Credit Card Blog

Donald G. Campbell, vice chairman of TJX Co., laments the fact that “smart” cards weren’t in use when his company had its unfortunate security breach. In 2006, fraudsters tapped into Marshall’s stores using wireless connections and made off with about 100 million credit and debit card numbers. Campbell estimates that TJX spent $202 million on law suits, security consultants, and other expenses related to the breach. But how much would it cost to make a business truly secure in the United States?

Unlike many European countries, the U.S. doesn’t require cards to have smart technology and additional layers of security such as PINs and microchips. Industry insiders speculate that it would cost billions of dollars to upgrade every credit card and card reader in the U.S. At that price, security breaches sound like a bargain.

But Campbell and a growing number of proponents are in favor of adopting the “chip and PIN” security measures. Since instances of credit card fraud in the United States are still statistically low, it might take a lot more to persuade banks and card companies to upgrade their security. But if major breaches are allowed to continue unchecked, it’s only a matter of time before chip and PIN opponents are convinced.

In the meantime, you can select a smart card for your own personal use. The U.S. General Services Administration offers smart card information at their web site: http://www.smart.gov/.

Already in Japan and South Korea, people use their cell phones to make credit card purchases.  They no longer need to carry credit cards with them.  Will the US be next?

Eight of ten biggest banks in the US are already offering some basic financial services on cellphones.  Right now,  account holders are able to check their account balances by tapping away on their tiny phone keypads.  Millions of American’s are making use of “mobile banking”, and taking advantage of the ability to approve bill payments, transfer money between different accounts, receive instant alerts when an account balance drops below a specified minimum, or alerts when there is unusual activity seen on one of your accounts.

While the technology is still virtually unknown to the majority of American’s, people in the financial industry believe it’s only a matter of time (between three and five years) before our cellphones become virtual wallets.  Until you can use your phone to make actual purchases, you can check your account balances with your phones before making a purchase to see if you’ve got the money to cover your purchase.

Over a two year period, a study was conducted by Citizens for Equal Access to Credit regarding individuals considered “subprime credit card users”.  This group of people had been classified this way due to low credit scores.

The study of 360,000 credit card users found that more than 60 percent ended up raising their credit score by 40 points or more over the duration of the study; and then given a  higher credit limit on their low-limit credit cards.

 With more than 7 million people having lower credit scores than ideal, this study is proof that when used correctly, low limit credit cards can help individuals re-establish their credit scores.

It would seem that an interest free credit card is the absolute best deal in credit that you could secure, right?  If you look a little closer at some of the interest free offers, you may find there is great potential to be hit with fees.  Understanding the fine print of interest free credit card offers is necessary to keeping the good deal good!

1. Know the interest rate after the interest free period ends.  If you charge more than you can pay off while the card is in it’s interest free period, you should know how much interest you’ll pay on those purchases later.
2. Know what purchases are eligible for the interest free promotion.  If your idea was to use the interest free credit card to purchase gift cards or transfer balances, keep in mind that these are often not included in an interest free offer and you could be in for a rude awakening when you get your bill!
3. Understand what happens if you make a late payment or miss one.  Usually a late or missed payment will result in losing your interest free offer.

Have you received an offer for credit card insurance? Some card companies have been calling their customers and offering insurance that’s supposed to help out in the event of the customer’s disability or death. The downside is that some customers are getting signed up for this insurance without actually agreeing to take part. The cost? A hefty $100 a month.

Credit counselors are warning card holders to steer clear of this expensive insurance. It’s some of the most costly insurance available, and once you’ve signed up for it, it can take a long time to disentangle yourself. Card holders have complained that it took one to three months to cancel the credit card insurance and stop the monthly charges.

Should you trust credit card insurance offers? Some might be okay, if expensive, but other offers smack of a scam. It’s best to seek out death and disability benefits through your employer or a well-known insurance provider. Until credit card insurance is more credible, depend on your cards only for reservations and purchases.

Good news for our friends across the Atlantic: Woolworths has announced the launch of their new credit card, the Woolworths Everyday Money credit card. Woolworths CEO Michael Luscombe is excited about the launch, calling it a logical entry point into the financial services sector. Says Luscombe: “Our wide-reaching customer base is the ideal target market for the credit card as we already transact with them every day. We are in the business of providing customers with the essential goods and services they need for their everyday lives. Our financial services offering will be an extension of that proposition.”

