Saturday, October 07, 2006
Man is arrested after teacher's car, credit cards taken
A man who has allegedly been busy stealing purses and IDs from libraries and schools was arrested by Granite School District Police Wednesday.
The man was booked into the Salt Lake County Jail for investigation of 29 charges including 25 felonies. The charges range from vehicle theft and possession of stolen credit cards to drug possession. He is being held on $140,000 bail.
Granite police began tracking the man after a car belonging to a Valley Junior High School teacher was stolen from in front of the school Tuesday night during parent-teacher conferences.
While the teacher was meeting with parents, a man walked into her unlocked classroom and found her gym bag on her desk, Granite police Capt. Bob Lavin said. Inside the bag were the woman's car keys.
The man was able to find the woman's car in the parking lot and took it. Also in the car was the woman's purse under the front seat.
The next day, the woman discovered her credit cards had been used at a Walgreen's and an Albertsons in Kearns and an ATM in West Valley City. Investigators were able to obtain surveillance video from security cameras from those incidents and recognized the man in the video as someone they arrested in November for stealing a computer from Granite Park Junior High, Lavin said.
Investigators tracked the man down in Murray and arrested him after staking out an apartment where he was living with his girlfriend. When officers took the man into custody, he had $995 cash in his pocket that he just received from using another person's ATM card, Lavin said.
Police believe the man was stealing purses, checks and credit cards to support his drug habit. Officers also found small amounts of methamphetamine, marijuana and illegal pills when they arrested him, Lavin said.
During the past few days, Lavin said the man had apparently used stolen credit cards to go on shopping sprees at several department stores and then traded stolen items with a man who had stolen a purse from the Murray Library.
The teacher's car was recovered at a nearby apartment complex undamaged. Her checks, IDs and credit cards however had been traded to another drug user, Lavin said.
Police said the incident serves as a good reminder to teachers to always lock their classrooms when they aren't in them. And library patrons need to keep a close eye on their purses and wallets.
Merchant Advisory: Increased Use of Gift Credit Cards Requires Update of Merchant Fraud Rules
Use of 'gift' credit cards (from American Express, MasterCard and VISA) has caused many valid online transactions to be rejected because of commonly enforced AVS anti-fraud rules.
To help reduce fraudulent online orders, AVS verification checks portions of the billing street address and zip code and match them to the address on record for the credit card. Individual retailers determine their specific responses based on the AVS result; for instance if the order is for more than $100 and AVS fails, then the order is automatically rejected.
Because 'gift' credit cards are not issued to a specific consumer, these cards typically do not have a billing address tied to the card. In these cases most of the financial institutions issuing branded gift cards return special codes indicating that the address could not be validated; however, some online merchants have programmed their systems to simply reject transactions that do not obtain a full match AVS response.
With an expected spike in post-holiday online purchases using 'gift' credit cards, all merchants should carefully review AVS rules and policy. Suggestions include:
--Carefully expanding AVS rule sets to include the responses that would be obtained for 'gift' credit card.
--Educating internal review teams to spot gift credit card orders that are most likely valid, but might have been marked otherwise.
Merchants can also call the ClearCommerce Merchant Holiday Hotline at 866-497-0343 for more information on the special AVS response codes.
Consumer Tip:
Consumers may receive messages that their orders have been declined when using gift cards. Should this happen, the best course of action is to simply call the merchant and place the order with a representative. Chances are the gift credit card, and the gift givers' intentions are still good!
What's your favorite money-saving tip?
Whether your goal is to save up for your dream vacation or to dig yourself out of credit-card debt, handling your finances successfully is one of the keys to leading a happy life.
"When you are able to responsibly manage your money, it makes a statement that you are finally understanding yourself and your needs," says Suze Orman, certified financial planner and author of The Money Book for the Young, Fabulous & Broke (Riverhead Books, 2005). To help jump-start your savings, try these simple tips from your fellow Shape readers.
Stock the office fridge
"I keep food in both the fridge and freezer at work, and that helps me
avoid eating out at fast-food restaurants, which saves me money and
calories!"
--Elizabeth Sanders, 25, Fort Myers, Fla.
Stay focused
"I think of one big item I'm saving for, like a new TV, when I'm
spending too much. The reality check keeps me focused."
--Jessica Williams, 33, Charlotte, N.C.
Pay it like a bill
"I put the same amount of money in my savings account on the same date
every month, and this has allowed me to save over $3,000 in the past
year!"
