March 29, 2023

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?

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Bucks Blog: The Most Common Consumer Complaints

Consumer complaints to the Consumer Financial Protection Bureau were most often about mortgages and credit cards, according to a summary the agency issued Thursday.

The federal agency began taking complaints about credit cards in July 2011 and has gradually added other categories, including mortgages, bank accounts, private student loans and other consumer loans. Most recently, it added credit reporting as a category, and is working to add others including payday loans and debt collection.

The agency this month expanded its publicly available searchable database of complaints, and is encouraging analysis of the data. The database now contains about 90,000 complaints, the agency said. The agency also published a “snapshot” of the more than 131,000 complaints received from July 2011 through February of this year. (The number of complaints in the summary is larger than in the database because it includes complaints that were referred to other regulatory agencies,  found to be incomplete or are pending further review, the agency said.)

The summary shows that about half of the 131,000 complaints received concern mortgages — as might be expected, given the extended fallout of the housing crisis. The most common complaints concerned problems consumers encountered when they were unable to make payments, like issues with loan modifications or foreclosures.

“The complaints indicate consumer confusion persists around the process and requirements for obtaining loan modifications and refinancing,” the report said, particularly on issues involving submission of documents, payment trial periods and allocation of payments.

Roughly a quarter of complaints received by the agency overall related to credit cards, with billing disputes the most common problem.

More than 80 percent of the total complaints have been sent to companies for review and response. Companies have responded to 95 percent of complaints received, the report said.

The database includes companies’ description of actions they have taken to address the complaint. A company may label the complaint, for instance, as “closed, with monetary relief.”

Consumers can review and dispute the company’s response, and the agency uses that feedback to decide if the complaint warrants further investigation.

“By sharing these complaints with the public, we are creating greater transparency in consumer financial products and services,” Richard Cordray, the agency’s director, said at a public hearing in Des Moines, where the expansion of the database was announced.

Have you complained to the Consumer Financial Protection Agency? What was the result?

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Bucks Blog: A Deposit by Credit Card That’s Returned by Paper Check

Sometimes, it’s the little things that annoy you.

I have an older relative who needs help managing her affairs. She recently relocated to a new home, so I called to disconnect her cable television and telephone service, which are provided by Cox Communications.

When I stopped by the local office to return her cable equipment, I was surprised to learn that the deposits that the company had required to establish her account — $100 total, which I had paid for, on my credit card — weren’t going to be returned right away. And it wasn’t going to be credited back to my card. Rather, Cox would mail a paper check.

This made no sense. I didn’t have time to debate the representative, but later that day, I called customer service to inquire about the deposit policy. Why, I asked, couldn’t the deposit simply be credited to the card, avoiding the hassle of dealing with paper? After all, Cox had been happy to accept payment that way, to set up service. And the account had a credit due on it, so the deposit wasn’t needed to cover an outstanding balance. “I don’t know why” it’s done that way, the representative told me. She put me on hold to ask a supervisor, but came back with the same answer. Deposits are returned by check. Period.

Amy Quinn, a Cox spokeswoman, confirmed in an e-mail that all deposits were returned by paper check, to the account holder, and mailed to the bill-to address that Cox has on file.

“Due to privacy and security reasons, Cox provides refunds to our customers via paper check to the account holder and address that is in our billing system,” she said. “We cannot automatically refund deposits back to credit cards because we do not have the ability to confirm if the card we are refunding to is the actual account holder. This approach is designed to protect our customers’ privacy and security.”

She also noted that “by issuing refunds via check and sending it to the address we have on file in our system for that customer account, we are making our best effort to ensure the refund is provided directly to the account holder.”

I checked to make sure the paper checks weren’t just used for situations like mine, in which I had paid the deposit on behalf of someone else. But, no. Even if actual account holders pay the deposit by credit card, they would get the deposit back on paper, too.

Cox is also my cable provider, and I have generally found their customer service to be fairly responsive. So it’s disappointing that they can’t come up with a way to deliver funds electronically, when it’s more convenient for their customers.

