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News Scan Apr 2012

Credit Card News, Economy News, Banking Industry News - Apr 2012
Apr 2012

CFPB to Collect Data on Firms' Diversity Policies

Source: Americanbanker Category: Banking Industry News
  • The Consumer Financial Protection Bureau Monday outlined how the bank regulators plan to implement a mandate in the Dodd-Frank Act to promote diversity in the workplace at financial institutions.
  • The CFPB plans to work with banks and nonbanks, as well as other regulators with similar office including the Office of the Comptroller of the Currency, Federal Deposit Insurance Corp.
  • Federal Reserve Board and Federal Housing Finance Agency to develop the standards over time.
  • The agency may look at banks' internal workplace policies on promoting diversity, as well as how diversity practices affect women and minority customers.
  • Institutions are well aware that this is something that affects their base of talent, both for employment at the institution; it affects their customer base, and therefore business opportunities.
Apr 2012
  • Domestic banks have continued to ease credit standards over the past three months as more Americans are searching for credit, according to a Federal Reserve survey.
  • According to the quarterly survey of senior loan officers, demand for credit card loans increased in the first quarter of 2012, with 17.5 percent of banks reporting a moderate uptick over the past three months.
  • Auto loans were particularly hot: 31.4 percent of banks said they had an increased demand for them.
  • According to this quarter's survey, 14 percent of banks loosened restrictions on credit card applications. But most banks are letting their standards be.
  • As in the previous four surveys, a small number of domestic banks reported laxer standards on credit card, auto, and other consumer loans while demand for consumer loans continued to increase.
Apr 2012

Fed says no to raising interest rates

Source: Creditcards Category: Banking Industry News
  • The Federal Reserve announced that it would continue to leave today's record-low interest rates unchanged.
  • The Fed's decision to keep rates low also means current borrowers with variable rate loans won't see a sudden rate hike any time soon.
  • That's especially good news for credit card holders, since the majority of U.S. credit cards are variable rate cards.
  • Consumers shouldn't wait to pay down their lingering debt, however, because they won't be off the hook forever, say experts.
  • Consumers should also be aware that those rate hikes, when they do come, won't necessarily be small, she adds.
  • When the Fed starts raising rates, it will eventually raise them by more than a few percentage points, she says, which will have a significant impact on the amount of interest people pay on their loans.
Apr 2012
  • These include carrying a balance on their cards, paying only the minimum monthly payment and being charged late fees.
  • Of the respondents who had a low level of financial literacy, 32 percent of women were found to be engaging in poor credit card behavior.
  • Only 29 percent of men did the same. Men were 6 percent more likely to pay their balances in full than women, and 6 percent more likely to comparison-shop for cards.
  • Financial literacy helped eliminate a gender gap in behavioral differences, but played no role in interest rate differences, where women are still lagging behind men.
  • Survey analysts said the reason for this is still unclear, and they did not speculate as to why it might be happening.
  • One possible explanation is that women may be more inclined to acquire retail credit cards, which tend to carry higher interest rates.
Apr 2012

The prepaid debit card comes of age

Source: cardratings Category: Debit Card News
  • More than 1 in 8 American consumers now carry reloadable prepaid debit cards, according to a new report from Javelin Strategy & Research.
  • Stronger rewards, cheaper fees, and changing attitudes about traditional banks all contributed to the growth of prepaid debit, even during a period that saw many banks shrink the number of their traditional checking, savings and credit card accounts.
  • More than half of underbanked respondents told research team that they used prepaid debit cards for routine online purchases.
  • Some traditional banks intend to use prepaid cards as a path to build loyalty with that younger generation.
  • While only 39 percent of underbanked consumers reported having access to high-speed Internet access, more than two-thirds of them own either a smartphone or a feature phone capable of online account management.
  • Survey respondents told researchers that a strong rewards structure can offset service fees, much in the same way that consumers look past annual fees when selecting cash back credit cards.
Apr 2012

More companies planning to hire: NABE survey

Source: Reuters Category: Economy News
  • The National Association of Business Economics' industry survey found that 39 percent of respondents expect hiring will pick up in their companies and industries during the next six months, up from 27 percent in January.
  • Some 48 percent of respondents expect hiring will hold steady. While that is down from 64 percent in January, it still underscores the slow pace of recovery in the labor market following the 2007-2009 recessions.
  • The uptick in demand for labor could be leading companies to offer bigger paychecks. Some 44 percent of respondents said wages and salaries were rising, up from 26 percent in January.
  • The poll also showed 63 percent of respondents expected U.S. gross domestic product to grow between 2.1 and 3 percent in the fourth quarter from a year earlier.
Apr 2012
  • It will take another eight years for cash and credit cards to be replaced almost completely by smartphones.
  • 65 percent of people said they believe that mobile payment technology will be widespread by 2020.
  • Relatively few people believed that cash or credit cards will disappear entirely.
  • PayPal and Google are the two most notable technology companies going after the opportunity, but so are the incumbents, including Visa, MasterCard and American Express.
  • Additionally, the U.S. wireless carriers are mapping out their own plans through a joint venture called Isis.
Apr 2012

March housing starts fall, new permits surge

Source: Reuters Category: Economy News
  • Groundbreaking on homes fell unexpectedly in March but permits for future construction rose to their highest level in 3-1/2 years.
  • Housing starts slipped 5.8 percent to a seasonally adjusted annual rate of 654,000 units.
  • Despite the drop in starts, the data suggests housing construction could still add to gross domestic product during the first quarter.
  • But an oversupply of unsold homes is depressing prices, creating a big hurdle for the sector.
  • Permits rose 4.5 percent to a 747,000-unit pace last month, the highest since September 2008 and beating economists' expectations for a 710,000-unit pace.
  • The rise in permits kind of offsets the disappointing data. Sentiment among home builders ebbed in April for the first time in seven months.
Apr 2012

Consumer prices up 0.3 percent in March

Source: Reuters Category: Economy News
  • Consumer prices rose modestly in March as falling electricity costs countered higher gasoline prices.
  • The CPI rose by 0.3% in March as the indexes for food, energy, and nearly all core items increased over the month.
  • Core prices were up 0.2%. Both figures match market expectations. While the headline's growth inched down from February (0.4%), core CPI skipped up from the month prior (had been 0.1%).
Apr 2012

The Future of Banking Could Include Palm Reading

Source: americanbanker Category: Banking Industry News
  • For 2012, that means using palm technology to verify identities at an automated teller machine. The technology is found in prototypes of new branch technology at consulting firm Accenture's financial services innovation centers across the world.
  • Roughly 90% of all new accounts are originated in branches and online banking has not yet managed to become a driver of new accounts.
  • While banks may continue to open branches, it will be a more methodical exercise that will focus on addressing specific gaps, rather than dots on a map.
  • Tellers will still exist, but futuristic branches will have a whole lot more gadgets and ATMs. Palm reading is just one way to access an account; customers could also use a quick-response (QR) code on their smart phones or contact-less cards.
  • Smaller banks could also band together to implement changes, taking small steps to implement new technology and taking a more multi-disciplinary view of technology and branches.