* VIDEO SOURCE: Poulson, K. “One Hacker’s Audacious Plan to Rule the Black Market in Stolen Credit Cards”. Wired.com, December 12, 2008.

Tips to Improve Card Security

If you’re one of the unlucky people affected by this crime, you know all too well how hard it can be to recover and reestablish your good name. Here are a few tips to keep your credit cards safe and prevent them from falling into the hands of criminals:

  The Credit Card Do’s

• Always sign your credit cards as soon as they arrive.
• Try to carry your credit cards separately from your wallet, in a zippered compartment, a business card holder, or another small pouch.
• Keep a record of your account numbers, their expiration dates, and the phone number and address of each credit card company in a secure place.
• Keep an eye on your credit card during every transaction, and get it back as quickly as possible once complete.
• Destroy carbon copies.
• Save your receipts to compare with billing statements.
• Open bills promptly and reconcile accounts monthly, just as you would your checking account. Or, monitor regularly with online banking or consider credit monitoring.
• Report any questionable charges promptly to your credit card issuer.
• Notify credit card companies in advance of a change in address.

  The Credit Card Dont’s

• Don’t ever lend your credit card(s) to anyone.
• Never leave credit cards or receipts lying around.
• Never sign a blank receipt. When you sign a receipt, draw a line through any blank spaces above the total.
• Never write your account number on a postcard or the outside of an envelope.
• Never gve out your account number over the phone unless you’re making the call to a company you know is reputable. If you have questions about a company, check it out with your local consumer protection office or Better Business Bureau.

Reporting Credit Card Fraud

If you lose your credit or charge card, or realize it’s been lost or stolen, be sure that you immediately contact the credit card issuer and make a report. By law, once you report the loss or theft of a card, you have no further responsibility for any unauthorized purchases made with it — or any fake credit cards produced with it’s number. The maximum liability that you can be responsible for under federal law is $50 per account.

* Be sure to compare credit card offers at ASAPCreditCard.com!

Different Reward Types

There is a big distinction between a promotion like this (which provides a one-time bonus)
and credit card points or reward miles you earn by using a credit card. The former is considered an incentive or financial gift — and as such is taxable. The latter is considered an earned rebate for making purchases and is not considered income.

With banks aggressively competing for new customers, sizeable sign-up bonuses and extra reward incentives are being used to lure the best consumers and triggering more attention from the IRS. In the case of Citi, the reward is valued at an impressive $625, making it easy to see why Citibank felt compelled to report it as taxable income, as the IRS rule requires all awards, gifts and prizes of more than $600 to be reported.

What You Must Report

So the bottom line is that any incentive or gift from a company is not a ‘free’ gift. The value is subject to reporting – even that new iPad, if it’s value is more than $600. Opening a new account can still be a non-event, tax-wise, if the reward isn’t worth more than $600.
It’s important to remember that normal rewards earned from a credit card aren’t impacted by this rule, and most signup bonunes also fall short of the minimum.

If you have any questions about these rules, we highly recommended that you consult a tax professional. Or, visit the IRS website for more information.

* See a complete list of the best reward credit cards.

JP Morgan Chase

Cardholders invited to test the new auto-activation system will sign up once and agree to receive a maximum of one monthly text reminder of the reward categories. In essence, the new system will stop the obligatory re-enrollment process for 2012. Earn 5% cash back bonus on up to $1,500 on the following categories spent in 2012:

• January – March: Gas stations, Amazon.com – activate starting December 15, 2011
• April – June: Grocery stores, Movie Theaters – activate starting March 15, 2012
• July – September: Gas stations, Restaurants – activate starting June 15, 2012
• October- December: Hotels, Airlines, Best Buy®, Kohl’s® – activate starting September 15, 2012

If you’re one of the loyal Chase Freedom cardholders invited to participate in the test phase, a monthly reminder seems a small price to pay for the amount of potential rewards you can earn. One caveat to remember is that if you discontinue the text reminders, the quarterly reward bonuses will be deactivated completely.

