Prepaid Debit Card Reviews, Complaints, Etc

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  • Swipe-Fee Rule Rejection Helps Merchants and Banks’ Cost

    Swipe-Fee Rule Rejection Helps Merchants and Banks’ Cost

    After winning a court ruling on claims they were over charged billions of dollars under and unlawful rate set by the Federal Reserve, retailers battling banks over debit-card transaction costs may soon benefit from lower fees.  In Washington, U.S. District Judge Richard Leon ruled on Tuesday that in setting the cap on debit card transaction fees at 21 cents, the Federal Reserve considered data it wasn’t allowed to use under the Dodd-Frank law and neglected to bolster competition in card networks.

    “The board’s final rule not only fails to carry out Congress’s intention; it effectively countermands it!” Leon wrote in his ruling.

    Before Federal Reserve regulations cut back on perks such as reward programs and free checking to soften the blow, Lenders collected about $16 billion annually from swipe fees.  Unless overturned, the decision will force regulators to revisit rules that bankers said would cost them 45% of their swipe-fee revenue.

    “In effect since October 2011, the Fed’s rule will stay in place until the central bank drafts new regulations or interim standards,” Leon said.

    Frank Keating, the president of the American Bankers Association, said the decision “will harm banks of all sizes and make it more difficult for institutions to serve their customers.”  “The price controls enacted as a result of the Durbin Amendment served one purpose – further lining the pockets of our nation’s big-box retailers at their own customers’ expense,” Keating said in a statement.  “It was – and still is – all about trying to help retailers increase profit margins while providing no real benefit to consumers.”

    Merchants previously paid banks an average of 44 cents per transaction.  The Fed first proposed cutting the sum to 12 cents before settling on 21 cents after bankers complained.

    “Tuesday’s ruling will lead to lower interchange rates for billions of debit card transactions each year,” said Durbin, who filed a brief in the case supporting the retailers.  “The Fed’s 2011 decision to bend to the lobbying by the big banks and card giants cost small business and consumers tens of billions of dollars and did not do enough to rein in the anti-competitive, anti-consumer practices of Visa and MasterCard”.

    Leon, who said the Fed rule raised costs for debit transactions under $12, said he was inclined to give the Fed “months, not years” to rewrite the rule.

    “The starkest, most powerful evidence of how absurd this rule was is that it resulted in a price increase,” Jeffrey Shinder, an attorney at Constantine Cannon LLP in New York who filed a brief for a group of retailers including 7-Eleven Inc. and Wendy’s Co.

    The case is NACS v. Board of Governors of the Federal Reserve System, 11-cv-02075, U.S. District Court, District of Columbia (Washington).

    For more information, visit:  http://www.bloomberg.com/news/2013-07-31/fed-s-debit-card-swipe-fee-limits-rejected-by-u-s-judge.html

     

  • Credit and Debit Card Issuers Agree to a $7.25 Billion Settlement with US Retailers

    Credit and Debit Card Issuers Agree to a $7.25 Billion Settlement with US Retailers

    In what could be the largest antitrust settlement in US history, credit card issuers have agreed to a $7.25 billion settlement with US retailers.  The lawsuit involves a payment to a class of stores of $6 billion from Visa, MasterCard and more than a dozen of the country’s largest banks who issue the companies’ cards.  The proposed settlement would also allow stores to start charging customers extra for using certain credit cards in an effort to steer them toward cheaper forms of payment.

    According to lawyers for the plaintiff, card companies have also agreed to reduce swipe fees by the equivalent of 10 basis points for eight months for a total consideration to stores valued at about $1.2 billion.  Additionally, merchants would be required to disclose information about card fees to customers, and credit card surcharges would be subject to a cap.  Surcharge rules would not affect the 10 states that currently prohibit that practice.

    “This is a historic settlement,” said Bonny Sweeney, a lawyer for the plaintiffs.  The settlement “will help shift the competitive balance from one formerly dominated by the banks which controlled the card networks to the side of the merchants and consumers,” said Craig Wildfang, who also represented the plaintiffs.

    Noah Hanft, general counsel for MasterCard, said the company believed its interests were “best served by an amicable resolution” of the case.  Visa Chief Executive Officer Joseph Saunders said the settlement was in the best interest of all parties and did not expect the settlement to impact its current guidance.