Woolworths partnered with HSBC and Mastercard to produce the new offering. Shoppers will enjoy the rewards that come from using the Woolworths Everyday Money credit card. Purchases will add up and allow customers to earn shopping gift cards that can be used like cash at any Woolworths store. Woolworths has over 817 locations throughout the UK.

Credit card fraud is the leading result of identity theft. Thieves who steal other people’s identities often use them to open new lines of credit. Once a thief has your name, birth date, and Social Security number, they can start filling out credit card applications. If you receive many offers of pre-screened credit in the mail, identity thieves don’t even need to fill out an application – the card issuer did all the work for them! Some of these letters contain real credit cards. Calling an 800 number to activate them is all that’s required.

Identity thieves can also take over your existing accounts by pretending to be you. They call up the bank, verify your personal details, and change the PINs, passwords, and addresses associated with accounts. This is a nightmare for the actual account holder, who then has to spend time and money reclaiming their identity and their credit cards.

To fight credit card fraud before it devastates your credit, check your credit report regularly. Credit monitoring services will alert you to any changes on your credit report. Also, check your monthly credit card statements very carefully. Any suspicious activity warrants a call to your card issuer.

The last time you made a purchase with your credit card, were you asked to show your ID? If so, the merchant you bought from may have been violating their contract with Visa, MasterCard, or American Express. According to most contractual agreements between merchants and credit card companies, all a cashier is supposed to verify is the signature on the back of your credit card. Once they’ve compared that signature to the one you wrote down to complete the sale, no further ID should be requested.

Of course, most merchants ask for ID anyway. That’s because most employees and managers don’t realize that they’re not supposed to. Minimum purchase amounts are also a no-no according to most written agreements, but many merchants have a lower limit on how much you can purchase with a credit card. It’s a practical way to make sure they don’t lose money on card processing fees.

What can be done about minimum purchases and ID requirements? Not much, really. It doesn’t make sense to harass a merchant for trying to ensure the security and profitability of a transaction. File this one under interesting trivia rather than reasons to protest.

Surveys show that Americans would rather talk about the intimate details of their love lives than their credit. They were also more likely to bring up the subjects of death, rent or mortgage payments, their salaries, and their weight than the subject of their credit card debt. This begs the question: Are we dodging the subject because it’s embarrassing, or because we’re not really sure what we’re talking about where credit is concerned?

Other recent studies showed some discouraging numbers regarding what we know – and don’t know – about credit. 82% of Americans avoid discussing the topic whenever possible. 31% believe that credit scores reflect a person’s income level, age, and marital status rather than their payment history. Most know that making late payments hurts a credit score, but many don’t realize that maxing out one’s credit cards has the same effect.

Washington Mutual recommends that all card holders pay down their debt and check their credit report on a regular basis. They also suggest that card holders avoid coming anywhere near their credit limit on any card. A low debt-to-credit ratio will improve credit scores and decrease credit card finance fees.

We all know how to get into financial trouble using credit cards, and most of us are aware of the various rewards programs we could join through credit cards – but there are a number of additional cardholder perks that are often forgotten that are worth remembering:

Car Rental Insurance. Many people forget that when you rent a car on your a credit card you can usually avoid buying the insurance offered by the car rental company because your card offers a collision damage waiver and/or loss damage coverage automatically.

Travel Accident Insurance . Do you usually buy travel accident insurance when you take off on a trip?  You may be buying it for no reason, if you have a credit card that includes travel accident insurance coverage.  Just use a card with this benefit to book your flight or make trip arrangements and you’re covered.

Emergency Cash Disbursment.  Did you know some credit card’s include a benefit to assist you if you find yourself without cash in an emergency.  If you have this cardholder benefit, you just call customer service, explain your situation, and you’ll have cash.

Concierge Service.  There are many credit cards that offer 24/7 concierge service to cardholders and can help you with your busy schedule.  They can help find a destination, make travel arrangements, reservations,  or even send gifts for you.

Emergency Roadside Assistance.  An option becoming increasingly more popular when you take out a personal loan, you may not need to buy an emergency roadside assistance plan.  Many credit cards, including all Capital One cards, offer Emergency Roadside Assistance coverage.  If you breakdown  you can make a simple phone call and get help through your credit card benefit.