Depending on the outcome of the test program, auto-enrollment may be extended to all cardholders in the future. For now,  new applicants for the Chase Freedom card will enjoy an impressive 20,000 points redeemable for $200 cash bonus after spending $500 within the first three months, and unlimited 1% cash back on all purchases. Or, applicants can choose a $100 cash bonus instead and recieve a 0% APR for 12 months.

Be sure to see a complete list of all Chase Credit Cards.

Backlash Against Banks

Bank of America experienced first-hand the frustration of consumers when they proposed a $5 fee for the privilege of using their debit card. Consumers could not justify a fee to use their own money for a process that actually saves the banks the cost of processing. As a result, many consumers severed their relationship with the bank and took their business elsewhere.

In fact, the proposed fee led to a 20% year-over-year increase in the number of account closings. The negative opinions were like a runaway train gaining enough momentum on blogs and Facebook to force Bank of America to back down. The public backlash persuaded other banks to dispel their own plans to charge a similar debit card fee.

Mass Exodus of Consumers

Javelin Research estimates that 5.6 million bank customers changed providers since October. The damage done by such a large exodus was instrumental in why banks dropped the proposed debit card fee so quickly. Bank Transfer Day was cited as the reason 11% moved their accounts from a large to a small institution.

With the number of banks offering free checking accounts dropping to 29%, financial experts agree that consumers are going to have to accept some fees or do without some services, like access to live tellers. An optimistic view of the future includes untapped services and products that consumers wouldn’t mind paying for that might include discounts and coupons for online banking and personal financial management tools.

* Be sure to see a complete list of all our best credit cards.

How Marketing Impacts You

At most large companies, market researchers look for techniques that will produce the best results when a customer is shopping for their product; while behavioral scientists examine why customers do what they do. Both contribute to the way advertisers identify and analyze consumer needs and provide methods for gaining leverage over competitors.

The Neural Correlates of Behavioral Preferences experiment at Baylor College of Medicine was a simple cola-tasting test performed while volunteers were subjected to an MRI. The results showed that marketing imagery had a deeper impact on the volunteers who selected the product that tasted worse and had the poorer physiological reward. In other words, the impression that Coca-Cola was better overruled the immediate reward of the actual taste. This means that marketing strategies affect the brain without any conscious effort.

Credit Card Marketing Strategies

Credit card marketing focuses on successfully ‘branding’ credit cards in the same way that Coke has branded their cola. Of all the strategies used, the most important factor to credit card companies is the ability to establish an emotional attachment to their products. The snappy credit card jingle, humorous television ads and witty catch phrases are all a part of a campaign to make their products memorable and form an emotional connection with consumers. In doing so, many people may be unwittingly choosing a credit card based on the narrative and mental picture drawn by advertisers instead of the actual product itself.

Credit card companies have made huge strides in branding their products over the years. Considered a ‘luxury’ just a few decades ago, today the average American has 3.5 credit cards and an average of $15,799 in credit card debt.

Capital One has done especially well with it’s marketing campaigns. The phrase ”What’s in your wallet?” has become synonymous with their credit cards. And when it comes to establishing credibility – American Express stands out above the rest. The success of their ad campaigns is reflected in the shear number of consumers who are willing to pay an extra fee just be affiliated with a company that is perceived to be prestigious.

One of the largest credit unions in the U.S., Pentagon Federal Credit Union, will be the testing ground during the first six months of 2012 with new applicants either receiving the existing agreement or the revised version. The CFPB will then be able to use the feedback to determine if the new agreement wording makes a difference in consumer understanding.

The agency reported that the current word count of the average credit card agreement is over 5,000 words, much of it hard to understand legalese and fine print. By contrast, the revised agreement consists of a little more than 1,000 words that is wrtten at a 7th grade reading level. It’s divided into three sections – costs, changes and additional information. While it doesn’t eliminate the fine print altogether, it does simply the terms and moves the more complicated fine print to a separate page to satisfy attorneys.