--Shana Heilbrun, 27, Northville, Mich.
Play your cards right
"My husband and I buy as much as we can on a credit card that rewards us
for what we spend. We pay off the complete bill before it's due, so we
never pay any interest. That way we earn free money as our reward for
using the card."
--Johyne' Hill, 25, Sunnyvale, Calif.
I follow the '$1' rule when buying clothes. I never buy anything
unless I'm sure I'll wear it at least once for every dollar of the
price.
--Jessie Tannenbaum, 22, South Bend, Ind. (shown at bottom)
win $5,000
toward your financial freedom!
Beware of credit card offers - $s and sense
Evelyn Sterling was 19 when she got her first credit card---a MasterCard with a $500 limit. "At the time it seemed like easy money. I figured I can buy something now and just pay back the money later," says Evelyn, who was attending a local college in Chicago at the time and didn't have a full-time job. Looking to increase her balance, she applied for a second MasterCard six months later. This time her limit was $1,500.
By the time she turned 25, Evelyn had six credit cards (including store charge cards)and more than $5,500 in debt. She started falling behind on her payments and one of her creditors, Spiegel, canceled her card. She still owes $1,300 on that account. Evelyn, who is now 26 and working as a ministry director at Salem Baptist Church in Chicago, spent the past year reducing her debt. The first step was canceling all but one of her credit cards. She also took 13-weeks of debt management classes at her church.
Yet, Evelyn is no different than many young people who build up debt before they have adequate means to pay it off. But what teen doesn't like to shop at the mall or online, which typically requires you to use a credit card? Like their peers, teenagers spend money on clothes, CDs, books, food, and gas.
With so many expenses, today's youth are catching up with their parents, charging about $158 billion annually. Some Congressional leaders have sought to restrict credit cards use among people under the age of 21, arguing that credit card issuers lure unsuspecting teens into debt. They also want to end credit card soliciting on college campuses.
Getting a charge card can be a way to build a good credit record, which is invaluable when you are ready to get a car, mortgage, or even a small business loan, says Pierre Dunagan, financial advisor and principal of the Dunagan Group in Chicago. "It is also good to have in case of an emergency." Instead of calling a parent to wire money, a college student could use his or her card, for instance.
However, nothing can lead to poor credit quicker than the misuse of credit cards--several cards in one's name, huge unpaid balances, and late payments. Keep in mind that bad debts don't disappear from your credit once they have been paid. Your credit history includes charge-offs, bad debts, and late payments for a period of seven years.
If you have plans to buy a car, a house, or any other major purchase, you will want to have a clean credit report and a low credit score. Your credit report is a summary of your past and present accounts, including credit cards. And your credit, or FICO, score is a number based on all late payments and outstanding debts. This number ranges from about 400 to 800.
Friday, October 06, 2006
Man booked for stolen checks, credit cards
A man was arrested after stolen checks and credit cards were found in his wallet during an investigation.
Spokane County sheriff's deputies were called to 12516 E. 30th Ave. on Saturday to investigate a fight.
The woman who lived there with her ex-boyfriend gave deputies permission to search the house, according to the Sheriff's Office.
Deputy John M. Lammers checked the ex-boyfriend, John Franklin Jay Johnson, 25, through police records and found he had outstanding warrants for possessing marijuana and drug paraphernalia and for having a suspended license.
During a search, deputies allegedly found three checks and a credit card inside Johnson's wallet in different people's names. Deputy Darin Staley began to contact the owners and determined the checks had been stolen, according to the Sheriff's Office.
Johnson was booked into the Spokane County Jail on a charge of second degree posession of stolen property, a felony.
Can demand elasticities explain sticky credit card rates?
It has long been recognized that interest rates charged on credit card loans are sticky (that is, they remain high even when the cost of funds drops). Although some studies have blamed market power by issuing banks for the persistently high rates,(1) the credit card market is relatively unconcentrated, with hundreds of issuers nationwide. The explanation for the sticky rates is more likely, therefore, to lie on the demand side. Since consumers could minimize their cost of credit by borrowing at the lowest possible rate,(2) one would expect banks to drop their rates to attract customers in the competitive market. Yet issuing banks do not appear to be behaving in this way. Do banks maintain high rates because customers' demand for credit card loans does not respond to changes in the rates they charge (that is, because demand for credit cards is inelastic with respect to the interest rates)? Do consumers indeed borrow at high interest rates because they are irrational, as Ausubel (1991) suggested?
