Credit Card Blog

How excited were you when speed pass came out, allowing you to “speed” right through the gas stations- flashing your key chain at the cute light up thing on the pump and then filling up?! Getting gas had never been so fun…

What if you could “speed” buy everything? In some states, if you slap a special Timex watch on your wrist, you can do just that. Timex and Speed Pass joined together a few years ago, and created a watch with the speed pass chip inside. Essentially, the watch is like a debit card. You hold your wrist an inch from the special reader on the front of certain credit card readers, and your purchase will be automatically debited from the account you’ve connected to your watch.

The specially designed Timex watches were developed as a market test- apparently, they failed the test because you cannot currently purchase a credit/debit enabled Timex watch.

I wouldn’t be surprised if they made a “comeback” though, with all the advancements in credit card technology that is making it possible for us to make payments without handing over a credit card- like the blink technology.

How is it that a cashier could steal your credit card information right in front of your eyes, and you would never even know?

No, this is not a riddle- this is a scary fact that occurs due to advancing credit card skimming technology.  As if it isn’t enough to fear swiping your card through the local gas station readers, but now you have to wonder if you’re info is being stolen right in front of your eyes as you hand over your card to pay a cashier.

With handheld devices about the size of a lighter, cashier’s who have mastered the sleight of hand tricks could easily slide your card through the palm of their hand (and therefore through the small skimming device) before sliding the card through the cash register’s card reader to pay for your purchases.

Think about it- if you’re impatiently waiting to get out of the store, are you watching the cashier closely?  Some cashiers may engage you in conversation to distract you as they slide the card through their miniature theft device.

Keep a close eye on your credit card statements for any transactions that aren’t yours- the sooner you detect fraud the easier it is to avoid the hassles that can result from identity theft.

Imagine that you’ve finally taken your dream vacation to Europe, only to find out that your credit cards cannot be accepted. That would certainly put a damper on things, and it’s actually happening to lots of Americans who travel overseas. Some countries have instituted a new card system that requires you to enter a PIN instead of signing a receipt after the transaction. Additionally, European cards carry a chip inside them that carries information. American cards don’t have this, and were designed for the “swipe and sign” system we use here at home. That means that American credit cards simply might not work at many European stores, and especially at self-serve machines.

If you’re an American going abroad, carry cash with you to avoid an unpleasant surprise at the last minute. And try to select stores that have an attendant on staff, rather than self-serve situations. The attendant can let you know whether or not your card can be accepted before you ring up gasoline or train ticket charges.

All of the three major credit card companies report that merchants who accept their cards must agree to accept “swipe and sign” cards, even if they have another system in place. Some merchants don’t know or don’t abide by this, though, so it’s best to be prepared when traveling.

Skimmers, identity thieves who steal credit card information by running a credit or debit card through a hand-held electronic device, have a new target: “pay at the pump” gas stations. Customers at an El Monte, CA, Arco station had their debit card information stolen last April. Now the cards are being used in purchases from coast to coast.

How did this happen? Apparently the thieves planted a skimming device inside the gas pump. It’s thought that they concealed their activity by parking large vehicles in front of the pump, obscuring the gas station attendants’ view. The thieves were able to steal credit and debit card numbers, as well as PINs, from about sixty customers. They have used the stolen card numbers to finance $15,000 of fraudulent charges.

Skimming is a hot crime right now, so experts advise consumers to pay cash whenever possible. If you must pay with plastic, use only trusted merchants. Pay inside at gas stations. And regardless of how you pay, keep a close eye on your credit card and bank statements. Alert your bank or card company if you notice any unauthorized charges. A little diligence can save a lot of financial hardship down the road.

General Electric is considering partnering with other companies to stay in the private-label credit card market, or perhaps exiting that market altogether. Nothing is certain yet, but at least one CitiGroup analyst has already advised investors that “a complete exit of consumer (GE Money)… would be constructive in our view.”

CitiGroup analyst Jeffrey Sprague said, “Problems in consumer finance could prove to be a distraction in 2008, undermining the attractiveness of GE’s infrastructure exposure.” GE CEO Jeff Immelt commented via conference call: “I think we could partner or exit in private-label credit cards.”

Why all the trouble? Projections of slow growth for GE’s consumer-finance branch, GE Money, in 2008. Their U.S. business is to blame; it has a higher delinquency rate than their out-of-country business, and U.S. earnings are predicted to drop 20% next year. But GE is known for its ability to switch around its portfolio and to drop divisions that aren’t profitable. Right now, they issue credit cards through private labels such as Wal Mart. Only time will tell if this branch of the business will stay alive.

