EU-DIGEST

Fight Back Against Credit Card Fees

Dr. Carin Van Gelder was furious when she opened her credit-card bill and found out the interest rate on her Master Card had suddenly shot up, even though she always paid on time. "It went up to almost 20 percent and there was no reason, I couldn't imagine why there was a reason," Van Gelder said. The Consumer Reports National Research Center survey found a high rate of credit-card complaints. Fourteen percent had their credit limits lowered recently, 29 percent were hit with new fees or penalties, and 38 percent said their interest rates had been hiked, 10TV's Jeff Hogan reported.

"Our survey found that fewer people are satisfied with credit-card companies than with almost any other service we assess," said Kim Kleman of Consumer Reports.

Labels: Credit Card Companies

Credit Card Issuers ( Gangsters) Raising Rates, Fees Ahead of New Law - by Nancy Trejos

After being bailed out by tax payers money credit card companies are raising interest rates and fees seven months before new rules go into effect that will limit their ability to do so, much to the irritation of Congress and consumer advocates. Chase, for instance, will raise the minimum payment required of some of its customers from 2 percent to 5 percent of the statement balance starting in August. Chase and Discover have increased the maximum fee charged for transferring a balance to the card to 5 percent of the amount, up from 3 and 4 percent, respectively. Bank of America last month raised the transaction fee for balance transfers and cash advances from 3 to 4 percent. Card issuers including Bank of America and Citi also continue to cut limits and hike up rates, which they have been doing with more frequency since January.

Charles Chichester Jr., a 65-year-old retired U.S. Postal Service employee who lives in Fairfax County, was trying to pay off his credit card soon but now fears he will be unable to do so at all. He received a letter from Chase, he said, notifying him that his $373 minimum monthly payment would increase to more than $900. When he called to say he could not afford that, a Chase representative told him to consult with a credit counselor, he said. That's exactly what he plans to do. Note EU-Digest: This is scandalous behavior by the Banks and credit card companies.

Labels: Credit Card Companies

Credit Card Companies and Banks : Toxic Plastic - reign of terror by Credit card companies will continue - by Nancy Trejos

In the US Congress is on the verge of passing legislation that would transform the way credit card companies and consumers interact. But relief won't come anytime soon, even if the legislation makes it to President Obama's desk by Memorial Day, as he has requested. As proposed, the earliest that either the House or Senate version would go into effect is nine months after being signed into law. The Federal Reserve, meanwhile, has approved new regulations that do not go into effect until July 2010."With implementation nine to 12 months away, I think the reign of terror we've seen going on relative to consumers will continue," said Adam Levin, former New Jersey consumer affairs director and founder of Credit.com.

Labels: Banking Industry, Credit Card Companies

AP: On Tuesday European Union officials confirmed they have asked Visa Europe to answer antitrust charges that its fees for cross-border card purchases violate EU rules. The European Commission said it had sent a so-called statement of objections outlining the problems it has with Visa Europe's multilateral interchange fees. It says those fees, which are set by Visa, "restrict competition" between banks and can lead to higher costs for shops and consumers and "infringes European antitrust rules."

The EU charges come after they had opened a probe into Visa Europe's fees in March 2008, and comes a week after EU regulators dropped their threat of fines against Visa rival MasterCard after they promised to cut fees they have been charging for cross-border card purchases.

Labels: Anti-Trust Laws, Credit Card Companies, EU, Visa Credit Cards

With Defaults Rising, Is a Credit-Card Crisis Looming? - by Kristina Dell

We're not nearly out from under the subprime mortgage meltdown and already analysts are speculating about the next industry crisis, related to the little plastic cards in your wallet. With American Express becoming a bank-holding company this week in order to get low-cost funds and share in the $700 billion bailout pool, it's clear that even traditionally resilient industries like credit cards are feeling pressured. "Credit cards are in line to fall," says Adam Levitin, associate law professor at Georgetown University. "The question is whether they will beat out the auto industry — they're racing for the honors." Meanwhile, home equity, the biggest source of wealth for most families, has been drained by the mortgage crisis. "There isn't a cushion for anyone who has a bump in the road," says Levitin. "Credit cards are often the first place where we start to see all the other problems show up, from medical bills to divorce to a death in the family." And then, of course, there's unemployment. Thus, it's not surprising that credit defaults are up dramatically, at the highest rate in six years.

