Saturday, August 19, 2006
Credit cards Watchdog bites Visa over fees
The Visa credit card network has come under fire for charging too much every time consumers make a transaction.
The Office of Fair Trading said an agreement between Visa and the banks that issue cards breaches competition law.
The dispute concerns the 'interchange fee', which covers the cost of handling card transactions and is levied on retailers each time shoppers make a purchase.
The OFT said the agreement led to an 'unduly high fee' being paid to the banks. This cost, it added, was ultimately passed on to consumers through higher prices.
The competition watchdog has issued a statement of objection about the fees, and the parties involved now have the chance to respond before a final decision is made.
Colin Grannell, managing director of Visa, said: 'We do not agree that the rates are unduly high.'
Last month, the OFT ruled that a collective agreement between MasterCard and its members was anti-competitive.
It said that between March 2000 and November 2004, they were setting the fee too high so they could recover costs elsewhere " such as those incurred by interest-free periods.
Banking and credit card companies roll out credit cards with
It's a common ritual in a country with more than 500 million credit cards floating around. Customers and clerks swipe these pieces of plastic with magnetic stripes through readers that verify encoded information. With a little luck, the transaction is approved in seconds.
But the banking and credit- card industries are beginning to cut the last cord: They'll no longer require any physical contact with those swipers. In what could turn into a worldwide wireless revolution in payment methods, companies are rolling out credit cards with embedded radio frequency chips.
Customers simply hold up the cards - complete with their own minuscule antennae - and they're wirelessly linked to a new reader. There's nothing to sign either.
The idea is that transactions are faster and easier than with conventional credit cards, moving lines more rapidly and potentially changing the way we spend money. Variations on the same technology used by EZ Pass and ExxonMobil are hitting the banking world, allowing credit to compete even more with cash for convenience.
American Express already has rolled out a new Blue card with embedded chips and Chase over the past year has issued more than 1 million in Georgia and Colorado equipped with the technology that it calls blink. Expect the rest of the nation to follow.
In addition to such contact less cash transactions, these new cards also are equipped with a traditional magnetic stripe for a swiper. And that's something that's catching on at many nationwide chains.
At places like 7/11 and CVS and Walgreens, in many locations it's now as easy for card members as holding the card up to the reader and blinking their transaction, said Tom O'Donnell, a senior vice president at Chase. They take their goods and get their receipt, and they're on their way.
Analysts see these microchips in credit cards as a change that could affect millions and even billions of transactions.
It's a new payment form, a wireless payment, said Erik Michielsen, an analyst at ABI Research, in Oyster Bay. It increases merchant operation efficiency, raises average bills. Consumers have an easier, more fluid experience, which increases customer satisfaction. And it drives loyalty.
Michielsen reports that millions of these type of cards are being rolled out in 2005 and he expects to see tens of millions in 2006.
Some in the banking industry describe the shift to radio frequency technology as the biggest development in credit card technology in decades.
If you think about it, the use of a credit card hasn't changed in about 30 years, when the magnetic stripe was introduced, O'Donnell said. It's been 30 years since a brand new feature like this has been added to plastic. It's a big change.
It should make credit transactions even faster than using cold cash. And lines will move faster. The new system may make it even tougher to pirate a card number.
The idea for the merchant is to decrease the amount of time people spend online, O'Donnell said. This is a safe and secure way to pay. The credit card itself and the microchip are very safe and secure. They use a high level of data security.
Chase plans to bring it to this region, though there is no time frame for its arrival. But it's a high priority, he added.
Merchants with large numbers of small transactions such as CVS and 7/11 already are setting up readers in New York and nationwide. Chase believes that eventually many more merchants will also shift, creating a large number of venues equipped to take the cards.
Experts predict that once smaller purchases are shifted to credit cards, people are more likely to add items. Bigger purchases would shift later.
What's next?
Wireless payment technology isn't likely to remain limited to credit cards. Debit cards also are expected to cut the cord too. (Key Bank in Cleveland has already rolled out debit cards with microchips.) As for Chase, O'Donnell reports that We're currently developing our plans around debit cards, although we're not ready to introduce a time-frame yet. We think this new feature makes sense for credit cards and debit cards.
