December 6, 2019

Bucks Blog: Why You Can Ignore Those Odd $1 Credit Card Charges

I usually check my credit-card accounts online regularly, to keep on top of spending and to help spot any unauthorized purchases. Recently I noticed something odd I hadn’t seen before — a series of $1 charges, from the convenience store where I usually gas up my car.

I always use a credit card, rather than a debit card, when paying at the pump for gas. (That helps avoid the potential damage from “skimming,” in which crooks try to steal card numbers with illegal readers. Consumer protections typically are greater with credit cards than with debit cards in such situations, according to the Privacy Rights Clearinghouse). But I was perplexed as to why I was being charged an extra dollar for filling my tank.

Each charge for a fill-up had a corresponding $1 fee added, for a total of $3. Not exactly budget-breaking, but who likes paying extra fees, when gas is already pricey?

When I contacted the bank that issued my MasterCard, a representative named “Sophie” explained during an online chat that the apparent charges were not charges at all, but temporary preauthorizations done before charging the entire amount. Some merchants, like gas stations and hotels, do this routinely, as a way to verify that the card is active before authorizing the total amount, she said. “The amount of $1 is authorized so that the card can be checked without placing a large hold on the customer’s account,” she said, adding, “This $1 will drop off the account automatically.”

I called MasterCard for more details. A spokesman, Seth Eisen, said that when consumers use both credit and debit cards to pay, there are some instances — such as when a customer pays for gas at the pump — when the final amount of the transaction is not known right away. So it is standard practice for the merchant to get a $1 authorization from the user.

“The issuer does not know when the card is initially swiped how much gas will be pumped, or what the final transaction amount will be,” he said. The card issuer — the bank that issued the card to the customer — will not know this until the completed transaction is submitted to MasterCard by the merchant’s own bank, and then subsequently sent back to the issuer. “It’s at this point that the final purchase amount is placed on the cardholder account and the $1 hold is removed from the account,” he said.

Sure enough, when I checked my official credit-card statement for the month, there were no $1 charges to be found.

Have you noticed “authorization holds” on your card account?

Article source: http://bucks.blogs.nytimes.com/2013/07/03/why-you-can-ignore-those-odd-1-credit-card-charges/?partner=rss&emc=rss

Bucks Blog: Banks Rake In Overdraft Fees, Report Finds

Overdraft penalties represent well over half of banks’ fees from consumer checking accounts, a new report from the Consumer Financial Protection Bureau finds.

The report, based in part on confidential data provided by some of the nation’s larger banks, estimated that 61 percent of bank fees from consumer accounts were for overdrafts and insufficient funds, penalties charged when customers spent more than their accounts had available. Based on that finding, the bureau said it estimated conservatively that the banking industry earned $12.6 billion in such fees from consumers in 2011.

The report represents preliminary findings of a bureau inquiry into bank overdraft practices announced early last year. The bureau is not making any policy recommendations yet, but says it will conduct further reviews of account-level data.

The report found that overdraft protection can be very expensive for consumers and varies widely from bank to bank. Overdraft protection is a service in which the bank pays the amount in question, even though the account lacks the necessary funds, but then charges the customer a fee for doing so. The average customer overdrawing an account paid $225 in charges per year, the study found. And more than a quarter (27 percent) of checking accounts paid at least one overdraft charge in 2011.

The bureau did not identify the banks included in the report or even specify how many were included in the analysis, which also incorporated comments submitted by the public, consumer advocates and industry groups. The bureau said, however, that the banks in the study represented more than half of all deposit accounts. The bureau has supervisory authority over banks with more than $10 billion in assets, or more than 100 institutions.

Since the middle of 2010, the Federal Reserve has barred banks from charging overdraft fees for A.T.M. withdrawals or most debit card transactions unless a customer actively  chooses the service. The report found that customers who accept the coverage were more likely to end up paying higher fees and were more likely to end up having their account involuntarily closed than those who did not.

“What is marketed as overdraft protection can, in some instances, put consumers at greater risk of harm,” said Richard Cordray, the bureau’s director, in prepared remarks.

Opt-in rates vary widely among banks, suggesting that bank marketing of the service plays a role. At some banks in 2011, more than 40 percent of new customers opted in, while fewer than 10 percent did so at other banks.

Mr. Cordray said the findings did not indicate that banks should not charge overdraft fees. “Nonetheless,” he said, “our findings raise concerns about the number of consumers who are incurring heavy overdraft fees or account closures, and the wide variations across institutions indicate that certain practices and procedures merit further analysis.”

Have you paid overdraft fees? Do you think new rules are necessary to regulate banks’ use of them?