Labels: Credit Card Companies, Credit Card Industry

Credit Card Companies Go to War Against Losses - by Ron Lieber

Credit Card Companies Go to War Against Losses - by Ron Lieber

The suffering credit card industry wants some of you to help bail it out. In the last year or so, card issuers have raised interest rates, added new fees, lowered credit limits and even shut down accounts altogether. As unemployment has risen, so have the number of people who are paying their credit card bills late or not paying them at all. So the companies are deploying every weapon they have to shield themselves from further losses. They’re also scaling back their offers to new cardholders. According to new data from Synovate Mail Monitor, card companies sent 27 percent fewer solicitations to consumers in 2008 than they did in 2007. Given the wildly divergent approaches that card companies seem to be taking, it’s worth taking a closer look at what rules they’re changing, which customers they’re targeting and if there’s anything you can do to avoid drawing their attention.

Labels: Credit Card Companies

Credit Cardholders' Bill of Rights: What it means for you - by Karen Datko

While the $700 billion bailout and presidential election have dominated the news, the U.S. House passed a major piece of credit card reform legislation. The Credit Cardholders' Bill of Rights Act of 2008 passed the House on Sept. 23 by a vote of 312-112 (with nine members not voting). The bill, which still needs to pass the Senate before heading to the White House, would have a major impact on everything from how credit card issuers apply cardholder payments to outstanding debt to limits on interest rate increases.

Labels: Credit Card Companies, US

A special report on the credit card industry

EU-Digest Special Report: Credit Card Industry and Member Banks Sticking It To The Consumer

There are plastic time bombs sitting in your wallet - they are called credit cards. The "bargain" you bought at your favorite store with your credit card will increase in price by at least 28 percent, within a year, if you keep that purchase on your credit card by not paying off your credit card monthly.

The situation in the credit card industry is getting out of hand on both sides of the Atlantic. In Europe earlier this year the European Commission's antitrust regulator said in a draft summary it would possibly investigate banks and payment card providers for colluding on prices and using practices aimed at keeping competitors out of their markets. Also, according to the report, credit card fees and interest rates vary between countries, which indicate that there is limited cross-border competition.

In the US, this past Tuesday, the Merchants Payments Coalition, which groups about 30 associations, representing almost 2.7 million stores in America, applauded a congressional hearing on unfair credit card practices in the United States. The hearing, held by the US Senate Permanent Subcommittee on Investigations, is one of several meetings already held this year to investigate the allegedly unfair practices imposed on consumers and merchants by credit card companies and their member bank companies. "This hearing is another example of how serious the issue of credit card abusive practices is for everyone", said a Senator on the Subcommittee. "The credit card industry is profiting from outrageous fees". During the Tuesday Subcommittee meeting the discussion also focused on the so-called "interchange" fee, which represents a percentage of each transaction that American Express, Discover Visa, MasterCard and their member banks collect from retailers every single time a credit or debit card is used to pay for a purchase. The fee varies with the type of merchant, transaction, and card, but averages out to roughly 2% per transaction. This fee is the reason why some merchants require a minimum purchase of X amount before they will permit a customer to make their purchase using a credit or debit card. Unfortunately, the US Congress so far has only held discussions, but has done nothing to actually reduce or limit the exorbitant fees, sky-high penalties, and above normal interest rates being charged to cardholders. The need for action is becoming more and more pressing. Specially now the US Federal Reserve has cut benchmark interest rates. The credit card companies and their member bank companies have not followed suit after the interest rates were dropped and are still charging abnormally high interest rates and ridiculously bloated service fees.

In the US the five banks that issue most Visa and MasterCards include JPMorgan Chase, Bank of America, Citibank, Capital One, and HSBC. Surveys show all these banks have a poor reputation for making their Customers pay outrages fees for services and far higher than normal interest rates. The Household Bank MasterCard has a cash advance rate of 25.15 percent. Blue from American Express and Sun Trust’s Visa charge 23.34 percent. On top of that, there usually is a transaction fee of 3 percent or more. Someone using their Chase credit card to get a $1,500 cash advance will pay about $465 in interest and fees for this so-called "service" within the first year.