So is this the death knell for the familiar old magnetic stripe? Don't count on that.
Banks traditionally don't introduce something to replace something, said John Hall, a spokesman for the American Bankers Association. Generally, it's something to enhance a current system. Therefore, contactless transactions may reduce the number of checks that are written, but aren't likely to replace checks.
O'Donnell agreed.
Right now we think they'll exist together. There are millions of locations where people can swipe their cards. But it's clearly a faster and easier way to make those payments, he said. Over time, we believe we will migrate to making payments that way. How long is to be determined by the consumer and merchant.
And where will it all end? Microchips may be the beginning of an even bigger shift.
Michielsen believes chips will be inserted in phones and the phone itself could be used to make a payment instead of a credit card.
Credit unions narrow gap with banks under new rules - Up Front - boost asset bases
Local credit unions, long considered a low-cost alternative to big banks, have taken advantage of relaxed Federal regulations to boost their asset bases and take a place among the largest financial institutions in the region.
Spurred by passage of the Credit Union Membership Access Act of 1999, which lifted restrictions on credit unions marketing their products outside their core constituency, three institutions with roots in L.A.'s old economy have elbowed their way to boost assets above the $1 billion mark.
Credit union executives attribute the recent rise in membership and deposits to low interest rates, which have spurred consumers to seek out the more attractive fees and rates on car loans, money-market accounts and, increasingly, mortgage loans.
Kinecta Federal Credit Union, formed by Hughes Aircraft employees in 1940, saw a 20.8 percent jump in deposits from 2001 to 2002 and expects similar growth this year.
Wescom Federal Credit Union, founded by a group of Pacific Telephone workers, had a 5.7 percent jump in deposits in the same period. Its core checking, savings and money-market deposits have increased 27.2 percent in the first six months of 2003.
Lockheed Federal Credit Union, the third largest, had an 8.5 percent jump in deposits last year.
"Banks are going to have to defend themselves," said Thomas Graham, president and chief executive of Kinecta, which has 20 branches and $2 billion in assets. "The economy has driven the average consumer back to a place of safety."
Officials of these credit unions said they could not identify whether they were drawing business from large national institutions or smaller community banks.
MSC.Software, a software simulation company with 300 employees in Santa Ana, joined Wescom credit union three years ago.
"We tried to offer employees low cost benefits, and Wescom had lower interest rates and credit cards with no annual fees," said Tracy Bologa, the company's benefits coordinator.
Wescom recently signed up the city of West Hollywood, which joins a slew of companies like Guess Inc., Quiksilver Inc., IKEA and Watson Labs.
Officials of many of the largest banks in the region--prime targets for poaching by credit unions--declined to comment on the rise of the institutions.
Heng Chen, executive vice president and chief financial officer at Cathay Bancorp, said banks and credit unions offer different services with banks being "a little more traditional."
Cathay's deposits in Southern California fell nearly 5 percent last year even though it had a 10 percent increase in total deposits, which includes its offices in New York, Houston and Northern California. The bank has 13 branches in Southern California.
"Credit unions are really coming of age," said Darren Williams, president and chief executive of Wescom, who estimated that half of new credit union members are coming from the local community rather than sponsor companies --that is, small or medium-sized businesses that join a credit union and offer membership to their employees.
Bitter opponents
Credit unions are non-profit cooperatives that trace their roots to 19th century immigrant farmers who pooled their assets rather than pay often usurious rates charged by banks at the time.
Because of their non-profit status, profits are returned to members in the form of higher-yielding savings accounts and lower loan rates and fees.
That has raised howls from the banking industry, which has long complained that credit unions are unfairly subsidized and have been able to exploit their tax-exempt status to compete unfairly.
A 1998 Supreme Court ruling sided with banks, finding that credit union members had to have a "common bond," such as working for the same company or living in a community. The decision overturned a 1982 ruling by the National Credit Union Administration, the federal agency that oversees the industry, that had allowed credit unions to add as many as 10 million members. The Credit Union Membership Access Act followed a year after the Supreme Court ruling, lifting many of the restrictions.
