This Week in Credit Card News: CFPB Crackdown, Credit Card Delinquencies & Swipe Fee Controversy
Bill Hardekopf, Contributor
U.S. Credit Card Lenders Shun Add-Ons as CFPB Cracks Down
Chase, Bank of America and American Express are among credit card companies retreating from a $2.4 billion market as regulators seek curbs on deceptive marketing of products including debt cancellation. The crackdown from the Consumer Financial Protection Bureau is the agency’s first enforcement campaign and has led to fines against banks including Capital One and Discover. With U.S. banks already complaining that regulation has squeezed revenue, the bureau is considering new limits on payday lending and fees for checking overdrafts, and has proposed an overhaul of mortgage practices. [Businessweek]
Credit Card Delinquencies Reach 11-Year Low
More Americans are making their credit card payments on time. Credit card delinquencies fell to 2.93 percent in the second quarter, the lowest level since 2001, according to the American Bankers Association. This marks the first time the rate has been below 3
percent in that 11-year period. The rate is down from 3.08 percent in the first quarter. A delinquent account is any credit card account that is 30 or more days overdue. Paying their bills on time means cardholders are more financially prudent, avoiding late fee charges. It may also be an indication that consumers are in better financial shape as the holiday shopping season begins, a time when spending and debt usually increases. [LowCards.com]
Credit Card Swipe Fee Settlement Far from a Done Deal
The final approval of a proposed multi-billion dollar legal settlement over “swipe fees” on credit cards could be in jeopardy–or at least delayed–by more legal wrangling. Six of the 19 plaintiffs in the case, all big trade groups, now say they oppose the $7.25 billion deal reached in mid-July. The six retail organizations who brought this case say they are against the proposed agreement because it does not prevent Visa and MasterCard from boosting swipe fees whenever they want. [NBC News]
Discover Financial Profit Beats As Consumers Spend More
Discover Financial Services’ third-quarter profit handily beat Wall Street estimates as more Americans used its credit cards, highlighting improving consumer sentiment. U.S. credit card loans fell during the financial crisis as people paid down debt and cut back on purchases. An improving job market is now encouraging consumers to spend. Discover Financial said credit card loans rose 4 percent to $48.1 billion, on top of a similar rise in card sales volumes. [Reuters]
Lawyers Get Rich Off Consumer Bureau
As the government’s consumer watchdog cracks down on banks, debt collectors, student lenders and other financial players, law firms are stepping up to protect them–and profiting nicely as a result. Ballard Spahr’s Alan Kaplinsky likened the CFPB to a “three-headed monster,” with a regulatory head that makes new rules, a supervisory head that examines the books of financial companies, and an enforcement head that cracks down on companies. Ballard Spahr’s CFPB team helps about 125 clients fend off these three “heads”–which is especially crucial for nonbank companies like private student lenders and payday lenders since they have never been subject to ongoing federal supervision before. [CNN]
Consumer Reports Money Lab Puts 53 Credit Cards to the Test
To help you make sense of the wide range of credit card deals, the Consumer Reports Money Lab developed a computer model for evaluating cards and estimating the rewards you stand to earn based on your spending patterns. It compares the terms of 53 mass-market credit cards and uses the calculator to determine the best ones card for cash rewards, travel rewards, and carrying a balance. [Consumer Reports]
Supreme Court Hears Case Against Government for Credit Card Violation
The U.S. Supreme Court heard oral arguments that question whether the federal government can be held liable for money damages for violating the Fair Credit Reporting Act. The case, United States vs. Bormes, originated when a lawyer, James Bormes, paid an online filing fee on a government website and his receipt displayed his credit card number and expiration date. This is a violation of the Fair Credit Reporting Act. Bormes originally filed a class action suit in an Illinois district court, seeking punitive and statutory damages, but the case was dismissed. But Bormes appealed to the Federal Circuit which found in Bormes’ favor. The government argues that Congress did not stipulate that people can sue the government for these types of violations. [LowCards.com]
U.S. Mortgages Not Likely to be Affected by LIBOR Proposals Soon
A proposal to revamp the London Interbank Offered Rate, or Libor, could restore some confidence in the global interest rate that is widely used for bond yields and mortgage rates in the U.S. The British bank, Barclays, and other U.S. and British agencies have admitted to submitting false information that is used to set the Libor. The Libor has had wide implications for U.S. homeowners, who may even have an adjustable mortgage rate directly tied to it. For example, some mortgage rates on an adjustable rate basis, whether for a duration of 10 or 30 years, sometimes have an adjusted yield above the Libor. Any Libor changes would directly be transmitted to borrowers. [ABC News]
LowCards.com Weekly Credit Card Rate Report
Based on the 1000+ cards in the LowCards.com Complete Credit Card Index, the average advertised APR for credit cards is 14.32 percent, identical to last week. Six months ago, the average was 14.33 percent. One year ago, the average was 14.27 percent. [LowCards.com]