Several theories purport to explain credit card rate stickiness.(3) Although some studies have speculated whether demand for credit cards loans is responsive to interest rates, the only information about demand elasticities comes from consumer survey results.(4) According to evidence presented in Ausubel (1991), however, consumer survey results consistently underestimate how much consumers actually borrow. When the results of consumer surveys are compared to bank data, it turns out that consumers borrow more and repay less than they report. Therefore, evidence about demand elasticities should come from bank data, yet no study has explicitly estimated demand elasticities for credit card loans with respect to the interest rates charged. Using panel data from credit card plans offered by banks, this study estimates consumers' sensitivity to the various attributes of credit card plans: interest rates, annual fees, grace periods, finance charges, and additional enhancements. In the past, regulatory agencies and research economists have focused their analyses of the credit card market almost exclusively on the annual percentage rate of interest (APR). However, customers may be more responsive to other characteristics of the plans. It is worthwhile to find out whether the careful scrutiny the credit card rates have received over the years should be directed at other attributes as well.
Consumers have more credit card plan options today than ever before. Most credit card plans are offered nationwide, and abundant information about them arrives in every day's mail. Each plan is composed of many attributes. Are consumers more likely to borrow at a lower interest rate, pay a lower annual fee, or choose more "bells and whistles"?(5) Consumers may opt for high-APR plans because of their inelastic demand or because those plans compensate them with other features, such as low fees. This article approaches the sticky interest rate puzzle by estimating consumers' demand responsiveness to the various features of credit card plans.
The first section describes the data used in the analysis. Section II addresses the question of whether credit card users are rational. Section III sets up the specification used in this paper, while the following section presents estimation results. Section V examines how a bank's size affects the credit card rates it charges and the demand elasticity it faces. The final section offers a summary and conclusions. The results show that banks face an adverse selection problem: Lowering the APR would attract risky customers or induce existing customers to borrow more than they can handle. As a result, delinquent loans rise at a significantly higher rate than that of loans in general. This induces banks to maintain high interest rates. The adverse selection hypothesis is further supported by the finding that banks' income from credit card fees and interest increases with APR.
I. The Data
This study uses data from a survey on the Terms of Credit Card Plans (TCCP), collected semiannually by the Federal Reserve Board from approximately 200 of the largest issuers of bank credit cards. The survey was conducted each January and July during the 1990-95 period. Smaller banks are not included in the sample. Although they may offer systematically different terms of credit card plans, the sampled banks issue the majority of outstanding credit.(6)
The data include characteristics of each plan, such as annual percentage rates (APR), annual fees, grace periods, minimum finance charges, late payment charges, cash advance fees, and over-the-limit fees, as well as indicators showing whether the plan had additional "enhancements," such as automobile insurance, travel discounts, extended warranty, and the like. The data set was merged with information from bank financial statements filed with the Federal Deposit Insurance Corporation. These Consolidated Reports of Condition and Income (Call Reports) include each bank's deposits and assets, as well as outstanding credit card loans and income from credit card interest and fees. The Call Report data are collected quarterly. Data from March Call Reports were merged with the January TCCP data, and data from September Call Reports were merged with the July TCCP data.(7) Panel data constructed from information on the majority of credit card banks over the period of six years permit analysis of customers' sensitivity to features of credit card plans. Table 1 (below) provides descriptive statistics and definitions of the major variables.
Lenders hold the trump credit cards
Egg, the Prudential's online financial services business, has brought outraged protest from banking rivals by publishing a controversial survey accusing so-called risk-based lenders and credit- card issuers such as Barclaycard and Capital One of "hoodwinking", and "knowingly misleading consumers with promises of attractive headline rates which only a small minority appear to get".
Risk-based lenders offer loans or credit cards with interest rates tailored to an applicant's credit-worthiness. This American idea is rapidly growing in Britain, because its supporters say it enables poor-risk borrowers to obtain loans that would otherwise be denied them, even if they have to pay up to 30 per cent interest. Egg and other lenders which quote a single interest rate say their customers know where they stand. But if a would-be borrower fails their credit tests they are turned away.
Egg commissioned NOP, the respected market research organisation, to "mystery-shop" lenders and credit-card issuers. They found that only one in 10 potential borrowers were offered the lowest advertised rate and seven in 10 were not told at the outset that the interest rate they would pay depended on individual circumstances.