Still, some remain. Credit unions may still only solicit companies with fewer than 3,000 employees for membership. Expansion has meant an increase in jobs as well.
Credit unions have increased the number of tellers, consumer lenders and managers that handle small business loans, according to Roger Iris, senior vice president of OnStaff, a Culver City-based company that operates online job boards.
"The credit union market is booming," said Iris, noting that OnStaff's banking and credit union division has 16 offices, up from nine a few years ago and has had an increase in sales from strategic partnerships with credit unions looking to hire new employees.
Wescom is one example. It has added 14 branches since 1996 and expects to add 40,000 new members this year to its base of 200,000 customers.
Credit Clout
Deposits at L.A.-area institutions.
Institution 2001 2002 Change
City National Bank $7 $7.8 11.2%
Kinecta * 2.1 2.6 20.8
FirstFed Financial Corp. 2.3 2.5 9.5
East-West Bank 2.3 2.4 2.8
Wescom * 1.6 1.7 5.7
Cathay Bancorp. 1.9 1.8 -4.8
Lockheed FCU * 1.1 1.2 8.5
Hanmi Bancorp 1 1.1 1.4
* Credit unions
Friday, August 18, 2006
Wave of credit cards sweeps Europe, but Germans have no interest
FRANKFURT, Germany -- For a few fleeting months last year, Richard Klein binged on furniture and a fancy stereo -- thanks to his newly acquired credit card.
"But then the bill came, and the money was gone," Klein said. He tossed out the card after his bout with debt, concluding, "It's better to keep track of what I've bought."
Despite record-low interest rates and a credit spree sweeping across Europe, Germans are shunning the lure of credit cards.
"The Germans have a different consumption mentality: They don't get into debt," said Hubertus Pellengahr of the German Retail Association in Berlin.
Throughout Europe, credit cards have changed people's habits over the last decade. England has the most developed credit card market in the world after the United States, which has more credit cards than people. There and in France, people are used to dipping into the red to pay their bills. Credit cards have also been making great strides in Hungary since their introduction in 1999.
Not so in Germany. The German Retail Association estimates that credit cards are responsible for only 5 percent of goods purchased here annually, compared with 13 percent around the globe. It's not that Germans don't like plastic cards. But Germans use them mainly to substitute cash, not for long-term borrowing.
"When I want something, I pay for it myself," said David Hausen, a senior in high school. "It's a question of honor."
RELUCTANCE ROOTED IN HISTORY
The unpopularity of credit cards is rooted in pragmatism. Unlike debit cards, which are free, credit cards are viewed as expensive -- both for shopkeepers and customers.
The only retail stores to make a profit in Germany -- Aldi and Lidl -- accept only cash or debit cards. The discount stores have kept ahead thanks to a strategy based on speed and low costs, experts say.
"At Aldi, everything has to go fast," said Kerstin Aldendorf of the German Association of Banks in Hamburg. Credit cards would postpone the arrival of money into Aldi's coffers, lessening its competitive advantages.
This reluctance to borrow is also rooted in history. The great inflation of the 1920s, when prices doubled in a day and the middle class saw their savings wiped out, instilled in many Germans deep caution toward borrowing money.
M&I reissues credit, debit cards M&I reissues cards; Move
Compromised financial data is causing concern in Wisconsin again.
Marshall & Ilsley Bank, the largest bank based in the state, said Wednesday it recently reissued some credit and debit cards to protect customers from the possibility of fraud.
Also on Wednesday, Attorney General Peg Lautenschlager said she is joining 46 other attorneys general in urging Congress to pass a law requiring businesses to notify consumers when their personal financial information has been compromised.
M&I said it canceled and reissued "a small number" of credit and debit cards that had been deemed compromised as a result of a previously investigated security breach at a third-party processor that is not affiliated with the bank. Visa USA notified M&I of the breach.
Other details on the security breach were not available, but it was separate from a widely publicized incident last spring in which as many as 40 million card accounts of all brands and banks may have been exposed to hackers who penetrated the computerized data of Atlanta-based CardSystems Solutions Inc.
In that case, M&I and Green Bay-based Associated Bank reissued thousands of debit cards to customers whose account numbers may have been obtained by thieves. M&I reissued an undisclosed number of credit card accounts at that time.