During the past months the Central Banks from all over the world have pumped billions of hard currency into the world-wide banking system to fight off liquidity problems, mainly the result of their own making and poor judgment. So far, the benefits of the Central Banks bailout have not trickled down to the US consumer, where household debt continues to rise, after it reached $14.2 trillion in the third quarter, or a record 138% of US household disposable income, up from 113% in 2002.

Therefore it seems that one of the areas which urgently needs to be looked at by governments world-wide is the unregulated credit card industry.

Figures today show that the average American owes about euro 6,872 ($9.900.00) in credit card debt, which amounts to a staggering total of euro 639bn ($920bn)for the whole US. In Europe, according to the BBC and the Credit Action Group the average European has about euro 2,185.00 ($ 3,147) of unsecured/credit card debt. One third of the total European credit card debt involves British credit card owners. Banks in Britain generally apply American credit card policies and standards.

Given these facts and the steady rise in the use of credit cards and consumer debt in the EU, the European Parliament would do EU consumers and the economy a service to also open an investigation into the practices of the credit card industry, but hopefully with better results than the US Senate Permanent Subcommittee on Investigations has achieved so far for American citizens.

Labels: Banking system, Credit Card Companies, EU Economy, Legislation, US Economy

Special report on the sick state of the financial community and their collaboration with the political system

Consumers Must Revolt - Federal Reserve Chairman Ben Bernanke throws up smokescreen to appease consumers - Will Europe follow suit

The Federal Reserve Board moved Friday to place new regulations on the nation's credit-card industry that would make it more difficult for lenders to raise interest rates and would give consumers more time to pay their bills. They say if enacted, the regulations would be the most sweeping change in decades, offering consumers more protection against late fees and stopping lenders from making credit offers that regulators deem to be deceptive. "The proposed rules are intended to establish a new baseline for fairness in how credit-card plans operate," Federal Reserve Chairman Ben Bernanke said.

All this is a smokescreen by Federal Reserve Chairman Ben Bernanke to appease disgruntled consumers, and to cover-up a financial system which has gone out of control. Central banks have, and are continuing to bail out banks with tax payers money. Most of these banks have, and are continuing to act irresponsibly and without accountability. It is time for a consumers revolt and to take matters in their own hands by stopping to pay their credit card payments until legislation is passed to correct these inequalities. Leaving it up to political legislators to correct the problem will only mean more delay and certainly work in favor of the banking institutions and credit card companies to continue their uncontrolled and devious practices. The power lies with the consumers, not with the financial community and the time to act is now.

Labels: Ben Bernanke, Credit Card Companies, US Economy

US Economy - Outlook Dims on Credit - by Lauri Kulikowski

More analysts are becoming increasingly pessimistic toward the consumer credit industry. Howard Shapiro, an analyst at Fox Pitt Kelton Cochran Caronia Waller, on Monday downgraded his outlook for the specialty finance sector to market weight from overweight, and Sanjay Sakhrani, an analyst at Keefe, Bruyette & Woods, cut his buy-equivalent rating on American Express to market perform. Both cited mounting problems in consumer credit, including the inability of some people to pay off balances and the unwillingness of others to add to them. After examining recent data from several major consumer credit card issuers including delinquency trends, utilization rates and payment trends, "card credit has definitely inflected and we are seeing all the signs of distressed consumer behavior signaling a change in the economic climate," Shapiro wrote in a note. "This includes lower cure rates, higher utilization rates, lower payment rates and the like. The trajectory of losses in the industry going forward will depend highly on the U.S. unemployment rate." Credit losses will be particularly painful at American Express due to its "aggressive" growth in receivables over the past two to three years, "which likely reflected a degree of loosening underwriting standards at the trough of the credit cycle," he writes.

Labels: American Express, Credit Card Companies, US Economy

Credit Card Ripoff: Visa/Mastercard's "Foreign transaction fee" : What is the EU doing about it? - by Cory Doctorow

It doesn't matter if you use an ATM, buy over the Internet/phone, or walk into a store -- the credit-card companies always dip their beaks. When you pay your hotel bill, when you buy a plane ticket, every time you use Amazon.uk to order a British release (Citibank told me that they even charge the fee when I withdraw from my Citibank US account while at a Citibank UK ATM, using Citibank's own network!). What makes this such a rip-off is that the credit-card companies already charge a fee -- up to five percent! -- to the merchants for processing the transaction. So Mastercard and Visa are getting a slice from the store, and a slice from the customer. In a global marketplace, Mastercard and Visa are acting like letting you spend your own money is a special service deserving its own fee. The Citibank rep I spoke to told me that the fee used to be one percent, and that it was hidden on the credit-card bills, but that in 2006, the fees tripled and Citi started to break them out on the bill so you could see how badly you're getting hosed.

