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News Scan Aug 2014

Credit Card News, Economy News, Banking Industry News - Aug 2014
29
Aug
  • Bankers looking to close branches to cut costs must pay attention to the location of such closures - or run the risk of a Community Reinvestment Act ratings downgrade.
  • Nearly every bank has re-evaluated its branch network in recent years, as revenue has been squeezed and customers have migrated to digital banking. Several larger banks have announced major overhauls, while others have announced less extensive cuts.
  • Regulators are paying close attention to the size and scope of such cuts, industry observers said. In particular, they will be watching to make sure banks are maintaining a presence in low-and moderate-income communities. In many ways, CRA and compliance with the Bank Secrecy Act are clearly in regulators' cross hairs.
  • Federal law requires lenders to submit a branch-closing application to its primary regulator before the proposed closing, then post a public notice of the closing. Applications must include the reason for the closing and any hard data to support the decision.
  • A greater concern involves instances when community groups object to a planned closing
  • Bankers could expect some pushback from regulators if they attempt to close the last branch in a specific community.
28
Aug
  • U.S. Q2 GDP revised up to 4.2 percent
  • The dollar index, which jumped in early U.S. trading after the U.S. government reported the American economy grew at an upwardly revised 4.2 percent during the second quarter, was last up 0.10 percent at 82.499.
  • The Commerce Department had initially estimated that U.S. gross domestic product expanded at a 4.0 percent annual rate in April, May and June. The 4.2 percent rate reflected upward revisions to business spending and exports and was the fastest pace since the third quarter of 2013.
  • Safe-haven currencies, the yen and the Swiss franc, rose in global currency markets. The dollar was last down about 0.1 percent against the yen at 103.70 yen and flat against the franc after hitting a low of 0.9127 francs.
  • Selling of the euro, which traded at nearly $1.40 in May, has been driven over the last week by stepped-up speculation that European policymakers will quicken monetary loosening as a way to boost economic growth.
28
Aug

U.S. Second-Quarter Growth Strengthens

Source: Reuters Category: Economy News
  • The U.S. economy rebounded more strongly than initially thought in the second quarter with a bigger chunk of the growth driven by domestic demand in a bright sign for the future.
  • Both business spending and exports were revised higher, while a buildup in business inventories was smaller than previously estimated - a mix of growth that provides a stronger underpinning for the remainder of the year.
  • While the economy shrank at a 2.1 percent rate in the first quarter, economists expect growth of around 2 percent for the year as a whole, with GDP expanding about 3 percent in 2015.
  • The dollar firmed against a basket of currencies on the data, but U.S. stocks were down as traders kept a wary eye on Ukraine, which accused Russian forces of entering the country. Prices for U.S. Treasury debt rose as the troubles in Ukraine triggered flight-to-safety bids.
  • Economists had expected the second-quarter GDP growth pace would be revised down to 3.9 percent.
28
Aug
  • American Express, the perennial leader in Power's ranking, shares the top satisfaction score for the first time since the survey started in 2007. Discover climbed a spot from last year to tie AmEx with a score of 819, on a scale of 1,000.
  • AmEx has a head start on satisfaction because of its relatively affluent customer base. Its more exclusive business model means that its customers -- sorry, members -- collect lucrative rewards, often pay their entire balance monthly, and hardly ever get dinged with a late fee.
  • Discover has a broader customer base, but gets top scores in some important service categories, such as live phone contact.
  • The consumer analytics company polled nearly 20,000 people about their attitudes toward their cards and 10 large card issuers. Questions in the survey focus on six service areas: interaction, card terms, billing and payment, rewards, benefits and services, and problem resolution.
  • But in a market where reward offers are hotly competitive, satisfaction doesn't necessarily mean loyalty. Ten percent of cardholders said they switched their primary card, up from 8 percent in last year's survey. Close to half of those switching said the reason was a better rewards program.
  • Heightened consumer protection could also be boosting cardholder satisfaction. The Credit CARD Act of 2009 has restricted interest rate hikes and over-limit fees, formerly major friction points with issuers. And the newly formed Consumer Financial Protection Bureau's enforcement efforts have battled expensive card add-on products such as credit protection.
26
Aug
  • Bankers looking to close branches to cut costs must pay attention to the location of such closures - or run the risk of a Community Reinvestment Act ratings downgrade.
  • Nearly every bank has re-evaluated its branch network in recent years, as revenue has been squeezed and customers have migrated to digital banking.
  • Regulators are paying close attention to the size and scope of such cuts, industry observers said. In particular, they will be watching to make sure banks are maintaining a presence in low-and moderate-income communities. In many ways, CRA and compliance with the Bank Secrecy Act are clearly in regulators' cross hairs.
  • Federal law requires lenders to submit a branch-closing application to its primary regulator before the proposed closing, then post a public notice of the closing.
  • Applications must include the reason for the closing and any hard data to support the decision.
  • bankers could expect some pushback from regulators if they attempt to close the last branch in a specific community
26
Aug