Have you ever tried to make a small purchase using your credit card, only to find that the store owner had a minimum purchase rule in place? Many of us assume that such rules are legitimate, and so we buy things we possibly don’t need in order to meet the minimum purchase amount.

But according to Visa and MasterCard, such minimum charges aren’t allowed in their terms of business. Merchants who accept Visa and MasterCard are not permitted to set a minimum amount for which the card can be used as payment. Nor can they tack on fees for small purchases. American Express allows minimum purchase amounts, but insists that merchants impose those amounts on all the credit cards they accept. Since Visa and MasterCard won’t permit that, and since most merchants accept those cards, you can bet that most minimum purchase amounts are bogus.

The merchants who impose these rules often don’t know it’s not permitted; they are simply trying to recoup some of the fees they pay for credit card processing. Still, some consumers don’t like the rule. One irate customer even complained to Visa, who responded with a letter stating that the practice wasn’t allowed. He now shows the letter to any merchant who insists he make a minimum purchase to use his credit card.

 With “blink” technology on credit cards, people actually pay for their purchases via radio signal.  The card is not swiped and a magnetic-strip is not read.  How secure can a “blink” credit card be?

With a magnetic strip card, the information can be taken with equipment that’s been around for years.  With the encryption that is built into the blink cards, that same type of theft wouldn’t be possible- and the cashier never even has your card in his or her hand (eliminating the possibility of stealing the data with a handheld unit or memorizing the numbers).

It’s true that the signature on a magnetic strip card is supposed to be a form of security- but you’ve probably heard of pranks where people sign fake names or just scribble on the line rather than sign their name and the purchase is still made.  The signature doesn’ t offer much security because no one bothers to compare it to the signature on the back of the credit card anymore.  So, the fact that blink technology credit cards do not require a signature isn’t much of  security concern.

More concerning is the possibility of walking by a cash register and accidentally paying for someone elses purchase at the blink of an eye!  What’s to stop your card from paying if you are within range of the card readers?  Metal will, actually.  If the blink technology catches on and cards are issued with this technology- you would then need to purchase a metal sleeve or special wallets and purses that prevent your card from being read while inside the sleeve or wallet.

What’s the reason for the possible change in how credit cards are processed?  Primarily, it would be to “speed up transactions”.

Here’s something you don’t hear everyday: credit card companies paying cardholders.

 A hearing will be held on March 31st, 2008 involving a class action suit filed against Visa, MasterCard and Diners Club- hundreds of thousands of cardholders reported seeing transactions on their credit card statements in currencies that were not their own country’s between the mid 1990’s and 2004.

The class action suit states that the credit card companies were hiding fees up to 3 percent in foreign transactions by cardholders outside the US, which is a violation of both federal and state laws.  Additionally, the class action suit attempts to convict Visa and MasterCard for inflating the base exchange rates before applying fees.

July 2006 saw the involved credit card companies agreeing to settle the case for a cool $336 million.  People who receive settlement notices (being mailed this week) can choose to apply for a $25 refund, or go through their itemized transactions to request a fractional percentage of those fees.

The credit card companies involved in this class action suit, and including Bank of America Corp., Bank One/First USA, Chase, Citibank, HSBC/Household, MBNA Corp. and Washington Mutual Bank unit Providian Financial Corp., deny that they have done wrong in this situation.

Don’t forget to request your money if you’re part of this class action suit!

In an industry dominated by the big players- Visa, Mastercard, Discover and PayPal- it can seem impossible to break through with a new payment alternative.  There is a company that is making some headway, though- called “Bill Me Later”.  You’ve probably seen it during your online holiday shopping or just browsing the net- as big name retailers like Walmart.com offer it as a payment method- as do about 700 other online retailers.

 So if you’re still a little nervous about handing out your credit card details online- you now have a credit card alternative.  With Bill me Later, the company pays for your purchases and then sends you a bill.  It works like this:

When you are ready to buy something at a participating website, you can click the “bill me later” button.  You enter your name and last four digits of your social security number, and the company checks to see if they can lend you credit.  (They say that it doesn’t effect your credit score- but I’m not sure how they could check your creditworthiness without it effecting your credit score so we’ll definitely need to investigate that a bit further!)  If you are eligible for credit- the company pays and sends you an invoice.

 So how does Bill me Later compare with your credit card fees?  Very well in fact!  If you make your payment in full within the first month of purchase- there is no fee.  But if you are late or pay with multiple payments over time rather than all at once, you’ll receive an interest rate comparable to credit card rates- between 10 and 20%.