Note EU-Digest: About 23 billion card payments are made annually in the EU with an overall value of 1.35 trillion euros ($1.63 trillion) from a combination of merchant fees, customer fees and handling charges paid between banks and card providers.Credit and debit cards such as Visa and MasterCard are racking up "abnormal" and "excessive" profits for banks. In 2006 European Union antitrust chief Neelie Kroes said: "The more the payment card industry does on its own initiative, the less they are likely to face action under antitrust rules ". Unfortunately not much has happened to correct this profiteering by the credit card and banking companies in Europe or anywhere else in the world.

Labels: Credit Card Companies, EU

For the complete report from AlterNet click on this link

Europe Beware of the Credit-Industrial Complex

In 2004, US banks pocketed $32 billion in service fees, up from $21 billion in 1999. According to BusinessWeek, such fees accounted for 76 percent of profits at the Midwestern bank, TCF. Wells Fargo in San Francisco reportedly charges $2 every time someone with a low balance calls a service representative, and a whopping $30 an hour when a rep helps someone reconcile an account. Not surprisingly, the majority of these fees falls upon the poorest customers. One out of five customers switches banks because he or she is so outraged by these charges. One estimate by Gartner Research shows that it costs banks less than 50 cents to return a payment request, while turning around and charging us anywhere from $25 to $40 for this "service." The barely regulated banks are getting away with one usurious practice after the next: In addition to the subprime fiasco now threatening the entire economy, there are the extortionate service fees on your bank accounts and the escalating interest fees, late fees and truncated payment cycles on your credit cards. Millions of us now get credit card bills that give us 10 days -- and those aren't 10 business days -- to pay up or get hit with a late fee. No wonder the credit card industry has been one of the most profitable in the country, earning on the order of $30 billion annually.

Note EU-Digest: The EU Commission can do European consumers a great service to scrutinize the activities of the Credit Card Industry in the European Union to avoid that situations which American credit card holders are experiencing in the US, don't happen in Europe.

Labels: Credit Card Companies, Credit Card Debt, EU, Legislation

Western Europe sees strong debit-card growth

The number of payment cards in Western Europe increased by 9 percent from 2004 to 2006, hitting a total of 787 million, according to research firm Retail Banking Research Ltd. Each adult in the region now has more than two payment cards. According to RBR, the United Kingdom remains the region’s largest market, despite a fall in its card numbers as a result of credit-card issuers closing dormant accounts.

Western Europe’s largest card markets in 2006.Most countires have more debit than credit cards. However, in Austria, Belgium, Germany, the Netherlands and Turkey debit cards account for more than three-fifths of the market. Issuance of prepaid cards, included in the debit sector, remains under‑developed, although such cards are expected to gain in importance over the next few years as banks target people who do not hold bank accounts, and as companies use them to control employee expenditure.Debit cards are the dominant form of card payment based on volumes, accounting for 63 percent of transactions despite that the fact they account for only 52 percent of cards. In contrast, credit cards payment volumes stand at only 17 percent, compared with 33 percent of cards in circulation.

Note EU-Digest: Consumers in Europe should be warned like smokers are about their health that credit cards are dangerous to their financial well-being. All they have to do is look at the US where personal credit card debt now has reached close to euro 545b (US $ 800b).

Labels: Credit Card Companies, Credit Card Debt, EU, Legislation

Mastercard Faces Fines in Europe - by Aoife White

Mastercard must drop fees it charges for cross-border transactions or face daily fines of 3.5 percent of daily global turnover, European Union regulators said Tuesday. The European Commission said that multilateral interchange fees charged to consumers for payments made in a different European country with either their MasterCard credit cards or Maestro debit cards unfairly inflated costs for retailers. EU Competition Commissioner Neelie Kroes also warned that she would reopen a probe into Visa's fees on Dec. 31.Europeans make more than 23 billion card payments every year worth over 1.35 euros trillion ($1.94 trillion). They pay additional fees using their cards in another European nation, which regulators say curtails Europe's attempt to create a single market in 27 EU states. Some 45 percent of European payment cards carry a MasterCard or a Maestro logo. Visa continues to speak with the EU, but said cutting interchange fees would force consumers to pick up some of the cost burden from retailers.

