even more interesting in the future is to watch trends develop. The CFPB, the credit card companies, and you as a cardholder should then be able to identify problem areas of the business as they emerge, and address them. So, for example, you might one day see that complaints concerning cash advance fees have suddenly jumped (they account for only 0.3 percent in the current report), and that might prompt you to check whether your issuers have bumped up their fees recently and, if so, consider switching to a different card.

A truly free market can only exist when all parties have access to full, accurate and timely information. Anything that improves the flow of knowledge, even imperfectly, should surely be welcomed. The CFPB is surely a step in the right direction.

Has there ever been a holiday period with so many tempting credit card offers? Well, here are two more.

American Express “gift chain”

American Express launched its “gift chain” on November 28. The idea is that you get a free gift every time you charge to an eligible American Express card an online purchase of $25 or more through a participating merchant’s website. You stand to receive anything from a $500 gift card to a $5 statement credit, a year’s membership of ShopRunner or… well, the list is long. The company will send you an email saying what you’re going to get as soon as your transaction is processed.

The catches? Well, you have to register your eligible credit card first, you can receive a maximum of 10 gifts, and the promotion runs from now until either December 21 or when the goodies run out, whichever is earlier. However, American Express says that there are “hundreds of thousands” of those so you stand a good chance of walking away with something worthwhile.

Participating merchants include:

• American Eagle Outfitters
• Bed Bath & Beyond
• Blue Nile
• Dell
• GameStop
• J.Crew
• Lenovo
• Neiman Marcus
• Nike
• REI
• Rue La La
• Toys”R”Us
• vente-privee USA
• Walmart.com
• YoYo.com
• Zappos

Capital One travel rewards cards holiday vacation competition

Today’s second credit card offer comes in the form of a competition from Capital One. It’s teamed up with TravelingMom, which apparently is “the nation’s top website and blog network for moms who travel.”

Between now and December 10, moms can visit the website and share their stories there. One lucky mom (who’s chosen by a random draw) gets to relive her vacation with her family. More specifically, and according to the website: “The winner will get plane tickets for four and five nights in a hotel anywhere in the continental United States – a prize worth up to $5,000, courtesy of Capital One Venture.”

Only a cynic would imagine that this is largely an excuse for the credit card company to remind people of the (admittedly good) benefits offered to holders of Capital One Venture travel rewards cards. As your blogger is far from cynical, at least at this time of year, these include:

1. No blackout dates or other restrictions.
2. Fly on any airline, or use points for other travel expenses such as hotel and rental car bills.
3. No foreign transaction fees.
4. Miles never expire, and you can earn as many as you want.

This competition sounds more like a bit of fun than anything else. But, if you’re in the mood, there’s nothing wrong with that.

Stand by for a blockbuster Black Friday weekend. Recently, the National Retail Federation (NRF) reported the results of a survey that suggested that half of all Americans (152 million) are planning to make purchases either in-store or online over the three days running from Friday through Sunday. That’s way up on last year, when some 138 million were expected.

Online shopping

How many will venture out and how many will head for their home computers may well depend on the weather and the crowds. Extrapolating from the NRF survey sample, about 74 million are certain to visit stores, while another 77 million say they plan to wait and see how cold it is and how mobbed the malls are.

One thing seems certain, at least according to new research published by comScore on Nov. 23: it’s going to be a bumper year for online sales. Just during the first 20 days of November, retail e-commerce sales reached $9.67 billion, 14 percent up on the $8.47 billion spent during the same period last year. comScore now forecasts that such purchases for the whole 2011 holiday season will top $37.6 billion, 15 percent up on 2010’s equivalent number.

Credit cards and online shopping

Presumably, a large chunk of that will be spent using credit cards. There are at least four reasons why anyone with self-discipline, sound finances and cards (particularly rewards credit cards) should think twice before paying for online purchases any other way:

1. Credit cards provide better statutory protections against fraud and shoddy or wrongly described goods than any other payment method.
2. Many rewards credit cards are currently offering exceptional deals both on the cash and points you can earn and on redemptions.
3. You get an interest-free “loan” between the date you make a purchase and the date you have to settle your next card statement.
4. Many credit cards have built-in protections that can extend warranties and boost your right to return unwanted goods.

Credit card debt and temptation

Of course, those who can’t resist tempting bargains may be better off sticking to debit cards, checks and cash. Writing in the Detroit Free Press on Nov. 24, Susan Torpor gave a sobering example of how those extra impulse purchases can add up–and how they can affect your credit card debt.

