More consumers are paying on-time and avoiding fees…

According to the credit reporting agency TransUnion, late payments on credit cards carrying the MasterCard and Visa logos fell to 1.1% for the June to September period, down nearly 6% from the previous quarter. Since delinquency rates typically rise in the third quarter, the decline, together with the 11% decline from the first quarter, indicate that consumers are handling debt better. In addition, the third quarter rate for late credit card payments of 90 days or more past due (1.1%) nearly matched that of the previous year (1.09%). Delinquencies were highest in Nevada (1.98%), Florida (1.47%), Arizona (1.35%) and California (1.33%), lowest in N. Dakota (.66%) and S. Dakota (.70%).  TransUnion’s statistics are culled from approximately 27 million anonymous, randomly sampled individual credit files. (More…)

Interchange fees suspended for donations to Haitian relief…

Recent business and financial news has warned of credit card issuers jacking up rates in advance of federal rules that will put limits on the practice. Just when many people are struggling to figure out how to make ends meet in the midst of a recession, they’ve been slapped with higher interest rates. The logical assumption is that consumers need to minimize their credit card usage to stay out of the cross hairs of lenders. But at least one company, Citibank, the second largest credit card issuer in the country, is using a totally unexpected tactic – lowering interest rates for customers who use their card a lot. (More…)

Interchange fees suspended for donations to Haitian relief…

Banks and credit card companies make roughly $250 million annually through transaction costs on charitable donations, with a sharp increase when disaster strikes and humanitarian aid pours in. With contributions to the Haiti relief effort expected in the millions, banks and credit card companies stand to make a bundle from the generosity of Americans. But with growing criticism that credit card issuers are profiting from disaster, American Express, Visa, MasterCard and Discover are opting to forgo or donate their usual interchange fee (3-4%) for some donations made to the relief effort. Credit card companies have only been willing to waive their processing fee for charity once — for the 2004 tsunami disaster, according to Richard Walden, the chief executive of Operation USA. (More…)

Senate Banking Chairman to be replaced by Tim Johnson…

The chairman of the powerful Senate Banking Committee since 2007, Sen. Chris Dodd (D-Connecticut), has decided not to seek reelection after 5 terms in the U.S. Senate. Dodd and the Senate Banking Committee were at the center of efforts to deal with the economic meltdown. He also has played a prominent role in the healthcare debate. Considered the most vulnerable incumbent for the upcoming election cycle, behind Sen. Majority Lead Harry Reid, Dodd’s numbers plummeted following the crisis in mortgage lending.  (More…)

Officials must decide if Citi is ready to payback bailout…

It remains to be seen whether financial institutions that took Federal funds to survive the recent economic downturn can weather another crisis. But one of the largest recipients of government support, Citibank, is working to convince government officials that they are stable enough to handle things on their own and to end their connection with the taxpayer bailout program. Citibank has been struggling over the past two years as profits have sharply declined and credit card and mortgage defaults have escalated. The rescue of Citigroup was the most extensive for the US banks hit by the financial crisis last year. (More…)

New law could cap credit card interest rates at 16%…

With the noble thought that Congress needs to protect consumers from excessively high interest rates, credit card companies and banks may soon have a new law to conform to. Rep. Louise Slaughter (D-N.Y.), Chairwoman of the House Rules Committee, with the assistance of Reps. John Tierney (D-MA) and Michael Capuano (D-MA) proposed the Renewing America’s Commitment to Consumers Act. The law would seek to “prevent the kind of dramatic rate hikes consumers - even those with strong credit histories and who have paid their balances on time - have been experiencing.” As currently written the bill would: (More…)

New credit card reader hooks up to mp3 player or mobile phone…

Jack Dorsey, co-founder of Twitter has given the public its first look at a free credit card reader dubbed ‘Square’ that could replace traditional credit card scanners. Dorsey created the concept when he saw a need for easier payment methods, especially for consumers and retailers who would like to accept credit card payments without the hassle of a merchant account. Dorsey and his co-creators say that Square will bring “immediacy, transparency, and approachability to the world of payments.” (More…)

Chase and other banks ending arbitration to settle disputes…

JPMorgan Chase, the largest issuer of credit cards, will stop using arbitration to settle disputes, a long standing practice that some legal experts considered biased against cardholders, three months after a similar move by Bank of America. The arbitration clause will be dropped for at least 3 ½ years, starting in 2010, following an agreed upon court case. The company stopped sending credit card disputes to arbitration in July. (More…)

Even more proposals to help protect consumers…

Two new actions are in the works and are intended to further protect consumers from the big bad credit card companies. The first is an amendment to Regulation Z (Truth in Lending) proposed by the Federal Reserve Board that would ban several practices that continue to plague consumers and provide even more transparency in the disclosure of credit card account terms and conditions. Here are some of the things the proposed rule would do: (More…)

Credit card issuers opposed to additional legislation…

A renewed battle is on the horizon over $48 billion in fees that credit card issuers collect from merchants, with lawmakers pursuing more legislation. The focus is on bringing down interchange fees, the fee charged to retailers on every purchase made with a credit card which is split between the bank serving the customer and the bank serving the merchant. Interchange fees account for 19% of revenues last year for card-issuing banks associated with Visa or MasterCard. Interchange fees associated with these networks tripled from about $16 billion in 2001 to $48 billion last year. (More…)