In both instances, M&I sent letters explaining the situation to any customer affected.
Not all companies whose customers' information has been compromised are as forthcoming. Some large banks and other companies prefer to monitor accounts that may have been compromised and step in when there is evidence someone is attempting to use them fraudulently.
That reluctance to promptly notify potential identity theft or card fraud victims is spurring some public officials into action.
The legislation sought by the attorneys general would let consumers put a "security freeze" on their credit report, allowing them to control who can receive a copy of their credit reports. That would make it hard for thieves to use stolen data to open an account in the victim's name.
Lautenschlager noted that Wisconsin has had some "serious breaches of security that could lead to identity theft and other crimes against Wisconsin consumers."
Such great heights: soar to new levels with dimensional cards
Take your cards to new heights with Texture Magic, stencils and gorgeous handmade papers. So fast and easy, anyone can find time to create these textured and elegant cards. But don't stop there ... add dimension to boxes, terra-cotta pots and anything else you can get your hands on. Add new levels of dimension to your creations.
INSTRUCTIONS
1. Cut four 12" X 6" black card stock pieces. 2. Fold in half. 3. Cut three 5 1/2-inch square pieces of the marbled papers in colors that coordinate with the Texture Magic colors. 4. Cut one 5 1/2-inch square piece of the dragonfly paper from the Windswept collection. 5. Place all the cut paper pieces facedown on newspaper and spray the backs lightly with the Super 77 spray adhesive. 6. Press onto the center of each card. 7. Cut four pieces of the black card stock approximately 5" X 4". 8. Spray the backs of the stencils with stencil sprays or tape down edges to keep in place. Note: You can use many great stencils available, but you can easily create your own with decorative punches and shrink plastics or Mylar. Also consider creating your own drawings on these products and cutting them out with a craft knife. 9. Squeeze some of the Texture Magic onto the stencil according to manufacturer's directions. (I used one of the endless supplies of credit cards that come in the mail to spread the paint over the stencil.) 10. Once all the designs are stenciled onto the paper, set them aside to dry, preferably overnight. You can speed up the drying time with a heat tool. 11. When dry, cut around the edges of the stenciled pieces with the deckle-edge scissors and mount onto the 6-inch square black card stock using double-stick foam tape to add dimension. 12. The dragonfly card has a golden-colored handmade paper piece between the stenciled piece and the black card. 13. The dragonfly was embellished when it was dry with the Uni-ball Gold pen. The "feelers" were added and lines were drawn directly on the stenciled dragonfly.
Thursday, August 17, 2006
Nearly 2,000 fake credit cards seized from Chinese ship
Nearly 2,000 counterfeit credit cards have been confiscated from a Chinese-registered cargo ship which arrived at Kobe port last month, Kobe customs officials said Tuesday.
Customs officers found the 1,921 fake credit cards inside the 37,143-ton Gaohe, which has a crew of 38, during a search of the ship, the officials said.
According to customs, the ship entered Kobe port at 8:50 a.m. on May 19. Customs officers found some counterfeit credit cards inside a bag in a passageway in the ship's interior during a routine inspection. They then searched the entire vessel and found the rest of the fake cards.
The officers have questioned the crew members but have not been able to determine to whom the cards belonged, the officials said.
All of the cards had the JCB logo printed on them and appeared authentic, but none had the names of cardholders or expiration dates, and the magnetic strips were blank, the officials said.
The Gaohe runs a regular service connecting eight ports in Japan, China and the United States, and reportedly headed to its next stop, Nagoya, on May 19.
It is the second seizure of fake credit cards being smuggled into Japan this past month. A Singaporean man was arrested for trying to smuggle about 2,000 fake credit cards into Japan, police and customs officials at Narita airport said Monday.
The man arrived at Narita on June 2 from Singapore and was carrying the cards in a cardboard box.
The authorities believe an organized crime ring might be behind the smuggling attempt, because the cards are highly accurate forgeries, no different in appearance from real cards.
The fake cards seized from the Singapore man reportedly bear the names of six consumer credit companies based in Japan along with Visa and MasterCard logos. They had no numbers or names, and their magnetic strips were blank, the authorities said.