Have you had to get a deposit back from a cable company? Did it come in paper form?



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Consumer Borrowing Soared in November

Americans increased their borrowing in November by the largest amount in a decade, the Federal Reserve said Monday.

Consumers took out more loans to buy cars and used their credit cards more to buy holiday gifts, a sign to some analysts of their growing confidence in the economy.

The Federal Reserve said total consumer borrowing rose $20.4 billion in November, the largest increase since a $28 billion gain in November 2001.

A category that measures credit card debt rose $5.6 billion, the most since March 2008.

Another category that tracks auto loans increased $14.8 billion, close to July’s increase, which was the biggest since February 2005.

The third consecutive monthly increase in overall borrowing is a departure from the thriftier habits practiced during and immediately after the recession, when credit tumbled and the savings rate climbed.

Many Americans are taking on more debt as the unemployment rate drops and the economy improves, albeit modestly.

Consumer confidence is up, holiday sales were solid and the domestic auto industry is coming off its best two sales months for the year.

That has prompted Americans to step up spending, even though their wages did not keep pace with inflation in 2011. Many are tapping into their savings or borrowing more as a result.

Borrowing has increased in six of the last nine months. And consumers saved just 3.5 percent in November. That is the lowest savings rate since the recession began in December 2007.

Americans saved less than 3 percent of their after-tax income in the three years before the recession began. But in 2008, as the unemployment rate began to rise and home prices fell, consumers cut back on spending, borrowed less on their credit cards and saved more.

The annual savings rate rose above 5 percent in 2008 and stayed above that level until 2011. At the same time, consumer borrowing fell for 26 consecutive months, from October 2008 until December 2010.

Economists caution that Europe’s debt crisis could slow growth in the United States. A recession in Europe could damp demand for American exports and weaken financial markets.

The Federal Reserve’s borrowing report covers auto loans, student loans and credit cards. It excludes mortgages, home equity loans and other loans tied to real estate.

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Bucks Blog: A New Verizon Fee for Some Bill Payments

Our colleagues on the Bits blog have a post of interest to our readers, too. It says that Verizon Wireless plans to begin charging a $2 fee on Jan. 15 when customers use their credit cards to make a one-time payment online or over the phone.

The company, which calls the $2 charge a “convenience fee,” said that customers who make automatic monthly payments with their credit or debit cards or through their checking accounts will not have to pay the extra charge.

The company said it was encouraging people to use these free options, which also include sending a paper check or pushing money electronically to the company via your bank’s online bill-payment system. The fee also won’t apply to one-time credit card payments made in a Verizon store.

Companies like being able to deduct monthly payments from subscribers’ accounts because they are guaranteed the money. How do you feel about automatic payments? Do any of you pay in the way that Verizon is now trying to discourage?

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Bucks: Want to Pay Less for Car Insurance? Have Good Credit

Everyone knows that having a good credit score qualifies you for lower interest rates on loans and better terms on credit cards. But it can also affect the rates you pay for car insurance — sometimes quite significantly, when the savings are measured over time.

The most important factors in setting rates generally are your age, where you live and driving record, says Des Toups, senior managing editor of, a rate-quoting Web site. But most insurers also check your credit when quoting a rate, because there’s a correlation between your score and the likelihood you will file an insurance claim. The higher the score, the less likely you are to file one.

While the practice of checking credit scores for auto insurance quotes is widespread, it’s still somewhat controversial. One company, Cure Insurance, markets itself as one that specifically does not check credit scores. “Think about it,” the round blue “spokes head” that functions as the company’s logo, says on its Web site. “What does credit history have to do with your driving skills?” A handful of states, including California and Massachusetts, forbid the practice of checking credit scores for auto insurance quotes. But efforts to ban it nationally through federal legislation have failed.

An analysis from finds that drivers with credit scores over 750 – typically considered very good credit — pay considerably less than a driver in the same age bracket with merely average scores.