    Not everyone was pleased with the proposed settlement, however.  One class plaintiff, the National Association of Convenience Stores, rejected the settlement in a statement on Friday from its president, Tom Robinson, who is also president of Robinson Oil Corp.  “Not only does the proposed settlement fail to introduce competition and transparency, it actually provides Visa and MasterCard with the tools to continue to shield swipe fees from market forces,” Robinson said.  “The proposed considerations are a far cry from the $50 billion in swipe-fees paid each year by US retailers.”

    The American Bankers Association, a trade group whose members include the bank defendants, said retailers, not consumers, stood to gain the most from the proposed settlement.  “Big-box retailers will likely seize this opportunity to ask Congress for even more handouts,” said ABA President Frank Keating in a statement, referring to the Durbin amendment passed by Congress in 2010 limiting debit-card swipe fees; a move that banks say resulted in an $8 billion windfall for retailers.

    “The legal process worked and should send a signal to Congress that it is wrong to pick winners and losers in a complex dispute between industries,” the Electronic Payment Coalition, which represents payment networks, said in a statement.  The plaintiffs charged that Visa and MasterCard colluded directly and indirectly through the issuing banks to keep merchants from finding ways to mitigate credit-card costs.

    Plaintiffs in the case include supermarket chain Kroger Co, pharmacy chain Rite-Aid Corp and shoe retailer Payless Shoe Source, as well as trade associations such as the National Association of Convenience Stores, National Grocers Association and the American Booksellers Association.

    The National Retail Federation, a trade group representing retailers, said that “the test will be whether the injunctive relief is meaningful.  Unless it is, the card market will stay broken and neither merchants nor their customers will achieve a long-term benefit.”

    For more information visit:  http://www.brecorder.com/general-news/172/1215994/

  • First Tennessee Bank Introduces Its New Debit Card for UT Vols Fans

    First Tennessee Bank Introduces Its New Debit Card for UT Vols Fans

    In an announcement on Friday, First Tennessee Bank introduced its new debit card for UT Vols Fans.  First Tennessee Bank, a longtime corporate supporter and the official bank of the University of Tennesse’s Vols and Lady Vols, already offers Big Orange checking, with personalized checks.  With the university’s strong fan base and the bank’s leadership position in the Tennessee market, the two make for a great fit.

    “You might use your debit card several times a day,” said Pam Fansler, president of the bank’s East Region, “so a Vols card gets attention.”  The customized debit card features the distinctive big orange “T” allowing University of Tennessee fans to show their colors.  Unlike some debit cards, this one can even be used worldwide.

    For those who aren’t die hard UT fans, the bank also offers a Memphis Grizzlies and University of Memphis Tigers debit card.

    For more information, visit www.firsttennessee.com.

     

     

  • Prepaid Debit Cards vs. Secured Credit Cards

    Prepaid Debit Cards vs. Secured Credit Cards

    Prepaid Debit Cards vs. Secured Credit Cards: What’s the difference? Most people assume they are the same, but there are some striking differences. While they both offer guaranteed approvals, requiring you to use your own money for deposits, there are some striking differences.  This article will help you assess your situation and determine just which card is right for you.  

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    Secured Credit Cards:

    • Your initial deposit serves as your line of credit
    • You have to pay back the money in monthly installments
    • You are charged an interest rate
    • Reports to the credit bureau and can help rebuild credit
    • Can generally be used to rent a car or book a flight
    • Deposit and spending limits
    • Annual and monthly fees may apply
    • No credit requirements

     

    Prepaid Debit Cards

    • An empty account where you spend what you load
    • No monthly payments
    • No interest rate
    • No credit reporting/does not affect your credit rating
    • Generally cannot be used to rent a car or book a flight
    • You can only spend what you deposit onto the card
    • You can load and unload the card at any time
    • No credit requirements

    Now that you know the difference between secured credit cards and prepaid debit cards, you will be better equipped to assess your needs, compare the costs and benefits and determine which card is right for you. For more information, visit:  http://www.lowcards.com/comparing-prepaid-debit-cards-secured-credit-cards-13098

  • Fifth Third Bank’s New ‘Stand Up to Cancer’ Debit Card Offering Drives Funding for Cancer Research

    Fifth Third Bank’s New ‘Stand Up to Cancer’ Debit Card Offering Drives Funding for Cancer Research

    Fifth Third Bank this week announced the launch of the Fifth Third Stand Up to Cancer Debit MasterCard.  Stand Up To Cancer is a groundbreaking initiative that facilitates scientific collaboration to accelerate innovative cancer research and bring new therapies to patients quickly.  The card is now available by visiting any of the Bank’s more than 1,300 banking centers.