Card Delinquency at Seven-Year Low: TransUnion

Source: Cutimes Category: Credit Card News
  • Credit card delinquency at the end of second quarter of 2014 had dropped nearly 9% to 1.16%, according to the national credit data firm.
  • This was a sharp decrease from the 1.27% delinquency in credit cards in the second quarter of 2013 and the lowest rate of credit card delinquency since 2007, the data showed.
  • Data revealed consumers, on average, added very little to their credit card debt. Average credit card debt moved from $5,226 per account in 2013 to $5,234 per account in 2014. However, consumers in the 50 to 59 age bracket increased their credit card balances by 0.60% and cardholders over the age of 60 increased their balances by 1.86%.
  • Part of the reason for the increases was the 40 to 60-year old age range remains the peak years for both earning and purchasing with cards and other means as well.
  • Younger consumers continue to have lower debt levels, which can be attributed in part to limited access to card credit and a greater reliance on debit cards, among other factors.
21
Aug
  • The U.S. manufacturing sector expanded in August, with the rate of growth exceeding expectations and moving at the fastest pace in more than four years, an industry report showed on Thursday.
  • A Financial data firm said its preliminary or "flash" U.S. Manufacturing Purchasing Managers Index rose to 58 in August, which was its highest since April 2010, from 55.8 in July. Economists polled by Reuters expected a reading of 55.7.
  • A reading above 50 signals expansion in economic activity.
  • August’s survey delivers further evidence that robust manufacturing growth momentum has been sustained through the third quarter, with overall business conditions improving at the fastest pace for over four years, said the senior economist at a financial data firm.
  • The gauge of employment in the manufacturing sector rose to 54.6 from 51.2, and was at its highest since a matching 54.6 in March 2013.
19
Aug
  • Federal banking regulators are seeking the dismissal of a lawsuit filed by payday lenders that claim to be victims of Operation Choke Point.
  • The suit accuses the banking agencies of privately pressuring banks to sever their relationships with lawfully operating payday lenders.
  • The lawsuit was filed in June by a trade group for payday lenders and one of the nation's largest payday lenders. It accused regulators of engaging in a "concerted campaign" to drive payday lenders "out of business by exerting back-room pressure on banks."
  • The lenders' lawsuit cited the decisions by Fifth Third Bancorp and Regions Financial, among other banks, to stop doing business with payday lenders on the grounds that those relationships were outside of the banks' risk tolerance.
  • The payday lending trade group welcomed the FDIC's reversal last month, but it also suggested at the time that it would wait to see whether the agency's actions match its rhetoric.
15
Aug

Taxes, Tuition Can Rack up Rewards, for a Fee

Source: Creditcards Category: Credit Card News
  • If you love piling up points on your rewards credit card, the prospect of paying college tuition, taxes and other big expenses with your card can be awfully tempting. But as you may have already discovered, you will probably have to pay an extra "convenience fee" to use your credit card.
  • According to preliminary data from the 2013 Student Financial Services Policies and Procedures Study conducted by the National Association of College and University Business Officers, approximately 56 percent of higher education institutions accept credit card payments without charging a convenience fee.
  • Mortgage servicers typically don't allow borrowers to make direct payments using a credit card, but some have made agreements with third party vendors that will take your credit card details and pay your mortgage for a flat fee plus a percentage of your payment. The fees for this service vary based on the amount of your mortgage and your mortgage company, but are typically between 1.5 and 3.5 percent of your payment.
  • Landlords are increasingly offering tenants the option of paying rent with a credit card. Convenience fees for such transactions are typically around 2.75 percent of your bill, but in this case rewards may outweigh costs. Some third-party payment facilitators that landlords are using to process the card payments are rewarding tenants for using their card payment services by offering discounts to local businesses and services.
  • Charging large purchases should only be an option if you have the means to pay the credit card bill when it comes due.
  • Allowing interest to accrue by rolling over a balance, along with paying any transaction or "convenience" fees will most certainly negate the value of any rewards that you can amass.