Suppose, she suggested, that you charge an extra $25 a day in impulse purchases to your credit cards between Thanksgiving and New Year’s Eve. If you only make minimum payments on the $950 you run up, it should, she calculates, take you six years to clear the debt. And, if your credit card rates average 15 percent (lucky you!), you’re likely to pay $501 in interest charges for the privilege.

No wonder credit card companies are so keen to tempt you with promotions and enhanced rewards this holiday. They want your money.

In theory, you can swipe any American Express, Discover, MasterCard or Visa product at any location anywhere in the world that accepts those cards. The reality can be different. The United States is fast becoming the only advanced nation that has not switched–or is not in the process of actively switching–to the so-called “EMV” payment technology, which, instead of having a magnetic stripe, uses a tiny microprocessor chip embedded in the credit card to enable transactions.

No matter what the theory is, in practice American travelers often encounter problems in the 130 countries that have so far adopted EMV with both wary merchants and automatic payment devices–when pumping their own gas, buying rail tickets, paying tolls, using hotel express check-out machines and so on.

Credit cards to go

As increasing numbers of their customers complain of bad experiences, American credit card companies are beginning to respond by issuing products that have both magnetic strips and chips, and that thus can be used anywhere. The latest such product comes from Chase, and is the British Airways Visa® Card. Chase says that this is the first among airline credit cards to be EMV-enabled, although Business Insider reports that Citi’s chipped Executive AAdvantage World MasterCard was launched in July. And U.S. Bank’s range of more general travel rewards cards has one.

Chase already has two products with chips: the J.P.Morgan Select card, and the Palladium card. Other issuers, including Wells Fargo and the United Nations Federal Credit Union, have been trialling or generally issuing EMV cards, and Citi says that it plans to do offer more soon.

Rewards with no foreign transaction fees

Chase’s new product comes with a hefty $95 annual fee, although that may not bother too much the high fliers (in both senses) to whom the credit card is designed to appeal. Indeed, regular travelers may find that the card’s lack of foreign transaction fees could easily save them that–and considerably more–over a year.

Like many travel rewards cards, this one comes with its own currency, in this case called “Avios.” You earn 2.5 Avios for every dollar spent on British Airways purchases, and 1.25 Avios a dollar on everything else. Handily, these can be redeemed for flights and upgrades not only with British Airways but also with the other 11 partners that make up the oneworld® alliance:

• American Airlines
• Cathay Pacific
• Finnair
• Iberia
• Japan Airlines
• Lan Airlines
• Malév
• Mexicana
• Qantas
• Royal Jordanian
• S7 Airlines

In a press release, Andrea Burchett, who’s a spokesperson for The Mileage Company, which operates British Airways’ Avios currency and rewards program, commented:

The new EMV chip-with-signature provides our globally minded flyers with a safe and convenient way to make transactions when overseas. The addition of EMV chip-with-signature technology makes the British Airways Visa card the first airline co-branded credit card issued in the United States that is chip-enabled, which is just one of the many valuable benefits afforded to our loyal customers.

It’s been a long and painful path, but most of us finally seem to be on top of credit card debt. But have we learned our collective lesson?

Credit card debt problems contained…

Two authoritative reports on card debt have been published in the last week, and both contained their share of cheerful reading. The first, from Fitch Ratings, show that “charge-off rates” (when credit card companies write off debts as noncollectable and pass them on to collection agencies) remain very low. In the third quarter, they averaged, for the top-seven card issuers, 4.53 percent which was down 363 basis points (bps) year over year. The other report, from TransUnion, showed that the number of delinquencies (when cardholders fall 90 days or more behind on their accounts) remains “near record low levels.”

…for now

However, both reports also contained somewhat muted warnings that there could be clouds on the horizon for consumers and credit card companies alike. TransUnion reported that the third quarter saw the first rise in delinquency rates for two years. And, of course, many delinquencies turn into charge-offs, so it’s no surprise that Fitch says: “…higher provision expenses [are] expected for 2012.” In other words, card issuers should set aside more money to cover bad debt next year.

Now, it’s true that neither of the reports is predicting serious problems anytime soon. But they contain enough worrying data to cause this blogger some issues.

Credit card offers going subprime

Perhaps the most worrying of all was a remark contained in TransUnion’s press release. Ezra Becker, who’s the company’s vice president of research and consulting in its financial services business unit, said:

We find card delinquency being driven by a number of factors. One such driver is the changing risk profile of consumers opening new credit card accounts. In the face of competition for prime consumers and the clear deleveraging efforts of those consumers, lenders have been gradually shifting their focus to the sub-prime market.