The study compared the lowest rates offered for nearly 43,000 single-driver policies insuring one car with liability, comprehensive and collision coverage, when the driver reports no violations or accidents. The credit score used was calculated using data from TransUnion, one of the three major credit bureaus; it isn’t a true FICO score, which is the number a lender typically uses. Rather, it’s a version of the so-called insurance score that insurers check when you apply for coverage. The insurance version uses the same information as a traditional credit score, but gives more weight to factors deemed to reflect risk, like bankruptcy filings and maxed-out credit cards, Mr. Toups says.

The analysis found that young adults ages 25 to 34 with clean driving records, for instance, pay an average of $1,938 a year for full auto coverage. But those same drivers with a credit score over 750 pay an average of $1,155 — a 40 percent savings.

Drivers in that same age group with credit scores of 650 to 749 pay an average of $1,658, a savings of $280 compared with the overall average; those with lower scores, of 500 to 649, pay an average of $2,023, or $85 more. (Drivers with no credit file are penalized the most; they pay an average of $2,182, or $244 more than the overall average.)

The benefit continues through subsequent age brackets as well. Premiums tend to drop as drivers age, but high credit scores still mean you’ll pay less. If you kept a good credit score until retirement, you’d save nearly $23,000 over the average premium paid by people with similar driving records, Mr. Toups says.

Do you think it’s fair that your credit history affects your car insurance rates?

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DealBook: Capital One to Buy ING’s Online Bank for $9 Billion

Peter Foley/Bloomberg News

9:54 p.m. | Updated

Capital One Financial agreed on Thursday to buy the ING Group’s online banking unit in the United States for $9 billion in cash and stock, one of its biggest efforts yet to add to offerings beyond credit cards and other consumer lending.

Under the terms of the deal, Capital One will pay $6.2 billion in cash and issue $2.8 billion worth of new shares to ING, giving it a 9.9 percent stake. ING will also have the right to name a director on Capital One’s board.

Long known for cheeky credit card ads asking customers “What’s in your wallet?” Capital One is seeking to build up a national banking franchise. Buying ING Direct USA, one of the best-known online banks in the country, will help give Capital One a broader platform and a huge source of lower-cost funds.

Currently the eighth-biggest bank in the country by deposits, Capital One will rise to the fifth-biggest through the deal.

“The acquisition of ING Direct is a game-changing transaction that delivers attractive deal economics immediately and compelling long-term strategic value,” Richard D. Fairbank, Capital One’s chairman and chief executive, said in a statement.

ING was reluctant to shed its online banking business, one of its crown jewels and a leader in the expanding direct banking industry. But it was forced to sell off the unit by the European Commission as part of the bank’s 10 billion euro bailout in 2008.

“Although I regret that ING Direct USA will no longer be a part of ING, I am very pleased that we have found in Capital One a good home for our customers and employees, who are very important to the continued success of the ING Direct USA Business,” Jan H. M. Hommen, ING’s chief executive, said in a statement.

Capital One emerged the winner of a relatively crowded auction, one that also included General Electric’s GE Capital and the CIT Group, according to people briefed on the matter. One of the reasons Capital One prevailed was its willingness to shoulder more than $60 billion worth of mortgages and mortgage-linked securities.

In order to help pay for the transaction, Capital One said it planned to raise about $2 billion from a sale of new shares and $3.7 billion from selling new debt.

But the bank insists that the deal will pay for itself quickly. Capital One expects to reap $90 million in savings from combining back-end systems and staff, as well as $200 million from lowering funding costs. The transaction will also add to Capital One’s earnings per share beginning next year.

Shares in Capital One began rising on Thursday afternoon after Dow Jones reported news of the impending deal, closing up $1.13, or 2.4 percent, at $49.

The deal is expected to close by the end of the year or early next year, pending regulatory approval.

Capital One was advised by Morgan Stanley, Barclays Capital, Centerview Partners and the law firms Mayer Brown, Loyens Loeff and Wachtell, Lipton, Rosen Katz. ING Direct was advised by Deutsche Bank and JPMorgan Chase.

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Credit Cards Got More Use in March

Opinion »

Should Colleges Ban Fraternities?

A Room for Debate forum on how to rein in students who drink more and behave more lewdly toward women.

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