NOP sent 200 researchers to call four companies, Barclaycard, Capital One, Abbey National and Lombard Direct. They said they were employed and had lived at the same address for at least six months, and wanted to borrow pounds 5,000 over three years.
Only 4 per cent were offered Barclaycard's lowest advertised rate of 11.9 per cent, and the average was 18.6 per cent. Only 32 per cent of those applying to Capital One were offered the lowest rate of 11.5 per cent. The Committee of Advertising Practice's guidelines say at least 50 per cent should have that opportunity. The average rate offered by Capital One to NOP's inquirers was 14.8 per cent.
At Lombard Direct, part of Royal Bank of Scotland, no one was offered a personal loan at the lowest rate of 6.9 per cent, which is also advertised as their typical rate. The average was 8.5 per cent. Only 4 per cent of the NOP team were offered Abbey National's lowest advertised personal loan rate of 6.6 per cent, and the average offered was 8.1 per cent. Mark Nancarrow, chief executive of Egg UK, said: "How many consumers would buy a hi-fi from a shop with a price tag reading `Price agreed after purchase'? In fact, would anyone be willing to buy any product when the exact price will not be unveiled until after they have committed to buy? We believe this is yet another example of consumers being duped by UK banks, this time by dazzling headline rates which often fail to sparkle."
The four lenders responded furiously, particularly the two offering personal loans. Pankaj Talwar, Abbey National's head of consumer credit, said: "NOP's report for Egg is flawed in many respects. It is based on a very small sample, which represents a fractional percentage of the number of internet loan applications we receive every month.
"They have also not used the same person or indeed profile across each brand and these factors are important when ascertaining a customer's rate. We also reduced our rates during their research period, which means the results are even more misleading. The findings do not bear out what actually happens with real customers. Last month, more than 70 per cent of customers who took out a loan for pounds 5,000 or more with Abbey National via the internet were offered the typical rate of 6.9 per cent or better.
"By offering customers different rates according to their individual circumstances, we are able to offer the majority of people a best-buy rate because they do not have to subsidise other customers. By flat pricing, Egg is potentially making customers with a good credit rating pay more than they would have to under an individual pricing approach. For example, typically a customer applying for a loan via the internet of pounds 10,000 over five years would be pounds 812 better off with an Abbey National loan than with Egg."
Lombard Direct said: "The findings are extremely misleading, because they phoned for a rate that is clearly available only over the internet. The majority of customers who apply to Lombard Direct get the typical rate advertised, regardless of how they apply. On the internet, the typical rate is 6.7 per cent and on the phone this is 7.4 per cent. Last month, when the research was done, well over half of our customers got the typical rate, whether they applied on the phone or on the internet. It is standard industry practice to offer different rates by phone and on the internet. We make the difference clear. For example, our press advertising refers only to the phone rate. The rate used in the phone research was advertised only on the Internet. We have also reviewed our website and although the internet rate is advertised only there, we are making it even clearer this is available only by applying over the internet."
Barclaycard's spokesman said: "The risk-based approach is standard practice for insurance and mortgages, and credit card lenders are having to manage their risk the same way. You can either exclude people or offer different people different rates. Egg does it one way, we do it the other, and our way allows us to be inclusive."Thursday, October 05, 2006
Ace introduces private-label credit card - Company Business and Marketing
More than 700 dealers have signed up already, with about half of the 5,100 members expected to sign
OAK BROOK, ILL. -- Joining the growing number of companies offering private-label credit cards, Ace Hardware has introduced its Ace Credit Card program.
The Ace credit card program has been available for two months, and the number of dealer-members who have signed up their companies so far has exceeded the expectations of Greg Huff, treasury operations manager for the buying group. He said he expects about half of Ace's dealer members -- which number just over 5,100 -- will eventually sign on for the program.
NHCN research found that 103 of the nation's top 500 retailers offered private-label credit cards in 1998. More than 700 Ace dealers have signed up for the Ace credit card, which is funded by St. Paul, Minn.-based Green Tree Financial Services.
Ace Hardware is basing part of the promotion of this program on the fact that Green Tree takes a smaller percentage of each credit card purchase than either Visa or MasterCard, according to Huff. "Dealers should have no incentive to take anything but the Ace card," he said.