Yep, between July and September of this year, more than a quarter (25.2 percent) of all new cards issued went to subprime borrowers, according to TransUnion’s data. And that just a few short years after an almighty credit crunch created by lending irresponsibly to the subprime.

Credit card interest rates another problem

But it’s not just subprime borrowers who pose a threat. Dan Geller, an executive vice president with Market Rates Insight Inc., told PaymentsSource on Nov. 15:

Issuers are taking a bigger risk than in the past by stepping up promotions and tempting consumers with deals to spend more on their credit cards as we head into the holiday season with the hope that higher spending will lead to balance carry-over.

So issuers are using special credit card offers to tempt the prime and the subprime to take on debt. You can see why. Credit card interest rates are currently unusually high (16.75 percent APR, at the time of writing, according to IndexCreditCards.com), so having customers carry forward balances would boost interest income, one of the card sector’s most significant revenue streams.

Credit card debt to rise?

The latest Federal Reserve data on consumer credit suggest that, in September, revolving credit (which is nearly all credit card debt) fell by 1 percent. However, not everyone is convinced that the Fed’s figures accurately reflect reality. One who may wonder about that is Robert A. Dye, chief economist at Comerica. In a Nov. 15 email, he wrote:

Undaunted by flat-lined incomes, shoppers forged ahead in October driving retail sales up by 0.5 percent, after a strong 1.1 percent gain in September. The income constraint means that households are willing to add debt or reduce their saving rate in order to keep spending more. We saw both mechanisms in play in September and may well see the same when the October income and consumer credit data are published.

So what do you think? Have we learned our collective lesson? Or are we circling back to set off again on that long and painful path?

Nobody could blame you for wanting to bury your head in the sand. Why should you be planning your holiday spending now, when you’ve got Thanksgiving to worry about? But, if you can spare a few minutes, here are some ideas that could put cash back in your pocket. So let’s talk turkey.

Credit card companies and sign-up bonuses

As you probably know by now, credit card companies are currently locked in a desperate battle to win market share. This largely explains the recent rush of enhancements to rewards credit cards. And it may also be behind sign-up bonuses, which card issuers pay on some products simply to say thank you for becoming a new customer and for spending a certain amount on your new plastic.

Right now, at least two cash back credit cards are offering a whopping $200 in sign-up bonuses, and that’s in addition to the usual rewards (up to 5 percent cash back) you would normally receive. But, before we explore those cards, here are two caveats:

1. You’re likely to need excellent credit in order to qualify for either, so don’t bother reading further if you’ve had financial problems recently. It’ll probably only make you feel worse.
2. Deals like these are seductive. Don’t apply if you already have significant credit card debt, or if you’re one of those people who can’t resist temptation when it comes to spending.

Cash back credit cards from Chase

The first of today’s cash back credit cards to offer a $200 sign-up bonus is the Chase Freedom® Visa card. To get the bonus, you have to spend at least $500 within the first three months that you have it, which may not be a problem, given the time of year.

Chase pays 5-percent cash back but only for purchases (capped at $1,500 a quarter) made within revolving categories that change every three months. So, for example, during the current (October-December) quarter, that 5 percent is paid on purchases made in restaurants, department stores and movie theaters, as well as on charitable donations. Generally speaking, you get 1 percent on everything else, though you can get up to 10 percent if you shop at certain retailers through Chase’s online portal.

There’s no annual fee on this card, but interest rates, which are variable, are currently 15.99 percent to 22.99 percent annual percentage rate (APR), depending on your creditworthiness. That isn’t uncompetitive, but it’s hardly generous either. It might be best to charge to this one only purchases that you know you can pay down quickly, and to use low interest credit cards for everything else.

Cash back credit cards from Citi

The second card (only alphabetically) is the Citi® Dividend World MasterCard®. The sign-up bonus deal is precisely the same as Chase’s: $200 back if you spend $500 during the first three months after your account is opened.

And its rewards are very similar too. Its bonus categories also pay 5 percent (1 percent on everything else), and change each quarter. Citi’s choice of categories for the current quarter seems even more seasonally appropriate than Chase’s:

1. Department stores
2. Clothing stores
3. Electronics stores
4. Toy stores

Citi caps the rewards you can earn in any one calendar year at $300, but makes an exception for purchases made through the Citi Bonus Cash Center, where they’re unlimited. Like the Chase card, Citi’s card has no annual fee, and, interestingly enough, both Chase and Citi charge precisely the same credit card rates on these two near-identical products. So the same suggestion applies about not using it for purchases that you can’t pay down quickly.

