Credit Cards, News and Notes

After Citigroup revealed that about 200,000 credit card accounts were hacked last month, the Federal Deposit Insurance Corporation (FDIC) is calling for stronger security measures at banks. The security breach comes after recent attacks on other businesses, schools and government agencies.

The hackers gained access to Citigroup customers’ email addresses and account numbers, but were not able to see Social Security numbers, birth dates, credit card security codes and card expiration dates, according to a USA Today article. Citigroup did elaborate too much on the security breach. “For the security of these customers, we are not disclosing further details,” Citigroup spokesman Sean Kevelighan said.

Security at banks and other financial firms has become a source of concern to many consumers. When information is stolen by hackers, consumers are at risk of identity theft, which has emotional and financial costs. Identity thieves can use consumer’s information to wipe out bank accounts, open new credit cards and do other significant financial damage.

Citigroup is contacting customers who might have had data stolen. But if you have one of the bank’s credit cards and are concerned about security, contact the company to get more information about your account and what kind of protection is place in case identity theft occurs.

Three banks are entering the online payments race and will let customers send money from checking accounts to other individuals with an email address or cell phone number. Bank of America, Wells Fargo and J.P. Morgan Chase launched the new service in a bid to compete with PayPal, according to the Wall Street Journal.

PayPal is the biggest electronic payment service out there. There are other companies out there trying to cash in on the popularity of online payments, so the banks are facing other competitors. The service is initially being offered free by the banks. While many banks offer the ability to send electronic payments, customers usually have to provide more information than with the new service. The service also does not require checking account holders to register for a separate account to move money the way PayPal does.

Many banks are looking to retain customers and find new sources of revenue. The Wall Street Journal article states that “U.S. households made more than $865 billion of payments between individuals through 11 billion transactions last year, according to a survey from consulting firm Aite Group LLC. That amounts to roughly $7,500 and 96 transactions per household.”

Using a business credit card could open you up to some of the problems that were addressed by the passage of the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009. Although the CARD Act created more transparency for consumers who take advantage of credit card offers, business cardholders may still be subject to harmful practices such as unpredictable pricing, according to a report from the Pew Charitable Trusts.

Among the harmful practices, banks and other credit card lenders can change the terms of business credit card agreements at any time, including rate changes. The CARD Act does not allow consumer credit card terms to be changed during the first year, and after that, cardholders must be given 45 days notice. Penalty rates on business cards can be applied immediately, while consumer cards don’t allow penalty rates to kick in until an account is 60 days past due. There also is no restriction on penalty fees for business cards.

People who use business credit cards that are not transparent about terms and conditions may run a huge financial risk because they are personally liable for the expenses. American households receive about 10 million business credit card offers each month, most of which have terms that would be illegal for consumer credit cards, according to Pew.

A recent survey by the U.S. Public Interest Group found that banks are still hiding fees from consumers. The survey found that fewer than half of bank branches failed fulfill their legal obligation to fully disclose bank fees to prospective customers. About a quarter of banks did not disclose any fees.

Surveyors visited 392 bank branches in 21 states to get information on fees and determine if banks were actually complying with requirements to disclose all account-related fees.

“Shopping for banks is harder when banks fail to obey the law and provide up front information about the fees they charge,” said Ed Mierzwinski, U.S. PIRG Consumer Program Director and author of the report. “We look forward to July 21, when the CFPB, the new consumer cop with only one job, protecting consumers, steps onto the financial beat and starts keeping the banks honest about their fees.”

As a consumer shopping around for the best banking deal, it is important to ask for all the terms and conditions before signing up for a checking account or other services. Ask for a fee schedule so you can fully evaluate the offer. If you aren’t happy with the fees and other terms, look for a different bank.

U.S. employers added jobs in April, according to the U.S. Department of Labor. Gains in employment were spread across various industries, with nonfarm payroll employment adding 244,000 jobs and the private sector adding 268,000.

Secretary of Labor Hilda L. Solis said in a statement:

April’s broad-based job gains were the largest we have seen in 11 months. Our economy has now seen private sector job gains for 14 months running. During this period, we have added 2.1 million private sector jobs, including 760,000 in the last three months alone. We have crossed an important threshold by creating more than enough jobs in each of the last three months to outpace growth in the labor force and put unemployed Americans back to work.

Despite the gains, the overall unemployment rate rose slightly to 9 percent from 8.8 percent.

Unemployment among teenagers is at a high 25 percent. That means many teens who could earn money and begin a savings won’t have the means to open a savings account. Teens not having an income could also be a drain on parents’ income and savings if they were relying on their kids finding a job.