    Stand Up To Cancer will receive $10 for each $25 annual fee associated with the Stand Up To Cancer Debit Card.  In addition, Stand Up To Cancer will receive $.0005 per net retail purchase made with the Stand Up To Cancer Debit Card.  From July 2013 to June 2016, Fifth Third is guaranteeing a minimum contribution of $400,000 in connection with this program.

    “As a populist movement to accelerate the pace of research, Stand Up To Cancer depends on the contributions of countless individuals, no matter how large or small – ever precious penny adds up to make a real difference,” said Rusty Robertson, co-founder, Stand Up To Cancer and partner, Robertson Schwartz Agency.  We’re grateful to Fifth Third Bank for offering consumers a simple and convenient way to support research that’s focused entirely on helping patients.”

    The card can be used anywhere Debit MasterCard is accepted.  Fifth Third Bank is the first card issuer to offer a Stand Up To Cancer payment card and says a Stand Up To Cancer credit card is also in the works.  “We are proud to work with Stand Up To Cancer to support the organization’s research and provide our customers a way to get involved in the fight against cancer,” said Julie Joseforsky, senior vice president and head of Bankcard for Fifth Third Bank.  “At Fifth Third we are committed to improving the lives and well-being of the communities we serve and are pleased to have found an innovative way to do so with a debit card – a payment form many of our customers are already using every day.”

    For more information on Fifth Third Bank’s new Stand Up To Cancer Debit MasterCard, visit: www.53.com/SU2C

    For more information on Stand Up To Cancer, visit: www.standup2canceer.org

    For more on this story, visit:  http://www.marketwatch.com/story/fifth-third-bank-introduces-stand-up-to-cancer-debit-card-2013-06-12

  • Reports Show Bank Customers Need More Protection From Debit Card Overdraft Fees

    Reports Show Bank Customers Need More Protection From Debit Card Overdraft Fees

    A report released this week by the Consumer Financial Protection Bureau shows bank customers need more protection from debit card overdraft fees.  The report focuses on overdraft fees banks charge customers when they overdraw their checking account with a debit or ATM card.

    Before mid-2010, when customers didn’t have enough money on their checking account to cover transactions, most banks would allow the purchase to go through and charge an overdraft fee.  This would result in multiple overdraft fees for the customer.  In 2009, the Federal Reserve adopted a new rule that prohibited banks from charging overdraft fees unless customers opted into an overdraft program in advance.

    The CFPB study found that not only did a large number of customers sign up for overdraft protection, but they continued to rack up fees.  The study also found customers who had been charged overdraft fees before the opt-in rule were more likely to opt in than those who had not been hit with overdrafts.  It also showed the more overdraft charges they had incurred before the rule, the more likely they were to opt in.  Customers who incurred at least one overdraft or bounced check fee in 2011 paid an average of $225 in overdraft fees that year.

    Banks say overdraft protection is a service some customers want and are willing to pay for.  Consumer groups say banks are luring customers into the program with confusing disclosures and marketing pitches.  “So-called ‘overdraft protection’ programs are really just a way for banks to bilk their most vulnerable customers with costly fees,” Consumers Union says in a press release.

    “We need to determine whether banks and credit unions are causing the kind of consumer harm that the federal consumer protections laws are designed to prevent,” said CFPB Director Richard Cordray.

    Consumers Union says the report “underscores the need for new reforms to protect customers from unfair checking account overdraft programs.”  It urges the bureau and other federal regulators to simplify disclosures of overdraft policies, require that overdraft fees be reasonable and proportional to the financial institution’s cost, limit the number of overdraft fees that can be charged per day and year and prohibit banks from processing daily transactions in a way that maximizes fees.  A bill sponsored by Rep. Carolyn Maloney, D-N.Y, would do many of those things including limiting fees o one per month and six per year.

    For more information on the CFPB Study of Overdraft Programs, visit:  http://files.consumerfinance.gov/f/201306_cfpb_whitepaper_overdraft-practices.pdf

    For more information on this article, visit:  http://blog.sfgate.com/pender/2013/06/11/bank-customers-still-racking-up-debit-card-overdraft-fees-report-says/

Prepaid Debit Card Reviews, Complaints, Etc