Customers getting in control of their cards

Customers getting in control of their cards
In my last blog post, I talked about a Lloyds TSB Airmiles Duo card, which gives the customers a choice of using either MasterCard or American Express card for their purchases. I believe this is an example of a broader trend in card issuing – giving the customers more control. Here are a couple of other examples of card issuers giving customers more control: – Control of funding and settlement timing. Chase Blueprint card is a product combining a traditional credit card with debit, installment loan and financial planning functionality. It allows the customer to bucket payments into different categories – for example, everyday payments to be cleared in full or large one-off items to be paid off over time. It also offers tools to assist the cardholder in managing finances, such spending trends analysis and ability to set goals and set up payment plans. – Control of spending patterns and limits. Barclaycard and Orange have implemented the MasterCard’s inControl technology for their contactless card – the first deployment of this functionality for consumer cards. It lets cardholders set personalised controls, such as blocking a transaction made abroad. The customers can also set spend budgets and choose to receive instant SMS alerts or e-mails when these are exceeded. Regulation is also pointing in the same direction – Reg E in the US requires banks to let their customers choose whether they want to use the overdraft facilities on their ATM and one-off debit card transactions or not. I expect to see customers taking more control over their cards in the coming months and years.

Buy a TV at TD Bank?

Buy a TV at TD Bank?
TD Canada Trust recently launched an interesting web site called Shop MyAXS. It is an online shopping site that can be accessed only by TD Visa cardholders. In order to purchase an item, the user must enter their TD Visa account number and create a username and password. The site claims to offer savings of up to 50% off brand names to eligible shoppers. TD appears to have signed up for a loyalty program with a firm called MyAXS. MyAXS offers the online shopping portal and passes along the discounts to members.

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I find it curious that a bank would like to extend itself into the retail business. Granted consumer cards are used for retail purchases, but positioning the bank as a place to shop online is a completely different matter. The big question here is can TD encourage consumers to switch to a TD Visa by offering them shopping discounts? Even if customers do sign up for a TD Visa card, offering them a single deal or a handful of deals is not enough to encourage customers to alter their affiliations. Can it be used as a carrot? For sure. However, the features and rates of TD Bank’s cards would have to be extremely compelling in order for customers to switch. In fact, I would argue that TD is more likely to attract one-off deal shoppers than a loyal contingent of converts. It is also a nice feature/perk for existing cardholders.

TD also promotes the MyAXS offering on its own web site, buried in a section called “Related Services.”:

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Credit Card Legislation

Credit Card Legislation
Large credit card issuers have been given relatively free rein in the past. That has now come to an end with recent legislation. Double cycle billing is now over. According to the American Banker, “The statute allows card companies to increase rates on existing balances only when a payment is 60 days or more late, a promotional rate expires, the rate is tied to a variable rate or the cardholder has entered a workout agreement.” While I can understand how card holders are upset if they find their rates increased unilaterally, it also prohibits banks from repricing for risk when the financial circumstances of the card holder change. I can think of a reasonable compromise: a happy medium would be to allow limited rate increases on existing balances (say x% every 3 months) given certain well-defined changes such as a drop in FICO score of greater than y. This is unsecured credit, and if risk increases so should price. Mortgages, car loans, and HELOCs have a collateral to help banks recover some of their loans in worst case. Credit cards don’t, so I think banks deserve A BIT, more flexibility. Credit cards shouldn’t give banks carte blanche to double cycle bill, apply payments to the advantage of the bank, repeatedly charge overlimit fees for the same event. Look for similar Congressional action on NSF fees tied to debit cards. With the government bailing out the banks, citizens are feeling empowered to question some of the more egregious practices.