Article source: http://bucks.blogs.nytimes.com/2013/06/11/banks-rake-in-overdraft-fees-report-finds/?partner=rss&emc=rss

Consumer Debt Rises on Cars and Education

The Federal Reserve said Tuesday that consumers increased their borrowing in November by $16 billion from October to a seasonally adjusted record of $2.77 trillion.

Borrowing that covers autos and student loans increased $15.2 billion. A category that measures credit card debt rose just $817 million.

The sharp difference in the borrowing gains illustrates a broader trend that began after the recession. Four years ago, Americans carried $1.03 trillion in credit card debt, a high. In November, that figure was 16.5 percent lower.

At the same time, student loan debt has increased significantly. The category that includes auto and student loans is 22.8 percent higher than in July 2008. Many Americans who have lost jobs have gone back to school to get training for new careers.

The November increase also reflected further gains in auto sales, which rose 13.4 percent in 2012 to top 14 million units for the first time in five years. The need to replace vehicles lost to Hurricane Sandy may have helped.

Article source: http://www.nytimes.com/2013/01/09/business/economy/consumer-debt-increases-on-car-and-school-loans.html?partner=rss&emc=rss

Bucks Blog: The People Who Are Spending More This Season

Black Friday shoppers rush into Valley River Center mall in Eugene, Ore.Associated PressBlack Friday shoppers rush into Valley River Center mall in Eugene, Ore.

As Cyber Monday unfolds, consumers seem a bit more comfortable with spending this holiday season, according to an annual survey.

Twelve percent of those surveyed said they would spend more this year, compared with 8 percent last year, according to the survey, which was commissioned by the Consumer Federation of America and the Credit Union National Association.

At the same time, the percentage who said they would spend less declined to 38 percent from 41 percent, the survey found.

ORC International conducted the survey of 1,012 adults by land line and cellphone from Nov. 9-13.

The results indicate continued gradual improvement in holiday spending plans since a sharp decline four years ago, said Bill Hampel, chief economist for the CUNA, in a statement.

The intention of consumers to increase holiday spending may reflect improvement in their financial situation. From 2011 to 2012, the percentage who said their financial situation was better rose from 19 to 24.

Many families, however, remain strapped. Only half (49 percent) said they had extra money to pay for an unexpected expense of $1,000.

What are your spending plans for the holidays this year?

Article source: http://bucks.blogs.nytimes.com/2012/11/26/the-people-who-are-spending-more-this-season/?partner=rss&emc=rss

Advertising: Returning to Industry’s Roots With Lessons in Branding

The class was held at the offices of the CreativeFeed marketing agency. About half the students were CreativeFeed employees while the rest were entrepreneurs more experienced in technology than in old-fashioned brand-building.

Mr. Berger, 62, retired from Euro last year after 25 years at the company, and has turned his attention to training the next wave of advertising and marketing employees.

The challenge is that with more agencies focusing on digital media, their employees need to come up with sophisticated algorithms and data analytics platforms to better tailor messages to consumers. Many agencies have reported difficulties in finding qualified employees to fill jobs that are technical in nature, but still creative. Old-fashioned branding may seem quaint, but Mr. Berger thinks it should not be ignored.

“I think that old school or new school, the most important school is understanding the power of a brand,” he said. “As technology and as media has become more fragmented, the importance of building a powerful brand has become more important. You only have a few places where you need to speak about what your brand is and you need to control that.”

***

In his class, Mr. Berger presented his students with a series of questions including identifying the major elements of a brand and whether a company can build a brand without advertising. He presented case studies on Volvo, Apple, Google and the entertainer Jay-Z, dissecting each brand’s elements, like the products sold, the brand’s values, and tone of voice.

“Half the class were entrepreneurs who started their own business,” Mr. Berger said. “Quite frankly, they have never had that kind of training. They come in, they hear about those pieces of technology, how you can reach this customer, and the most foundational part of it is never taught in school.”

Carlos Solorio, an entrepreneur in the class, is the co-founder of Arden Reed, a company that makes custom men’s wear, like suits. Mr. Solorio and his partner used Kickstarter to raise money for an e-commerce site and are also part of a start-up incubator program in Chile. Before entering the fashion business, Mr. Solorio was an investment banker specializing in Latin American mergers and acquisitions. He said he took Mr. Berger’s class to shift the current pitch for the Arden Reed brand from being solely about the fit of the garment.

“The customers I’ve spoken to sometimes mention the fit, but almost every time it comes down to the compliments they receive or what their wife thinks of them,” Mr. Solorio said in an e-mail. “It’s not that if fits, but that they feel more confident in a custom suit.” He hoped Mr. Berger’s class would help his company “key in on that emotion that someone purchasing Arden Reed wants to achieve and provide a consistent message around that.”