The fact these two credit cards are so similar may relieve you of one holiday headache: choosing which to apply for. Just toss a coin. Heads you win, tails you win.

This content is not provided or commissioned by any company mentioned in this post. Opinions expressed here are author’s alone and have not been reviewed, approved or otherwise endorsed by any such company. This site is compensated by companies referenced in the blog posts through advertising, affiliate programs or otherwise.

Capital One last week announced plans for a special Black Friday promotion for holders of its rewards credit cards. From Nov. 25 to Nov. 28, you can gain enhanced points and cash back by using the company’s Perk Central online shopping portal to make purchases from more than 40 retailers.

Extra rewards for Black Friday

Normal rewards (both points and cash) will be boosted by up to 100 percent on goods or services bought from these online outlets. They include:

• Gamestop.com: +40 percent
• Landsend.com: +100 percent
• Lego.com: +100 percent
• Lenovo.com: +100 percent
• Macys.com: +40 percent
• TigerDirect.com: +67 percent

There are no caps on the extent of the rewards you can earn with Capital One, and they never expire as long as your account is open.

Leverage existing rewards points on certain items

As Capital One says, points on its rewards credit cards can be redeemed at any time. But it’s also running a special pre-holiday redemption promotion from Nov. 18 to Nov. 21 that could help you augment the value of the points you’ve already accumulated on your Capital One card. Items being promoted include:

1. Magellan Roadmate 1324 satellite navigation devices
2. Sharp Aquos 60″ LCD HDTV televisions
3. TaylorMade Bumer SuperFast 2.0 Driver golf clubs

If you know a golfer, adventurer or home entertainment enthusiast, then this promotion could turn out to be a thrifty way to kick off your holiday gift shopping.

Rewards credit cards offer more

Of course, as regular readers already know, Capital One’s promotions are just the latest in a long line of marketing initiatives designed to increase card use. Right now, credit card companies are fighting hard for market share, with rewards being their principal battleground.

And their customers appear to like that. Last month, Capital One published the latest results of its continuing survey of consumers’ attitudes to rewards across all card issuers’ products. All those polled held rewards credit cards. The findings included:

• The proportion of customers who were “completely satisfied” with their rewards credit cards increased between the first and third quarters: up to 23.9 percent from 21.7 percent.
• As many as 47 percent of respondents had redeemed at least some of their rewards during the third quarter.
• Some 27.8 percent of cardholders were saving up rewards for holiday shopping.

Are you one of those people who receive their monthly credit card bills, check the minimum payment required, and then (at least usually) pay only that minimum? If so, you’re a member of quite a big club.

Credit card debt paid down more slowly

Of course, everyone knows that making only minimum payments is a very slow, and, with credit card rates the way they are, a very expensive way of paying down plastic. But, with so many other more immediate demands on household income, it’s understandable that many cardholders choose to take this route, often while promising themselves that they’ll pay off more next month.

New research published in the Journal of Marketing Research suggests that, just by showing the minimum payment required on monthly statements, credit card companies are actually encouraging people to pay down their debt more slowly.

The study, conducted by the Boston College Carroll School of Marketing in conjunction with three English universities, found that for many consumers “including the minimum required payment information on their account statements can reduce the amount they pay each month by as much as 24 percent – about $120 less on a $2,000 balance.”

Linda Salisbury, a Boston College assistant professor, says, “The mere presence of minimum payment information acts like an anchor on borrowers’ repayments, pulling them downward.”

Credit card companies not to blame

Credit card companies have little choice but to show minimum payments. Salisbury explains that “this presents a tricky balancing act for lenders: removing the minimum required payment may increase repayments overall, but it would also put lenders at greater risk of increasing default levels.”

You can see her point. It’s the reason so few restaurants invite diners to pay what they think a meal is worth, and why those that have tried the experiment have tended to pull down their shutters so quickly. Plenty will pay more than necessary to keep the restaurateur in business, but plenty of others will pay way too little. If card issuers effectively made the repayment of credit card debt voluntary, an awful lot of people might not put their hands up.

How much interest will I pay? I don’t care!

The Credit CARD Act of 2009 obliged credit card companies to show on monthly statements the potential cost of interest over the long term, along with different payment scenarios. You might think that giving consumers this additional information would empower them to make smarter choices. But no. Sadly, and surprisingly, the Boston College study found, “Disclosing future interest costs significantly increased the likelihood a cardholder would pay only the minimum required.”

As regular readers may know, card issuers are currently falling over each other in their rush to improve their credit card offers. In fact, it’s getting tough to keep up with all the enhancements. So here’s the first in an occasional series of news blogs that is going to try to make sure that you don’t miss anything that could be of value to you.