Dealers have been requesting the Ace card as a way to help consumers finance large-ticket purchases, and to give dealers the option of rolling open accounts off their books, according to Huff. Some dealers have said they will require all accounts to switch to the Ace cards, while other dealers plan to handle accounts on a case-by-case basis, Huff said.
While some Ace retailers want to offer the card because their competitors have private-label cards, the co-op did not develop this program in order to "keep up with Joneses," Huff said. "We believe there's a value to having Ace's name in the wallet of customers, but that's a positive [extra] benefit," he explained.
Ace Hardware is offering one card for consumers, one for contractors, and is considering one for commercial and industrial customers. The cards, which have no annual fee, have a credit limit of $10,000 for consumers, $25,000 for contractors, and would have a limit of $25,000 for industrial and commercial customers. The interest rate is 21.2 percent on the consumer card and 19.1 percent on the contractor card.
For retailers who take on the cards, Ace Hardware is providing in-store promotional signs and a letter to send to customers about transferring their accounts. Customers can use the cards at any Ace store that participates in the co-op's credit card program.
Katrina credit-card charges questioned
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 following the Aug. 29 storm, according to federal records.
The 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 government 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 automatic heart defibrillators for nearly $1.5 million for use at shelters.
The credit card bills, which are directly payable by Uncle Sam, were vulnerable for abuse in the Katrina aftermath after agencies were given the power to raise the credit limit from $15,000 to $250,000. That authority was repealed on Oct. 3.
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."
This time, the congressional audits -- the first of which is due out early next year -- will not only focus on any abuse but on missed opportunities to get discounted rates for commonly purchased items such as office supplies and clothing, according to the Government Accountability Office, the investigative arm of Congress.
Based on prior audits, at least 10 percent of the Katrina charges -- or about $4 million -- might have been saved if the government used its leveraging power to pay lower-than-retail cost, said Greg Kutz, managing director of special investigations at GAO.
"It's one way to look at it," Kutz said, addressing the rough estimate of 10 percent spending waste while at the same time stressing the GAO's review was far from complete. "There are always some bad apples out there, trying to do things for personal gain."
Only a thorough review will tell whether spending went notably awry.
For example, was $11,078 worth of ice bought by the U.S. Forest Service at retail stores really necessary, since the government already had a $107.9 million pre-existing ice contract with IAP Worldwide Services? Some senators have charged that poor planning led to waste in the IAP contract, which is also being audited.
Danielle Brian, executive director of the watchdog group Project on Government Oversight, expressed concern with many instances of retail purchases, which included $66,632 worth of supplies from Wal- Mart for items such as scissors, white bath towels and nail clippers.
"Only time will tell where the money has been squandered which should have gone to help Katrina victims," Brian said.
In many instances, the government records showed anomalies. The Transportation Department, for example, initially reported a purchase of a $5,374 paper shredder; it later said the shredder, which was apparently designed to meet security standards, was improperly designated as a Katrina expense.
The U.S. Army Corps of Engineers lists repeated duplicate charges -- for example, the exact same charge of $1,461.42 each for "1 IP90 portable printer," "1 Laserjet 2430TN printer," "1 wireless access point" and other miscellaneous items that spokesman Scott Saunders later acknowledged were probably errors.
Auditors including Homeland Security inspector general Richard Skinner have already cited the Red Cross and FEMA for similar data- reading errors that they said reflected inadequate accounting procedures.
Robert Johnson, a spokesman for the Department of Transportation, said most federal employees are seeking to do the right thing. His agency's expenses, totaling more than $400,000, included $5,728 for boots and T-shirts with DOT logos, many of them worn by the auditors themselves in the Gulf Coast region.
Credit card debt down 11.4% in U.S.; But bankruptcies, not money
A new survey says the average U.S. consumer carried 11.4% less credit card debt this year, but industry experts say it might not be entirely because people were thriftier.
Myvesta, a Rockville, Md., consumer education organization, said Thursday that its annual survey, conducted in early November, showed the average American had a credit card balance of $2,328, down from $2,627 in 2004.
The survey also found the average consumer had about three credit cards in his or her wallet, the same as in 2004.
It's hard to say exactly why the survey shows smaller credit card balances, those involved with consumer debt and counseling say. It might be a reflection of a healthy economy, said John Penn, president of the American Bankruptcy Institute.
"It could be that unemployment is down, people had jobs and they didn't charge up as much as they might have otherwise," Penn said.
