One-Year Anniversary for EMV (Chip) Cards

A segment from the folks at Nightly Business Report on the status of EMV cards (also known as chip cards) in the United States:

--> www.FedPrimeRate.com Privacy Policy <-- >  SITEMAP  <

Credit-Card Fraud, Xmas Shopping Seasons 2013

Target card swipe machine

40 million was the initial estimate of Target customer card accounts accessed by scammers.

Now the estimate has been raised to 110 million!

Yikes!

I used to shop at Target many years ago.  It's been at least 4 years since I've been in a Target store.

But this news still makes me a bit nervous, because I have no idea how long Target keeps credit card info in their databases.

Most of my cards have new numbers now, but who knows.  These scam artists are scum, but they are not stupid.   

--

Back in 2008, I treated a new friend to lunch at Red Lobster.

I paid the bill with my Chase debit card, a card that's linked to my business checking account.

As is the custom in the USA, the waitress took my card, disappeared with it, then returned to my table for a signature.  She was acting a bit strange; shifting eyes and somewhat hurried, but I thought nothing of it.

And that was the first time I've ever been a victim of a credit-card scam.

That waitress used one of the widely available, and very portable, card readers, to get my digits.

I got my money back, after faxing a reasonably simple, but still annoying, form.

But the incident was a real wake up call for me.  Using the debit card attached to my business checking account for such transaction was something I would never do again, I pledged to myself.  Way too risky!

Now here's a very interesting difference between Europe and America: when you're ready to pay your restaurant bill with a credit or debit card, the server will bring the credit card terminal to your table!  Your card never leaves your line of sight.

         And that's the way it should be.

Europeans are also ahead of the game with their adoption of smart cards.  Comparing magnetic strip payment cards to smart chip cards is like comparing audio cassette tapes to a digital music player full of MP3's.

Neiman Marcus

American credit-card banks have been resisting the smart card thing, which really doesn't make sense to me.  Surely the cost of upgrading is less than the cost of dealing with payment-card fraud!

--

Fast forward to today: luxury retailer Neiman Marcus reports a serious payment-card related breach.  All this card fraud seems to be focused on the 2013 Xmas shopping season.

Credit-card rewards be damned!  I think paying with cash will be king for many months to come...

--> www.FedPrimeRate.com Privacy Policy <-- >  SITEMAP  <

The Current by Discover Card: A New Prepaid Debit Card from Discover Financial Services

Current by Discover

We've added the new Current by Discover prepaid debit card to our prepaid lineup.

An Excellent Card for Teens

Prepaid credit or debit cards are very useful as teaching tools for introducing teens to the world of money and helping young adults learn about managing their money wisely.

With this new prepaid card from Discover, the fees are reasonable, but we were really impressed with the parental controls that are included with the card. Parents can:

• set monthly, weekly or daily spending limits. Lots of parents will appreciate this feature, especially if they have kids who need time to learn about budgeting and the pitfalls associated with overspending.
• get activity alerts via email or text message. Great for monitoring how a Current card is being used -- and there's no extra charge to use this feature.
• restrict a card so that it can't be used at certain locations, like tobacconists, motels or beer distributors.

Other features we like:

• There's no charge for funding the card
• No minimum balance requirement
• Free Direct Deposit, and there's no charge for depositing funds via a credit card or a bank account.

Users of the Current by Discover card can withdraw cash for free four times per month. Additional ATM transactions will incur a $0.50 charge per transaction.

A $3 fee is assessed for replacing a lost or stolen card, or for changing to a new card design.

Though the Current card has no minimum balance requirement, each card needs to be funded with at least $20 when a new account is opened.

The membership fee is $5 per month, but if you pay for a year's membership, the fee is $50 (a $10 discount.)

A parent can have up to 3 Current by Discover prepaid cards in their account, and each card has a funding limit of $2,500.00.

COUPON: When you sign up, use coupon code BT709 to get your first month of membership free. This coupon expires on May 30, 2010.

In this deep recession we're in, it's more important than ever to teach young adult about spending money wisely. Discover's new prepaid card is a timely payment solution that parents from all walks will appreciate, and I'm willing to bet that it's on its way to becoming the most popular prepaid debit card in the American market.

Oh, and the Current card has some very cool designs to choose from. Enjoy!

--> www.FedPrimeRate.com Privacy Policy <-- >  SITEMAP  <

Visa-Branded Debit Cards More Popular Than Visa-Branded Credit Cards

If you've been questioning the popularity of debit cards, here's some irrefutable evidence -- in the form of a WSJ article -- that not only are they here to stay, they may even become more popular than standard credit cards in the near future. Here a clip:

"...'The reality is that the vast majority of consumers want to pay as they go,' said Stacey Pinkerd, who oversees Visa's debit-card business.

Visa's net income leapt 71% to $536 million, or 71 cents a share, in the fiscal second quarter ended March 31, from $314 million, or 39 cents, a year earlier.

