This Week in Credit Card News: Interchange Fees, Online Banking and Terrible Credit Cards

Bill Hardekopf
Provided by LowCards.com
Can a Merchant Require ID for a Credit or Debit Card Purchase?
Both Visa and MasterCard prohibit merchants from requiring customer ID as a condition for accepting their credit or debit cards. American Express discourages the practice, but doesn’t ban merchants from requiring customer ID. Discover allows merchants to require an ID. [Consumer Reports]
Online Banking? Sure, As Long as it is Free
Almost 80 percent of consumers visit their bank’s website daily or weekly, according to a survey by Mintel Comperemedia. They use it, but they don’t want to pay for it. A monthly fee of $5 is enough to scare 93% of the people surveyed. Writing a check is still the most popular method for paying bills. [Consumer Reports]
American Express Faces Up to $500M in Legal-Losses Filing
American Express disclosed that it could face up to $500 million in losses from various lawsuits and federal inquiries beyond what it has already set aside in reserve for such losses due to legal issues brought against it by the Justice Department. These issues arose after American Express refused to join an industrywide agreement to allow merchants to steer customers toward cheaper forms of plastic. Citigroup Inc. said it added an additional $4 billion in legal losses this year; Bank of America Corp. could have an additional $1.5 billion. [Wall Street Journal]

Changes in Interchange Fee Affect Consumers, Retailers and Banks
Last December, the Federal Reserve proposed to cap debit card swipe fees at 12 cents per transaction, a surprisingly sharp decrease from the current fee that averages between 1% and 2% of a transaction. Merchants fought hard for this limit on interchange fees, but in the end, it could backfire on retailers and consumers. Even the Federal Reserve governors are now questioning the impact this bill will make on consumers. Banks aren’t accepting this huge cut in revenue without a fight and are trying to delay the deadline. According to ABC News, some big banks, including Bank of America, Citigroup, and JP Morgan Chase, might limit each debit card purchase to $50 or $100 if Congress accepts the new rules for swipe fees. This could be a scare tactic by banks, but banks have proved again and again that regulations which cost them will eventually be passed on to consumers. [LowCards.com]
Credit Cards from Hell
Here are nine credit cards that are among the worst in America for their interest rates and fees. [CNN Money]
Card Data Tells Mixed Story
Americans carried an average of $4,284 on credit card statements in December 2010 which represented a 4% decrease over year ago levels, according to new data released by Experian. However, the most recent consumer credit report from the Federal Reserve showed that revolving credit, which is mostly credit card debt, increased by an annual rate of 3.5 percent in December. Card spending increased 6.5 percent in December compared with spending at the same stores a year earlier, according to First Data, which processes merchant transactions. [New York Times]
New Southwest Airlines Loyalty Program Kicks in this Week
Southwest’s system of awarding a free round-trip ticket after purchasing and traveling on 16 one-way trips went away, and is now replaced with a points system that is based on how much a customer pays for a ticket. Customers will accrue points on tickets purchased through the airline’s website. The higher multiples are for the higher levels of Southwest’s three-tiered pricing. There are no blackout dates for free flights. [Las Vegas Sun]
Is Congress Crippling Consumer Finance Reform?
Can Congress exert its political will on the supposedly independent Federal Reserve Board? Can it wipe out the infant Consumer Financial Protection Bureau? Could this be the end of future actions to save consumers from credit card and other financial abuse, including the enforcement of current laws? The Fed might be weakened, too. [CBS MarketWatch]
Fed, FTC Call for Lenders to Share Credit Scores
Free credit scores could be easier to obtain under a rule U.S. federal regulators proposed Tuesday. The rules would comply with a provision included in the Dodd-Frank financial overhaul that was passed last summer. The proposal requires a lender to provide free credit scores to borrowers when the lender uses a credit report to set high interest rates or other loan terms that aren’t the best available. The rules would apply to credit cards, mortgages and auto loans. [Wall Street Journal]
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 14.24%, a slight decrease from last week’s average of 14.25%. Six months ago, the average was 13.90%. One year ago, the average was 13.64%. [LowCards.com]

URL: http://blogs.forbes.com/moneybuilder/2011/03/07/this-week-in-credit-card-news-interchange-fees-online-banking-and-terrible-credit-cards/