Hard to explain
"It's very difficult to put one's finger on exactly why or how this happened," said Nick Jacobs, a spokesman for the National Foundation for Credit Counseling.
Jacobs said that while the survey's findings were "a little out of step with others that we've seen," it may be a sign that consumer education efforts by his group and others are having an effect.
Some say the huge number of bankruptcies this year may have skewed average credit card balances downward because bankruptcy wiped big amounts of consumer debt off the books.
Indebted consumers, fearing that a change in bankruptcy law in mid-October would make it harder to have their financial obligations erased in court, filed what will turn out to be a record number of bankruptcies in the U.S. in the calendar year 2005. In its fiscal year ended Sept. 30, U.S. Bankruptcy Court recorded almost 1.8 million bankruptcy filings, a record.
As for Wisconsin, 38,039 bankruptcy petitions had been filed through November in the state, which broke the full-year record of 28,246 set in 2003.
Kathryn Crumpton, manager of Consumer Credit Counseling Service of Greater Milwaukee, said the "bumper crop" of bankruptcies probably affected the per-consumer credit card balance averages.
"We sure aren't seeing people with less debt. My goodness, no," Crumpton said.
Losses 7% in October
CardWeb.com, which monitors the payment card industry, said losses by card issuers topped 7% in October, mainly because of the wave of bankruptcy filings that preceded the change in the law.
The Myvesta survey a random telephone survey of 1,000 people from Nov. 4-6 found that males had more average credit debt than females, $2,369 to $2,289. People in the Midwest carried the smallest credit card balance, $1,972. Consumers in the West carried an average credit card balance of $2,547, the highest in the survey.
Wednesday, October 04, 2006
Treasury to unveil kite marks for credit cards and basic banking
THE GOVERNMENT is this week set to unveil plans for two new financial kite marks for credit cards and basic bank accounts as part of its drive to put pressure on product providers to reduce costs and improve terms.
CAT standards, which stand for cost, access and terms, were one of the key recommendations in Don Cruickshank's critical report on the banking industry. Mr Cruickshank criticised some of the exorbitant charges financial institutions were levying on customers, leading to excess profits of pounds 5bn.
It is understood that Melanie Johnson, economic secretary to the Treasury, will use a Treasury select committee meeting tomorrow to reveal details of CATs for credit cards and basic bank accounts.
The Government has already launched CATs for mortgages, individual savings accounts and long-term care insurance products.
The credit card industry, which is dominated by a handful of companies such as Visa and Mastercard, was criticised by Mr Cruickshank for levying interest and charges at unacceptably high levels. A number of high street stores charge more than 30 per cent in interest. It is expected that the new CAT mark will lower the maximum interest that can be charged from its current level of more than 40 per cent.
Ms Johnson is also understood to be planning to launch a CAT mark for basic bank accounts, which the Government required banks to launch by last October. The accounts offer basic services with no overdraft facilities and are aimed at people who traditionally have been excluded from taking up financial services.
The Government is also threatening to introduce regulations which govern areas such as mortgages rather than continuing to rely on self- regulation by the banks. The possible action springs from initial findings of a public consultation led by DeAnne Julius, chairman of the Banking Services Consumer Codes Review group.
Some Credit Unions Offering National Access
Credit-union members from across the country can access their accounts at the Vestal outlet of Visions Federal Credit Union. The office is pan of a nationwide movement known as "Shared Service Centers" that allow visiting or vacationing credit-union members to make transactions on their share accounts as if they were at their own institution's branch.
Shared service centers
The Visions shared service center in Vestal is one of 12 outlets in New York and more than 450 across the country. One million credit-union members from three dozen credit unions in the state can transact business at the centers, says Marc Inger, director of business development for New York State Shared Service Centers. The entity is an affiliate of the New York State Credit Union League (NYSCUL).
Credit-union members who spend their winters in Florida, says Inger, formerly had to use a bank in that state for the winter months. Now, members can use one of the 54 shared service centers in Florida during their time away from home.
The movement for shared service centers began in Alabama in the early 1990s as a way to increase members' convenience, says Inger. New York's credit unions first began a shared service centers program in 1994 and opened the first locations in 1995. Most of the centers in the state are located on Long Island, where the movement has gained popularity.