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Mr. Berger presented Apple’s history of television advertising including the “Think Different” campaign, which showed visionaries like Gandhi, Maria Callas and Jim Henson, and more recent campaigns that featured silhouetted figures dancing against colorful backgrounds while donning the white earbuds and devices synonymous with Apple products. “Apple has clearly said, ‘Here’s who we are and here’s what we stand for,’ ” Mr. Berger said.

While Apple’s products include computers, music devices and phones, the values of the Apple brand are not those products; they are design, innovation and functionality, Mr. Berger said. The tone of voice for the brand is cool, modern and enjoyable, he said.

Some students questioned the Apple brand, especially in light of the criticism the company has received over its labor practices in China and its closed-source operating system. One student even called the brand “arrogant.” Mr. Berger acknowledged the criticism but said that despite it all, the power of the Apple brand is undeniable. “The marketplace has spoken,” Mr. Berger said, “and they are the most valuable brand in the world.”

While Apple may have a strong brand message, the company still must get its product off the shelves and into the hands of consumers. Jay-Z, on the other hand, is an example of one of the newest forms of branding, the personal brand. “The human brand is the biggest evolution,” Mr. Berger said.

Jay-Z may have attached his name to music, clothes and big business deals like his stake in the Brooklyn Nets and the associated Barclays Center, but the reason he has been such a success is because of who the singer is. “The street cred that he comes from and doesn’t waver from, it’s probably been foundational to the brand he’s become, “ Mr. Berger said. “He’s a business and he totally understands that.”

Mr. Berger’s second class was postponed because of Hurricane Sandy, which gives students a few more days to work on their homework assignment: taking the tools they learned about brand building and applying them to a brand, even if that brand is themselves.

Article source: http://www.nytimes.com/2012/10/31/business/media/returning-to-industrys-roots-with-lessons-in-branding.html?partner=rss&emc=rss

Pace of Home Sales Quickened in December

Home sales in the United States rose in December to the highest pace in nearly a year, the National Association of Realtors reported. The gain coincided with other signs that show the troubled housing market improved at the end of 2011.

Still, sales remain depressed and ended the year well below healthy levels.

The Realtors group said home sales increased 5 percent last month to a seasonally adjusted annual rate of 4.61 million.

“The pattern of home sales in recent months demonstrates a market in recovery,” said Lawrence Yun, the group’s chief economist. “Record low mortgage interest rates, job growth and bargain home prices are giving more consumers the confidence they need to enter the market.”

For the year, home sales totaled only 4.26 million, up from 4.19 million the previous year. Since the housing bust four years ago, home sales have slumped under the weight of foreclosures, tighter credit and falling price.

Article source: http://feeds.nytimes.com/click.phdo?i=d8e8b4cc2391d8fbcade23ec5eacf7ca

The Fed Will Publish a Forecast on Rate Moves

The change was approved at the most recent meeting of the Fed’s policy-making committee, in December, but was kept secret until Tuesday afternoon, when the Fed released an account of the meeting after a standard three-week delay.

The inaugural forecast, set for Jan. 25, will show the range of predictions made by Fed officials about the level of short-term interest rates in the fourth quarter of 2012, 2013 and 2014, although it will not list individual predictions.

It also will summarize when they expect to start raising short-term rates, which they have held near zero since late 2008. And it will describe their plans for the Fed’s investment portfolio.

The forecast could reduce borrowing costs for businesses and consumers by convincing investors that the Fed intends to keep rates near zero for longer than expected. But the benefits most likely would be modest, as rates already are very low and already are widely expected to remain near zero into 2014.

A more significant possibility, is that the changes will set the stage for the Fed to announce an expansion of its existing economic aid campaign, for example, by once again increasing its purchases of Treasuries and mortgage-backed securities.

According to the meeting minutes, “a number of members” of the 10-person committee “indicated that current and prospective economic conditions could well warrant additional policy accommodation, but they believed that any additional actions would be more effective if accompanied by enhanced communication.”

This, however, is unlikely to have any broad impact on the economy, because the Fed lacks the power to address the most important issues weighing on growth, including a lack of demand from gloomy consumers, high levels of debt throughout the economy and the depressed condition of the housing market. Stock traders took the Fed’s announcement in stride as indexes continued their rise in the first day of trading in 2012.

The Standard Poor’s 500-stock index closed up 1.6 percent. The Fed’s staff, which prepares an economic forecast noted for its unusual accuracy in an uncertain business, reduced its medium-term outlook for growth, citing the impact of events in Europe, according to the minutes.

“The Fed’s core problem right now is that the parts of the economy through which those interest rate effects would normally get traction are blocked,” said Vincent Reinhart, chief United States economist at Morgan Stanley and a former senior Fed staff official. “It is not clear how effective any of these policies will be.”

