Category: Credit Cards

Consumers who have been trying to deal with their outstanding credit card debt responsibly may now be more likely to turn to mobile solutions to handle their accounts.

The number of consumers who are using their smartphones to access credit card account information grew significantly between December 2010 and June 2011, according to a report from the digital information tracking company comScore. In all, nearly 18.4 million consumers used a mobile browser to access credit card information, up 23 percent from the previous period's total of more than 14.9 million.

But the greater growth was seen in the number of consumers using smartphone applications to access these details, the report said. The number of credit card app users rose 43 percent to more than 6 million, up from nearly 4.2 million at the end of 2010.

Many experts agree that mobile phones are the future of the credit card industry, as consumers will be able to not only check their account data on these devices, but also use them to make purchases.

Many of the nation's top credit card lenders, retailers and other businesses, as well as consumers, are concerned about the rising tide of fraudulent credit card debt, and now the world's largest payment processor may have a new way to slow this crime.

Visa will soon begin issuing certain types of credit cards with a new redesign that some believe will make them more secure, according to a report from Main Street. The cards will now only present the issuing bank's logo and user's name on the front of the card, flipping the account number, expiration date and Visa logo to the back. However, Visa is reluctant to reveal why the change has been made.

"In an effort to help our financial institutions pursue options to maximize their branding opportunity on Visa cards, while maintaining the authenticity and integrity of the Visa brand, we are evaluating refinements that allow for the alternative placement of account information and security elements through limited market programs," a Visa spokesperson told the news site.

Consumers who have been trying to get out of debt may find it more difficult to do so if they don't spot fraudulent charges early.

A number of the nation's largest financial institutions have recently proposed changes to the way in which they charge consumers for using debit cards, and though consumers have sworn to find alterative payment methods, some experts don't believe the resulting change will be seismic.

Joseph Saunders, chief executive officer for Visa, recently said that despite consumer sentiment turning against financial institutions who plan debit card use fees, the number of debit transactions – and the value of those purchases – is unlikely to change, according to a report from The Associated Press. Visa, the world's largest processor of both debit and credit card transactions, believes that even if consumers do make good on their promises to switch to new financial institutions that do not charge for debit use, they will still use the debit accounts issued by those new banks.

"All of the banks recognize that their customers have an option to move to a competitor," Saunders said on a conference call with reporters, according to the news agency. "That being said, I don't believe that anything that's happening is going to substantially alter the macro debit volume in the United States. I don't think debit use is going to go away."

In addition, even those consumers who are considered underbanked and may not be able to open new checking accounts to which they can link debit cards will likely continuing using debit, just in another form, the report said. Saunders said that Visa has seen an appreciable jump in the number of transactions being completed with prepaid cards, which are expected to continue growing in popularity, particularly if new debit fees drive out more consumers.

Further, even if consumers don't turn to prepaid cards, they will likely simply begin using credit cards to complete a greater number of transactions than they currently do, the report said.

Visa saw both debit and credit card use expand in the fourth fiscal quarter of the year, though the latter did so more than the former, the report said.

Many Americans have likely looked to debit card use in recent months as an alternative payment method while they attempted to reduce debt. This type of card grants them the same payment flexibility they have likely come to expect from credit card use, but does not result in additional debt.

A new poll has found that increases in the fees financial institutions charge consumers for using their debit cards may lead to more taking on credit card debt to make their day-to-day purchases.

A recent poll by the Research Intelligence Group has found that the vast majority of Americans find the proposed increase in fees for using debit cards to be distasteful, according to a report from Bloomberg News. About 43 percent of those polled said they would seek alternative payment methods including credit cards and cash, while roughly 30 percent assert that they would switch banks. Just 13 percent of those polled said they would pay the fees if they were "reasonable."

"There's a lot of consumer discontent within financial services and I think there’s a lot of frustration," Rob Kaplan-Sherman, president of the services division of the Research Intelligence Group, told the news agency. "People express that they're going to change their behavior, and that includes changing how and where they bank."

Many consumers who have been struggling to reduce debt may have fewer options when it comes to avoiding these fees, as credit card use may be out of the question for some.

Consumers' online browsing habits have long been used to create targeted advertisements specifically for them.

But now the world's two largest credit and debit card payment processing companies are working to do the same with the information gathered any time a consumer takes oncredit card debt for purchases at brick-and-mortar stores, according to a report from the Wall Street Journal. Visa and MasterCard are working, separately, to develop technology that would allow them to instantly transfer consumers' real-world purchasing data to advertisers, which would then use that information to push specific types of ads to the cardholders within a short period of time.

For example, the ideal scenario for this type of system would be to send weight loss ads to consumers within minutes of their using their debit or credit card to purchase fast food, the report said. However, no such system exists at this juncture, and targeted online advertising is currently only tied to web browsing habits, not purchases at brick-and-mortar stores.

"There is a lot of data out there, but there is not a lot of data based on actual purchase transactions," Susan Grossman, group head of media solutions at MasterCard Advisors, recently told the newspaper. "We are taking it a level deeper…it is a much more precise targeting mechanism."