Provided by LowCards.com
Chase, Bank of America and American Express are among credit card companies retreating from a $2.4 billion market as regulators seek curbs on deceptive marketing of products including debt cancellation. The crackdown from the Consumer Financial Protection Bureau is the agency’s first enforcement campaign and has led to fines against banks including Capital One and Discover. With U.S. banks already complaining that regulation has squeezed revenue, the bureau is considering new limits on payday lending and fees for checking overdrafts, and has proposed an overhaul of mortgage practices. [Businessweek]
Credit Card Delinquencies Reach 11-Year Low
More Americans are making their credit card payments on time. Credit card delinquencies fell to 2.93 percent in the second quarter, the lowest level since 2001, according to the American Bankers Association. This marks the first time the rate has been below 3
percent in that 11-year period. The rate is down from 3.08 percent in the first quarter. A delinquent account is any credit card account that is 30 or more days overdue. Paying their bills on time means cardholders are more financially prudent, avoiding late fee charges. It may also be an indication that consumers are in better financial shape as the holiday shopping season begins, a time when spending and debt usually increases. [LowCards.com]
Credit Card Swipe Fee Settlement Far from a Done Deal
The final approval of a proposed multi-billion dollar legal settlement over “swipe fees” on credit cards could be in jeopardy–or at least delayed–by more legal wrangling. Six of the 19 plaintiffs in the case, all big trade groups, now say they oppose the $7.25 billion deal reached in mid-July. The six retail organizations who brought this case say they are against the proposed agreement because it does not prevent Visa and MasterCard from boosting swipe fees whenever they want. [NBC News]
Discover Financial Profit Beats As Consumers Spend More
Discover Financial Services’ third-quarter profit handily beat Wall Street estimates as more Americans used its credit cards, highlighting improving consumer sentiment. U.S. credit card loans fell during the financial crisis as people paid down debt and cut back on purchases. An improving job market is now encouraging consumers to spend. Discover Financial said credit card loans rose 4 percent to $48.1 billion, on top of a similar rise in card sales volumes. [Reuters]
Lawyers Get Rich Off Consumer Bureau
As the government’s consumer watchdog cracks down on banks, debt collectors, student lenders and other financial players, law firms are stepping up to protect them–and profiting nicely as a result. Ballard Spahr’s Alan Kaplinsky likened the CFPB to a “three-headed monster,” with a regulatory head that makes new rules, a supervisory head that examines the books of financial companies, and an enforcement head that cracks down on companies. Ballard Spahr’s CFPB team helps about 125 clients fend off these three “heads”–which is especially crucial for nonbank companies like private student lenders and payday lenders since they have never been subject to ongoing federal supervision before. [CNN]
Consumer Reports Money Lab Puts 53 Credit Cards to the Test
To help you make sense of the wide range of credit card deals, the Consumer Reports Money Lab developed a computer model for evaluating cards and estimating the rewards you stand to earn based on your spending patterns. It compares the terms of 53 mass-market credit cards and uses the calculator to determine the best ones card for cash rewards, travel rewards, and carrying a balance. [Consumer Reports]
Supreme Court Hears Case Against Government for Credit Card Violation
The U.S. Supreme Court heard oral arguments that question whether the federal government can be held liable for money damages for violating the Fair Credit Reporting Act. The case, United States vs. Bormes, originated when a lawyer, James Bormes, paid an online filing fee on a government website and his receipt displayed his credit card number and expiration date. This is a violation of the Fair Credit Reporting Act. Bormes originally filed a class action suit in an Illinois district court, seeking punitive and statutory damages, but the case was dismissed. But Bormes appealed to the Federal Circuit which found in Bormes’ favor. The government argues that Congress did not stipulate that people can sue the government for these types of violations. [LowCards.com]
U.S. Mortgages Not Likely to be Affected by LIBOR Proposals Soon
A proposal to revamp the London Interbank Offered Rate, or Libor, could restore some confidence in the global interest rate that is widely used for bond yields and mortgage rates in the U.S. The British bank, Barclays, and other U.S. and British agencies have admitted to submitting false information that is used to set the Libor. The Libor has had wide implications for U.S. homeowners, who may even have an adjustable mortgage rate directly tied to it. For example, some mortgage rates on an adjustable rate basis, whether for a duration of 10 or 30 years, sometimes have an adjusted yield above the Libor. Any Libor changes would directly be transmitted to borrowers. [ABC News]
LowCards.com Weekly Credit Card Rate Report
Based on the 1000+ cards in the LowCards.com Complete Credit Card Index, the average advertised APR for credit cards is 14.32 percent, identical to last week. Six months ago, the average was 14.33 percent. One year ago, the average was 14.27 percent. [LowCards.com]
Provided by LowCards.com
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