Labels: Credit Card Companies, EU, Mastercard, Visa

Plastic time bombs in your wallet
A special EU-Digest report on the credit card industry and their member banks

EU-Digest Special Report: Credit Card Industry and Member Banks Sticking It To The Consumer

There are plastic time bombs sitting in your wallet - they are called credit cards. The "bargain" you bought at your favorite store with your credit card will increase in price by at least 28 percent, within a year, if you keep that purchase on your credit card by not paying off your credit card monthly.

The situation in the credit card industry is getting out of hand on both sides of the Atlantic. In Europe earlier this year the European Commission's antitrust regulator said in a draft summary it would possibly investigate banks and payment card providers for colluding on prices and using practices aimed at keeping competitors out of their markets. Also, according to the report, credit card fees and interest rates vary between countries, which indicate that there is limited cross-border competition.

In the US, this past Tuesday, the Merchants Payments Coalition, which groups about 30 associations, representing almost 2.7 million stores in America, applauded a congressional hearing on unfair credit card practices in the United States. The hearing, held by the US Senate Permanent Subcommittee on Investigations, is one of several meetings already held this year to investigate the allegedly unfair practices imposed on consumers and merchants by credit card companies and their member bank companies. "This hearing is another example of how serious the issue of credit card abusive practices is for everyone", said a Senator on the Subcommittee. "The credit card industry is profiting from outrageous fees". During the Tuesday Subcommittee meeting the discussion also focused on the so-called "interchange" fee, which represents a percentage of each transaction that American Express, Discover Visa, MasterCard and their member banks collect from retailers every single time a credit or debit card is used to pay for a purchase. The fee varies with the type of merchant, transaction, and card, but averages out to roughly 2% per transaction. This fee is the reason why some merchants require a minimum purchase of X amount before they will permit a customer to make their purchase using a credit or debit card. Unfortunately, the US Congress so far has only held discussions, but has done nothing to actually reduce or limit the exorbitant fees, sky-high penalties, and above normal interest rates being charged to cardholders. The need for action is becoming more and more pressing. Specially now the US Federal Reserve has cut benchmark interest rates. The credit card companies and their member bank companies have not followed suit after the interest rates were dropped and are still charging abnormally high interest rates and ridiculously bloated service fees.

In the US the five banks that issue most Visa and MasterCards include JPMorgan Chase, Bank of America, Citibank, Capital One, and HSBC. Surveys show all these banks have a poor reputation for making their Customers pay outrages fees for services and far higher than normal interest rates. The Household Bank MasterCard has a cash advance rate of 25.15 percent. Blue from American Express and Sun Trust’s Visa charge 23.34 percent. On top of that, there usually is a transaction fee of 3 percent or more. Someone using their Chase credit card to get a $1,500 cash advance will pay about $465 in interest and fees for this so-called "service" within the first year.

During the past months the Central Banks from all over the world have pumped billions of hard currency into the world-wide banking system to fight off liquidity problems, mainly the result of their own making and poor judgment. So far, the benefits of the Central Banks bailout have not trickled down to the US consumer, where household debt continues to rise, after it reached $14.2 trillion in the third quarter, or a record 138% of US household disposable income, up from 113% in 2002.

Therefore it seems that one of the areas which urgently needs to be looked at by governments world-wide is the unregulated credit card industry.

Figures today show that the average American owes about euro 6,872 ($9.900.00) in credit card debt, which amounts to a staggering total of euro 639bn ($920bn)for the whole US. In Europe, according to the BBC and the Credit Action Group the average European has about euro 2,185.00 ($ 3,147) of unsecured/credit card debt. One third of the total European credit card debt involves British credit card owners. Banks in Britain generally apply American credit card policies and standards.

Given these facts and the steady rise in the use of credit cards and consumer debt in the EU, the European Parliament would do EU consumers and the economy a service to also open an investigation into the practices of the credit card industry, but hopefully with better results than the US Senate Permanent Subcommittee on Investigations has achieved so far for American citizens.

Labels: Banking, Credit Card Companies, European Parliament, US Senate