The surging popularity of debit cards largely reflects the growing use of plastic by American consumers. Credit- and debit-card purchases of retail goods and services vaulted past cash and checks in 2003. Now the recession is giving many consumers second thoughts about their credit cards. Lenders also are making it more expensive to charge purchases and lowering credit limits on credit-card users.

The U.S. government said last month that the personal savings rate rose to 5% in January, the highest level in nearly 14 years. Revolving debt, which mainly reflects credit-card loans, fell 9.7% to $955.7 billion in February, the Federal Reserve said.

'A big group of consumers like the discipline that debit spending can bring them, and that is particularly relevant in this kind of environment,' said Tim Murphy, who oversees MasterCard Inc.'s main payment products around the world.

The Purchase, N.Y., company's debit-card processing volume rose more than 13% last year, compared with a 2.2% decline in credit-card processing. MasterCard, a Visa rival, is likely to offer more details about the spending habits of Americans when it reports quarterly results Friday.

Unlike credit cards, which have balances that can be carried month-to-month, debit cards immediately deduct funds directly from a checking account. Debit cards are especially popular with younger consumers.

Debit cards are less profitable for banks than credit cards, but merchants still pay banks to accept the cards. In the past couple of years, banks have encouraged debit-card use through rewards programs. Those rewards typically are less generous than credit-card rewards.

To be sure, growth rates of debit-card transactions have slowed as Americans rein in their spending. Volume is widely expected to climb by a single-digit percentage this year, compared with more than 10% annually during the past few years. But credit-card usage is expected to keep declining.

At U.S. Bancorp, debit-card transaction volume rose more than 2% in the first quarter from a year earlier. Credit-card purchase volume fell more than 4%.

'Consumers are being more conservative in the way they manage their finances and that leads to a greater willingness to put transactions on debit cards,' said Cliff Cook, chief marketing officer for retail-payment solutions at the Minneapolis bank.

The debit-card business also gets a boost from Americans who got their first card as teenagers a decade or so ago. "As these people move into the family stages and career stages of their lives, the level of their household spending on debit cards goes up," Mr. Pinkerd said..."

--> www.FedPrimeRate.com Privacy Policy <-- >  SITEMAP  <

Debit or Credit - Is There a Right Answer?

In this day and age, paying with plastic is no longer just for the wealthy and the well-to-do. It’s commonplace to see someone pull a card out of their wallet to pay for purchases. These days, Visa and Mastercard debit cards empower anyone with a bank account to forego paying with cash. According to the Federal Reserve,

“In 2006, for the first time, consumers paid for more purchases with debit and credit cards combined than with checks. Debit card use is growing especially fast; debit cards have surpassed credit cards as the most popular electronic payment.”¹

With the use of debit cards rising the way it is, you no longer hear merchants ask, “Would you would like to pay with a credit card” - they now simply ask, “Debit or credit?”

But which is the right answer?

There are certain instances in which debit card use is the obvious choice. When you have problems obtaining credit or when you are not able to pay off balances in a timely fashion, debit cards are the way to go. You can use them like credit cards to make purchases online and by phone, and carrying a debit card is safer than carrying cash. However, there are some good reasons not to use debit cards that may surprise you. The following video explains what those reasons are:



As you can see, for all the perceived dangers involved with habitually charging purchases with credit cards, paying with debit cards poses unique risks as well. For consumers who are able to pay off their balances monthly, using credit is often a wise and profitable option compared to debit. Bankrate also provides information on how paying with credit can be beneficial:



Using credit for major and regular purchases is good for your financial health. There are so many benefits to managing your money by paying with credit that it’s hard to imagine not doing it. Savvy consumers also pay with credit in order to take advantage of the rewards offered by card issuers. For example, the Discover More card has an attractive rewards program that include:

• $40 Cashback Bonus when you apply
  
  
• Up to 20% Cashback Bonus® when you shop online
  
  
• Unlimited cash rewards, automatically
  
  
• Double rewards when you buy from more than 80 Cashback Bonus Partners

You can actually earn money by using a card like that, all with 0% intro APR and no annual fee. If you paid cash for the same purchases, you wouldn't receive anything extra at all. These kinds of rewards plus the added buyer protection and convenience that comes with proper credit card usage are why so many people who could pay with cash opt for credit instead. Those benefits alone may be enough to inspire you to commit to disciplining yourself to use your credit more wisely from now on. If you don’t yet have any credit, using credit cards the right way from the start will help you to develop a stellar credit rating that will pay off for years to come.

So, the next time you’re asked, ‘debit or credit', think first - the best answer may be ‘credit’ after all.


1 http://www.usatoday.com/money/perfi/credit/2008-07-31-credit-cards-debit_N.htm

--> www.FedPrimeRate.com Privacy Policy <-- >  SITEMAP  <