The change in communications policy is part of a broader effort by the Fed’s chairman, Ben S. Bernanke, to improve public understanding of the central bank’s goals and methodology. It formalizes a series of experiments with forecasting that the Fed has made in recent years, beginning with its statement in December 2008 that rates would remain near zero “for some time.”

Talking about future policy was a longstanding taboo among central bankers, who worried that investors would treat the predictions as promises and react badly when some predictions inevitably were off base. But the Fed now is casting its lot with the growing camp that regards shaping expectations as a primary tool for monetary policy, and is eager to seize any opportunity.

The forecast will summarize the predictions of the Fed’s five governors — two seats on the board are vacant — and the 12 presidents of its regional banks, only five of whom hold votes on the committee at a given time. It will be included in an existing forecast of economic conditions — the rates of growth, inflation and unemployment — that the Fed publishes four times a year.

In presenting those forecasts, the Fed excludes the three highest and the three lowest estimates submitted by the officials. It then reports the highest and lowest predictions among the remaining 11 forecasts, showing a range that it describes as the “central tendency.”

For example, the forecast published in November, showed the committee expected growth of 2.5 percent to 2.9 percent in 2012.

The Fed also will publish what it described as “qualitative information” regarding the committee’s expectations about the management of the Fed’s balance sheet.

The Fed’s plans for buying or selling assets are, at present, of even greater interest to most investors than the path of short-term interest rates.

Support for the changes was not unanimous, according to the minutes, which said that some “did not see providing policy projections as a useful step at this time.” But no formal vote was recorded. Instead, the minutes reflect that the participants — not just the 10 members with votes — reached a consensus.

Article source: http://feeds.nytimes.com/click.phdo?i=ef751cea62ea4695213334237bc6448a

U.S. Import Prices Rebound

Sunday Review »

Loose Ends: Panning Salon

Beneath the holiday spending, consumers are grouchy.

Article source: http://feeds.nytimes.com/click.phdo?i=7c8b72ca3b60253ee99a8bc78bbabc4c

Bucks Blog: A Proposal to Simplify Credit Card Agreements

Bloomberg News for The New York Times

Credit card agreements are typically something you’d want to read only if you suffered from insomnia. A glance at a few lines of the dense type, printed on filmy paper, is sure to help you drift off.

But buried in all that fine print are important provisions that affect you financially. So the federal Consumer Financial Protection Bureau is proposing a new, simplified form, to help make the agreements more readable and useful to card holders.

“The bottom line is that many credit card agreements are confusing and most consumers don’t understand them,” said Raj Date, the agency’s temporary leader, in prepared remarks announcing the effort on Wednesday.

The prototype is short — about 1,000 words, compared with roughly 5,000 for the average industry agreement — and it does away with much of the legalese that is too dense for most consumers to digest. “Consumers won’t drown in page after page of difficult-to-understand terms,” Mr. Date said.

Instead, that language has been edited out and moved into a list of standard definitions that can be made available separately — online, for instance.

The resulting plain-language document, Mr. Date said, should do a better job of explaining how the credit card actually works, including what fees apply and when, and what to do if there is an error on the account.

The suggested form is meant as a “thought starter” and will be modified in response to feedback from card companies and the public.

At the same time, the agency is making available a database of existing credit card agreements from more than 300 card issuers, searchable by the name of the issuer as well as by specific terms. (If you have any doubt that the forms could use some simplifying, take a look at any one of the agreements.)

What do you think of the suggested form? What changes would you propose?

Article source: http://feeds.nytimes.com/click.phdo?i=e5b1c7e1fc3d85488aed8816d1ad070d

Bucks Blog: A New Credit Report Tracks More of Your Financial Life

This week’s Your Money column discusses a new credit report from a company called CoreLogic, which includes all sorts of information about your financial life that is not captured by the reports from the traditional credit reporting agencies.

So lenders will now be able to see whether you have any child support judgments or property tax liens, as well as any evictions or applications for payday loans. The company also claims to catch mortgages made by smaller lenders that the big credit bureaus may have missed, as well as any property that you own outright. And the list goes on.

CoreLogic has also partnered with FICO to create a credit score based on this new data, which will initially be used by mortgage and home equity lenders. While the score will be released in March, the “CoreScore” credit report became available to all types of lenders on Wednesday.

Within a year, the new report will be available through annualcreditreport.com, where consumers are entitled to one free copy annually. That’s the same rule that applies to each of the big bureau’s reports on the site currently. Until then, you can call 877-532-8778 to get a copy.

What do you think of this development? Will you get a copy of this new report? If you do, let us know how it compares to the traditional credit reports.

Article source: http://feeds.nytimes.com/click.phdo?i=cd5d437f58957e694cfecd391726b4b8