While there is no immediate plan to make the new form mandatory, credit card companies may choose to opt in. But that could change once the testing phase is completed. By requiring the adoption of the rewritten agreements, there would be industry-wide consistency that would make it easier for consumers to comparison shop for credit cards.

The Consumer Financial Protection Bureau is asking consumers to review the model and give their feedback. Click here to check it out.

WE APPRECIATE YOUR INPUT!

Thanks for taking time to vote in our best and worst credit card issuers poll! If you’d like to share more about your experience, please feel free to add your comments below. We tried to include all of the largest credit card issuers, but if your bank wasn’t listed in our poll, please select “Other Issuer” and add more details in the comment section below.

* Be sure to see all our top credit card picks.

Lowest Credit Card Rates

Source: Informa Research Services, Inc., www.InformaRS.com

The Study Results

In the study, 481 Americans were shown a fabricated credit card statement with a balance of $1,937 and an APR of 14% to discern potential reactions to a typical situation. Additional information about the account was provided to different people in the group. Some were told that there was a minimum payment of 2%, while others were told how much interest would apply, if only the minimum was paid and/or how long that would take. Still others learned how much they’d need to pay monthly to eliminate the debt in three years; others simply were told of a higher minimum payment of 5%. Participants were then questioned about their past credit card habits and how much of the fabricated balance they would pay.

All this vital information helps to show the impact of a consumer’s credit behavior. The study found that consumers are not moved to change how they manage their accounts by the details. Surprisingly, disclosing future interest cost information actually increased the chance of making only minimum payments, unless the amount of time it takes to pay off the balance was known. Knowing the minimum payment evidently pulls people in the opposite direction from their financial interests. Interestingly, people paid significantly more when there was no mandatory minimum than when there was a 2% minimum.

Unexpected Outcomes

The CARD Act was established to help consumers make better decisions about their personal finances, but this study clearly shows the unpredictable nature of consumers who are given details about their liabilities. Instead of being encouraged to pay more each month, the information may instill feelings of indifference or even worse, hopelessness that results in a reduction of monthly payments. Although the Card Act has undoubtedly caused some positive changes, many experts suggest that the next time Congress proposes changes to credit card agreements that it be tested prior to enactment.

* Be sure to compare all our best credit cards.

According to Juniper Research, mobile payments are expected to grow from $240 billion
this year to $670 billion worldwide in 2015. But while mobile payments are dramatically on the rise, analysis by Consumers Union presents a cautionary note.

Mobile Security vs. Bank Security

Unlike banks and credit card issuers, protection against fraudulent mobile activity varies between wireless carriers and the terms of individual cell phone contracts. Banks, on the other hand, provide in-depth security to cardholders which is heavily regulated, and in most cases, required by law. For example, when a cardholder discovers unauthorized purchases made by someone using their credit card, they will only be liable for a maximum of $50 of the fraudulent charges. Fraudulent payments made on a tablet or smart phone do not have the same protections, and in some cases, the account holder may be liable.

Last spring, the Consumers Union called out some of the largest mobile phone carriers in the nation – AT&T, Sprint, T-Mobile, and Verizon included –  in an effort to ramp up their protection policies. But months later, the carriers are still falling short of what consumers need, the group says. Cell phone carriers offer limited protection for problems such as billing errors (most only give you 60 days to report an error) and some, like AT&T, Sprint and T-Mobile, only protect users after they’ve reported their phone stolen.

Banks offer a 10-day limit for any investigation regarding a fraudulent transaction for pre-paid card holders before issuing a refund. Mobile carriers don’t make any guarantees you’ll be refunded at all, Consumers Union says.

“As new mobile payment options become available, consumers are better off sticking to services linked to credit cards or debit cards, which come with strong protections required by law,” said Michelle Jun, senior attorney for Consumers Union.

“If wireless carriers want consumers to have confidence in direct carrier billing programs, they should strengthen their contracts with the protections consumers need.”

* Be sure to see a complete list of all our top credit cards.