Lawsuit Seeks Payback for Major Credit Card Breach
Following the recent revelation that a security breach potentially exposed 40 million credit cards to data theft, a class-action suit was filed Monday against CardSystems Solutions, MasterCard and Visa on the behalf of California credit card holders and businesses accepting credit card payments.
The lawsuit, filed in San Francisco Superior Court, alleges that CardSystems Solutions, an Arizona-based credit card processing company, failed to keep consumers' credit card data safe, breaking Visa and MasterCard's "Data Security Standards," which forbid storing certain consumer information.
Also, the suit says CardSystems is liable for the security breach because the company failed to "maintain a proper firewall and computer security system [and failed] to properly encrypt data, [and for] its unauthorized storage of consumer data."
Read the rest of this PC Magazine story: "Lawsuit Seeks Payback for Major Credit Card Breach"
OFT cracks down on 'illegal' penalty fees on credit cards
Credit card lenders have been illegally taking more than pounds 300m a year from customers in late payment charges and other penalty fees, the Office of Fair Trading ruled yesterday.
The regulator gave the industry until the end of next month to respond to its proposal to limit all such charges to a maximum of pounds 12, less than a third of the penalties currently levied by many leading lenders.
The ruling follows a series of court cases in which credit card borrowers and bank customers have successfully challenged the level of late payment fees they have been charged.
Consumer protection laws prevent lenders charging more than the actual costs they have incurred when processing late payments or credit limit breaches. But credit card lenders have routinely charged pounds 20 or more for customers who miss repayment deadlines on their accounts, or go over their credit limits.
Abbey and Aliance & Leicester charge pounds 25 for such failures, for example, while Barclaycard, the UK's biggest credit card lender, charges pounds 20.
John Fingleton, the chief executive of the OFT, said the regulator believed charges of this magnitude were illegal. "We expect credit card issuers to adjust their default levels quickly," he said. "We have not ruled out future legal action if the market does not respond positively."
The regulator said it would impose a new threshold on the credit card industry, where all penalty fees in excess of pounds 12 would be assumed to be unfair. The OFT also warned that even charges set at or below this cap would not necessarily be legal.
In addition, the regulator warned the same principles would apply to bank charges, though it has yet to formally set a cap for this sector, where penalty fees for unauthorised overdrafts and bounced cheques tend to be even higher. Lloyds TSB, for example, charges pounds 30 a day for unauthorised overdrafts, while Halifax charges pounds 30 every time a customer tries to process atransaction for which he or she does not have sufficient funds.
Consumer groups were triumphant after the ruling. Emma Bandey, of Which?, said: "The OFT has finally officialy acknowledged what Which? has been saying for years - that credit card com-panies have been fleecing their customers with unfair, sky-high charges."
Wednesday, August 16, 2006
Making the most of in-house credit cards at retail level
In the past few months, both Wal-Mart and J.C. Penney have begun to enhance their customer relationships by partnering with GE Capital to provide private label credit cards to their customers. In addition to making shopping more convenient for their customers, the private label credit card programs also deliver demographic information the retailers can use to enhance their marketing programs.
"At Wal-Mart, customer service is a priority," said Elise Garner, a company spokeswoman. Wal-Mart credit cards are "a great convenience," she explained. "Customers can shop and not have to worry about having enough cash for a purchase."
There is no annual fee for the Wal-Mart card, no expiration date and no finance charge if full payment is made each month. The interest rate on the card is "competitive with other credit card companies," said Garner.
Garner said Wal-Mart is in the process of expanding the number of outlets where consumers can use the card to include leased businesses that operate inside or adjacent to a Wal-Mart, such as Baskin Robbins, the in-store hair care salons and Murphy Oil-a gas station service that Wal-Mart offers at many of its super-center locations.
Garner noted that Wal-Mart has begun to direct market to its credit card customers by including special promotional offers and announcements in their monthly bill statements. The service alerts Wal-Mart's card-holding members to upcoming sales and offers that are not available to non-card holders.