Cash back credit cards: a bonus from American Express

First up is American Express, who is offering a one-off $25 statement credit if you spend $25 or more at a participating small business on this year’s Small Business Saturday, which is Nov. 26. But first you must register your U.S. American Express® Consumer Card or Business Card by clicking on the link at www.facebook.com/shopsmall and following the directions.

This has to be good on so many levels. For you, it could mean (if you shop really carefully) 100 percent cash back on a purchase. But also, it’s a great way of giving the struggling small business sector a much-needed shot in the arm.

Chase boosts rewards and perks for military

In other welcome news, Chase announced last week that it was improving the deals it offers to “our men and women in uniform around the globe.” According to the press release, the move affects those holding:

• Chase Military Star Rewards MasterCard
• Air Force Club MasterCard
• Army Morale, Welfare, Recreation (MWR) MasterCard
• Navy MWR MasterCard
• Marine Corps Community Service MasterCard

From now on, those with these cash back credit cards, none of which have annual fees, should receive unlimited rewards on all their purchases, and foreign transaction fees are going to be scrapped, something that should prove especially valuable to those serving overseas. Cardholders get 2 percent cash back on purchases at Army MWR, Air Force Services and MCCS Merchant outlets, and 1 percent on everything else. ,” said Emelie Smith Calbick, a general manager of Chase Card Services, commented in a press release:

Chase is proud to support our men and women in uniform around the globe. Service members and their families deserve financial resources that fit their unique needs – whether they are on-base, have been deployed or are anywhere in between.

As reported in CardRatings.com, according to Steve O’Halloran, spokesman for Chase Card Services, the Chase Military MasterCard is also included in the promotion, although the press release did not mention it. Chase’s USNA Alumni Association MasterCard is not part of the promotion, but it no longer includes a foreign transaction fee.

Visa small business credit cards

Meanwhile, also last week, Visa unveiled improvements to its “Visa SavingsEdge” program for those with small business credit cards that carry its brand. According to Visa, there are currently 24 million such cards in the US, but you have to register yours (it’s free at www.visasavingsedge.com/offers) before you can enjoy benefits.

After enrollment, you can get discounts at a large number of participating merchants that offer products and services that are likely to appeal to small businesses, including:

• Advance Auto Parts
• Barnes & Noble
• Health Advocate
• HyperOffice
• iContact
• La Quinta Inns & Suites
• Red Robin
• Sears PartsDirect
• Support.com

We’d love to report on some juicy behind-the-scenes goings-on at one of the major credit card issuers, but that’s going to have to wait for another day. Because today’s top story involves two recent improvements to rewards credit cards – one from Chase and the other from Discover – that deserve attention.

Chase turns rewards credit cards into travel rewards cards

Let’s start with Chase, which has managed a form of plastic alchemy by turning three of its ordinary rewards credit cards into travel rewards cards. Well, sort of. To be more accurate, it’s added the ability to transfer points from its Ultimate Rewards program to United Airlines MileagePlus accounts. The products affected are:

1. Chase Sapphire Preferred
2. Chase Ink Plus
3. Chase Ink Bold with Ultimate Rewards

You get one MileagePlus point for each Ultimate Rewards point, and the former can be redeemed on flights on United Airlines or any other members of the Star Alliance network. Chase says there are no limits to the number of points you can transfer, and claims that this is currently unique among credit card rewards programs. The card issuer’s Sean O’Reilly commented in a press release:

We are thrilled to offer our customers the exclusive opportunity to transfer Ultimate Rewards points for equal award miles with MileagePlus, the world’s leading frequent flyer program. The addition of MileagePlus to Ultimate Rewards enables our cardmembers to simply transfer points and have more travel options than ever before.

Discover Amazon’s treasures

No, Discover isn’t rewarding cardholders with trips to the Amazon river. It’s making it easier to pay for books and other goods on the Amazon website.

As of now, holders of Discover cash back credit cards, such as the Discover More Card, can use their rewards to partly or fully pay for purchases they make on Amazon with their Discover rewards, providing they first link their plastic with their Amazon.com account. If you part pay, you have to charge the balance to your Discover card.

There’s one more piece of good news for the holiday season. If you pay on Amazon using Discover cash back credit cards between now and the end of this year, you should earn double rewards.

Both Discover and Amazon commented in a press release… But no. Theirs were even more banal than Chase’s, so, as a public service, you’ll be spared them. Suffice it to say, Discover is very pleased with their new arrangement with Amazon and hopes you will be too.