New York Shared Service Centers (NYSSC) is run as a forprofit corporation because of the regulatory limitations placed on credit unions by their nonprofit status. Similar companies have been formed to operate businesses such as the Sharenet ATM network owned by several Syracuse-area credit unions.
The Visions Shared Service Center is known as an "acquirer," one of two sides of the shared-center equation. Credit unions that allow members to access their accounts at Visions are known as "issuers." The issuers pay a fee to the acquirer for each transaction completed at the shared center, says Inger.
The issuer can then pass along that fee to the member, but often won't charge the member for the service, he adds. The fees vary according to the type of transaction the visiting member completes.
Visions FCU, an issuer and an acquirer, doesn't pass the fee along when its members use a shared service center, says John Wilbur, marketing manager for Visions.
"Shared service centers," he says, "are an added benefit for our members."
The added benefit also keeps members in the credit union when they move away, says Inger. Retired credit-union members can maintain their relationship with their credit union after they retire by taking advantage of the nationwide network.
To become an issuer, a credit union contacts NYSSC and arranges to become certified to receive transactions from acquirers. The issuer will choose one of two computer systems that are compatible with the nationwide system and then integrate that system with the credit union's share records.
The cost to become an issuer, says Inger, is approximately $3,000 for initial certification plus around $1,500 per month for data lines. Computers and the transaction fees also will add to the expense of linking to the network.
Acquirers like Visions can make money using the network, says Inger. The initial cost to become certified as an acquirer is $5,000. The acquirer has the same charges as the issuer but can reap a revenue stream from issuers to offset the cost of running the shared center, he adds. Acquirers can market their services to members of issuer credit unions to attract more users.
"Overall, it seems to be working quite well," says Visions' Wilbur.
The shared service centers are part of an overall trend toward giving members greater access to their share accounts, says Susan Farnsworth, marketing communications specialist at Empire FCU.
Increasing electronic access
Over the past several years, she says, members have been able to access their accounts by telephone, computer, and at branch locations.
Empire is re-launching a branch location in the Syracuse suburb of Clay after researching why the location was underused. When Empire opened the branch in 1998, it was christened the "Clay Electronic Branch."
The name was problematic for two reasons, says Robert Padula, Empire's vice president for information technology. According to the credit union's research, members found the location of "Clay" to be vague. The sprawling town features several commercial areas rather than a central business district, and the members didn't know exactly where in Clay the branch was located.
The word "electronic," says Padula, was a turn-off for many credit-union members who belong for the personal contact and service offered by the smaller financial institutions. The credit union's research showed the members who did use the Clay branch valued the location for its proximity to suburban homes and businesses.
Price war predicted for credit card lending
Credit card experts are expecting a new year price war to break out as lenders attempt to cash in on Christmas spending.
Several leading credit card lenders have already launched special offers designed to persuade borrowers to switch their debts away from their existing credit cards.
Mint, the credit card company owned by Royal Bank of Scotland, fired an early shot in the plastic price war yesterday. It is offering new customers interest-free credit for up to 18 months.
The deal includes a 0 per cent interest rate on both balances transferred from other cards and new spending until November 2006, plus a further six months interest-free on new debts transferred to the card in January 2007.
The more competitive offers follow predictions of a significant increase in consumers' Christmas spending. Apacs, the group that runs Britain's electronic payments network, is forecasting consumer spending in December will hit pounds 48.7bn, up 10 per cent on last year. It expects the total to include pounds 11bn of credit card spending.
Nick White, the head of personal finance at the price comparison service Uswitch, said: 'January is traditionally the time when competition hots up in the credit card market, with new low- rate deals launched in an attempt to attract indebted consumers to move their debt to them.'
HSBC, the high street bank, has improved the terms on its credit card deal, as part of a retailer-style 'sale' of its products that was launched on Tuesday.
As part of the initiative, which has been pioneered by HSBC's widely regarded head of personal financial services, Joe Garner, it is extending an existing nine-month interest-free credit card offer by a further 35 days if borrowers open an account during January.
In addition, while Barclaycard, the UK lender, has yet to announce a new year deal, it is a joint partner in the launch of the SkyCard, a new credit card that is branded as a product from BSkyB, the satellite television broadcaster.
The SkyCard is targeting existing borrowers with 12 months of interest- free credit on balances transferred from rival lenders.
Richard Mason, the director of credit cards at the price comparison service Money Supermarket, said many of the new deals were aimed at those who had sharply increased borrowing during December.
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