Last December, J.C. Penney announced that GE Capital would re-launch the J.C. Penney credit card, with enhanced customer benefits and more favorable repayment terms. GE Capital also is providing new marketing programs and support for J.C. Penney customers shopping online.
Beware of credit-counseling fraud - Work & Wealth
If you're one of the estimated 9 million debt-stressed Americans who seek help from credit-counseling agencies each year, you might be getting less than you sign up for--and may even find yourself in a deeper hole. Why? Because the booming credit-counseling industry, with an aggressive new class of shady agencies, is rife with "improper advice, deceptive practices, excessive fees and abuse of nonprofit status," according to "Credit Counseling in Crisis," a report by the National Consumer Law Center (nclc.org) and the Consumer Federation of America (consumerfed.org). "It is virtually impossible to distinguish the honest, caring agencies from the rip-off artists by just looking at a TV ad or making a quick phone call," says Travis Plunkett, CFA's legislative director and coauthor of the report.
But unless you're on the verge of bankruptcy, "You can take your own steps to get out of debt," says Elisabeth DeMarse, president and CEO of Bankrate.com, a leading Web site for personal-finance information. "The first step is to stop using your credit cards immediately, and then pay two or three times the minimum each month." If you cannot make payments and require debt management, DeMarse advises that you look for a nonprofit agency in your community that's affiliated with the National Foundation for Credit Counseling (nfcc.org). "And," she adds, "it's a good idea to go and visit the agency to make sure it actually exists."
Were U.S. credit cards misused after Katrina?: $150,000 for Jockey
WASHINGTON -- Federal employees helping Katrina victims charged more than $39 million on government credit cards for disaster relief items. Congressional investigators want to make sure the taxpayers got a good deal.
And a senator, citing past abuse, wants to know whether anyone used the cards for holiday shopping.
Many of the goods, which included $60,639 for sleeping bags and $713 for four 27-inch televisions, were bought at retail rather than cheaper volume prices after the Aug. 29 storm, federal records show.
Spending also included $150,000 worth of Jockey underwear, six nail clippers and $3,200 for golf carts.
The Federal Emergency Management Agency says it needed some items quickly -- such as the underwear -- for evacuees in temporary shelters. Jockey International says the underwear sold at or below the company's cost.
Federal officials responding to Katrina "were not going to spend days calling all across the country and haggling prices -- the initial purchases were about saving lives," said Homeland Security Department spokesman Larry Orluskie.
The lists of purchases provided by five agencies show nothing outrageous -- bottles of water, hundreds of maps of New Orleans and Texas, pizza dinners and lots of insect repellent. The Homeland Security Department also bought 50 heart defibrillators for nearly $1.5 million for use at shelters.
The credit card bills, paid by Uncle Sam, were vulnerable for abuse in the Katrina aftermath after agencies were allowed to raise the credit limit from $15,000 to $250,000. That authority was repealed Oct. 3.
PAST ABUSES CITED
There is a history of credit card abuse by government employees, including charges for $400 Coach briefcases, a dog and Victoria's Secret clothing.
Sen. Charles Grassley, chairman of the Finance Committee who successfully pushed for the credit limits to be lowered back to $15,000, said his office was going to make sure "hardworking Americans don't pay for government employees' Christmas shopping."
"When I began looking into this issue several years ago, we uncovered hundreds of millions of dollars of taxpayer money that was lost due to inadequate controls," said Grassley (R-Iowa). "When you've seen this kind of abuse, it's hard to justify increasing the limit on these cards."
Monday, August 14, 2006
CREDIT CARD NATION: The Consequences of America's Addiction to Credit. - Review
WITH 1.5 BILLION CREDIT cards floating around, $560 billion in outstanding credit-card debt, and negative personal savings rates, clearly credit-card debt in the United States is a problem. With a million-plus bankruptcies each year, borrowing has taken on a role far beyond traditional economic justifications of investment or income smoothing.
While Robert Manning acknowledges in Credit Card Nation that over-consumption plays a role in the mounting piles of debt consumers are shouldering, he doesn't just fault individuals. He casts a wide net of blame, including the marketing and profit maximizing practices of financial companies, Reagan's supply-side tax cuts, financial deregulation, an unstable post-industrial economy, growing income and wealth inequalities, and a shift in cultural norms from the Calvinist ethos of industry and frugality to one of competitive consumption and short-term gratification.