Currently, MasterCard doesn't collect information such as consumers' names or addresses when they process a purchase, which would make it difficult to overhaul their entire system, the report said. However, it has already begun to do so in an effort to better create consumer profiles. Meanwhile, Visa's proposed system would use aggregate cardholder buying histories to create targeted ads while still keeping the individual consumer's information anonymous. At most, ads would only be able to be targeted by area, rather than tailored to an individual. However, it would also use data on consumers beyond their credit card purchases – such as information posted on social networks, search engines and the like – to beef up these profiles.

Privacy advocates have been trying to reduce the amount of information companies that specialize in targeted advertisements can use to create consumer profiles, as well as limit the access these companies have to user browsing habits. One such initiative is the creation of an online "do not track" service that allows consumers to opt out of these services.

Consumers have likely found that the number of offers for rewards credit cards – and the amount of points, cash back or miles they earn for every dollar of credit card debt they take on using those accounts – is on the rise in recent months.

Rewards credit card benefits have been on the rise in recent months, both for those who are switching to new lenders and those who are keeping their old ones, according to a report from CNN Money. For example, the value of introductory offers sent to would-be borrowers have jumped dramatically, though many now require borrowers to reach certain spending thresholds within a few months of opening the account.

Lenders are also beefing up benefits for current borrowers, the report said. Some are increasing the number of points they earn for every year the account is open, while others grant as much as 50 percent cash back on all rewards earned.

However, rewards credit cards typically also come with higher ongoing interest rates and annual fees that can be difficult for some to afford. Therefore consumers who are attempting to reduce debt may want to look at options related to no-frills accounts with lower rates and no fees.

Consumers concerned about being hit by fraudulent credit card debt may soon have less reason to worry, as the world's two largest card issuers are taking steps to upgrade security.

Visa and MasterCard are now taking steps to improve credit card security by encouraging businesses and ATM owners to upgrade their card reading systems so that they'll accept transactions completed with a new, safer type of card, according to a report from the consumer finance site Bankrate. These companies are trying to encourage the use of so-called "chip and pin" cards – those that store data on a microchip embedded in the card and require the user to enter a code when confirming purchases.

The companies hope to have these changes in place within the next year and a half or so, as MasterCard has set a goal of April 2013 as a date for ATM operators to install systems that allow consumers to use chip and pin cards at these machines, the report said.

Chip and pin is the most common type of credit card by far in a number of foreign countries, leading to some Americans running into trouble finding businesses that can accept their U.S.-issued magnetic strip cards overseas.

In the near future, consumers who use their smartphones loaded with near-field communications technology to handle their credit card debt may be able to earn greater rewards for making purchases on these mobile payment systems.

Google is working to expand the benefits associated with its mobile payment system known as Wallet, allowing consumers to search for, store and redeem coupons for select participating retailers, as well as rack up rewards points, according to a report from CIO Today. A number of major national chains are participating in the expanded service, and several others will soon begin accepting Google Wallet's tap-to-pay purchasing system known as SingleTap as well.

The problem for Google is that currently just one phone available in the U.S. – the Sprint Nexus S 4G – has the NFC technology necessary to complete such a transaction, the report said. It is believed, however, that a large number of NFC-ready devices will soon be available.

Analysts predict that NFC mobile payments will soon become extremely popular, climbing to an annual value of about $44 billion within the next few years.

In recent months, many consumers have worked hard to reduce debt and have increased the rate at which they pay their credit card debt on time, but now experts believe that trend will reverse in the near future.

Since the end of the recent national recession, the rate at which credit card lenders saw borrowers fall behind on payments or have their accounts written off as being uncollectable has plummeted, but as rates reach or approach historic lows, many experts now caution a correction may be in the offing, according to a report from the Wall Street Journal. However, it's simply a matter of the rate of improvement being unsustainable, rather than any great shift in consumer behavior.

After all the improvements seen in the last year or more, charge offs and delinquencies are expected to tick upwards over the next few quarters, and then move in concert with typical seasonal fluctuations, the report said.

Many consumers were able to improve the rate at which they paid down their outstanding credit card debt during the recession thanks to more conscientious bill payments and controlled spending.

A number of financial and technology companies are now attempting to convince consumers that they will be better served using their smartphones to make credit card purchases, and an executive from one major credit card lender believes it will take more cooperation to make that happen.

Mobile credit card payment systems are viewed by many in the financial services industry to be the next great frontier in purchasing platforms, and an American Express executive believes that companies will need to work together to make consumer adoption a reality, according to a report from the tech news site CNET.

Currently, a number of tech and financial companies are developing their own payment systems, which may make it more difficult for consumers to participate, particularly if they have several cards issued by different lenders.

By being able to store coupons and create budgets using a smartphone that can also make purchases, consumers may be able to trim the amount of credit card debt they take on and, in doing so, reduce debt for their whole household.