Manning's comprehensive approach to the causes of credit-card debt is far more compelling than the simple notion that aggressive marketing campaigns and solicitations alone have propelled the trend of credit-card-based lifestyles. While much of Credit Card Nation is devoted to exploring these causes, the book also relies heavily on characters who actually leave the reader thinking that this problem, in large part, boils down to a lack of personal responsibility.
There is Ron, painted as a victim of the leveraged buyout of Revlon. But somehow his swirling career path from postdoctorate researcher to private-sector chemist to part-time clothing salesman to stockbroker back to chemist back to stockbroker is not reminiscent of most people's experience of the 1990s. To blame the merger and acquisitions era for what appears to be a rather whimsical career track and the thousands of dollars in credit-card debt that financed the various transitions seems a bit of a stretch.
BMW goes plastic — with credit cards, that is - Statistical Data Included
The 1.25 million BMW owners in the U.S. are being offered a first by a foreign-headquartered brand - two BMW credit cards through VISA and personal banking through the BMW Bank of North America. BMW Financial Services is launching the rollout this month.
With the BMW Ultimate Card, rebates on future vehicle loans or leases will be available, as well as a variety of BMW merchandise sold in BMW dealer boutiques and travel benefits, including $1 million in accident insurance and the ability to travel anywhere on any major airline.
Other benefits are points for purchase of BMW merchandise, including accessories sold by BMW dealers.
The first credit card offered by an automaker was the GM Card, whose benefits included points that gave holders a rebate of up to $2,000 on purchase of a new GM vehicle.
BMW was the first automaker to open its own bank, based in Salt Lake City as an industrial loan corporation. BMW owners can open checking, money market and savings accounts at the BMW Bank on a seven-day 24-hour basis.
Stefan Krause, president of BMW Financial Services, says the automaker began furnishing products and services in Europe in the early 1980s.
On the planning list for the BMW Bank, he added, are home equity and personal finance loans.
BMW Financial Services was established in 1993 and is headquartered in Dublin, OH. It has more than $11 billion in managed assets and about 320,000 automotive lending customers.
Banks to face curbs on loans and credit cards
BANKS offering credit cards and loans could face a series of clampdowns if they are found to be making customers get into greater debt.
Some of the country's largest financial institutions may need to improve radically the way they assess creditworthiness, and face bans on issuing credit cards to customers who have taken out loans to consolidate other debts, if proposals discussed on 11 January get the go-ahead.
Financial industry watchdog the Banking Code Standards board launched a probe this year into the factors that are adding to Britain's growing Pounds 1,000billion mountain of personal debt.
The inquiry has studied 12 of the UK's biggest banks and credit card companies, focusing on the way they assess creditworthiness and the time it takes some customers to get into financial difficulty after applying for an unsecured loan or credit card.
The watchdog, which issues a voluntary code of conduct for the banking industry, is also expected to provide detailed guidance on granting loans based on joint household incomes.
In some cases lenders granted such loans without making sure that both spouses were aware of the debt.
The Banking Code Standards board is also said to be concerned about bank staff selling loans and credit cards on a target- incentive basis, being rewarded with bonuses or prizes.
The board has announced the preliminary findings of its investigation and has confirmed that it is working with the banking industry to find solutions to the problems identified.
Although it cannot fine banks, it can publicly name those companies who fail to adhere to the code.
Spending expert Datamonitor revealed this money that personal debt levels in Britain are higher than any other European country.
It said outstanding debt grew by 41 per cent in Britain between 2000 and last year, from Pounds 2,151 to Pounds 3,034 per head.
Debt advising organisations such as the Credit Counselling Service say they are now seeing at least one person a week who has run up debts of Pounds 100,000 or more.
The Citizens Advice Bureau says it is seeing more than one million new debt cases a year, mostly linked to unsecured consumer credit.
The Office of Fair Trading is also investigating insurance policies sold alongside loans and credit cards, after finding compelling evidence suggesting consumers were being ripped off by payment protection plans.
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