Thrifty and Thriving

Nope, that’s not an error. We usually think of rewards programs when we’re talking about credit cards. However, I just saw a story today from Smart Money that discusses the growth of debit card rewards programs. This growth is in response to a decrease in consumer credit-card use and an increase in debit-card use. To be competitive, you may see the following:

• Better rewards program offers — but watch out for the annual fee.
• Partnerships with retailers (hopefully some that interest you) to give you significant discounts if you use your card.
• More rewards for just being a customer — like Bank of America’s current “Keep the Change” program.

Read more about rewards debit cards from Smart Money.

FROM EARLIER: Citibank: Want a lower rate? Spend more money

An older post we wrote about American Express rate hikes has started heating up with new comments from bank customers who claim they have received letters informing them their rates are going up — by a lot. Read this recent comment from Vicki:

I got a letter from Citibank yesterday telling me that “to be able to extend credit to others” they needed to increase my intrest rate. I went from 9.9% to 29.99% I have not been late, nor have I missed any payments and have been a customer for many years. I went thru a hard year this past year and ended up putting a lot on the card but still maintained making the payments. How can this be fair????They are giving me till 12/20/09 (30 days) to cancel, pay in full or opt out…Where is the fairness to tax payers! The banks get bailed out with our money, then stick it to us???

Today, I found an article from the AP that may explain why this is happening. Starting in February, new legislation will go into effect that will restrict card companies from raising interest rates. When they do raise rates, they must give 45 days notice of the change. Citibank is preparing for this change by raising interest rates now — sometimes up to 30 percent. However, if you meet a minimum spending requirement (yes, I said requirement), you can get a rebate that will cover some or all of the rate hike. Read more. Want to know more about the legislation going into effect in February? Check out CreditCards.com.

Have your rates been hiked lately? Tell us your story.

Naomi from the Simpler Living blog took an interest in my post on debit cards and identity theft the other day and forwarded me this link from USA Today. It’s an article from Sandra Block that details not only the differences in fraud protection between debit and credit cards, but also how to protect yourself. Here’s how we’re protected by federal law:

• Truth in Lending Act: If you have a credit card and someone makes an authorized purchase, you are only liable for $50.
• Electronic Fund Transfer Act: You only have to pay $50 if you notice the unauthorized activity within two days and notify your financial institution. Notify them within 60 days, and you’re liable for $500. After that, you could lose it all.

I’ve always wondered about debit cards that allow you to sign for purchases or choose “Credit” on the keypad at the grocery store. According to the article, those cards, known as “signature cards,” provided by Master Card or Visa, have zero-liability policies to protect consumers from unauthorized purchases. Here’s some info from Visa’s and Mastercard’s Web sites.

If you use a debit card, here are some tips:

• Make sure no one has access to your pin. Don’t keep it in your purse or wallet or anywhere near your card.
• Don’t respond to e-mails requesting your pin or account info. A real bank would not ask for this through e-mail.
• Watch out for “card skimmers”: Keep an eye out for someone lurking behind you while at the ATM (or entering your PIN at the grocery store), and don’t use a suspicious ATM.
• Monitor your accounts online regularly. The sooner you catch unusual activity, the sooner you can report it.

Read more from USA Today.

And, get this, unlike other credit card companies, you can’t opt out and close your account. Read what some customers have to say about this at Consumerist.com.

If you’re an American Express customer, how will this affect you?

Larry Rulison reports that a hacker who managed to steal millions of credit and debit card numbers from customers of Hannaford and other businesses has been caught. That’s good news for these customers, but what happens when the person who steals your identity is not caught?

From the article:

Officials with the state Consumer Protection Board say that consumers should be diligent wherever they do their shopping but that in general, credit cards can offer more protection from identity theft.

“By using a credit rather than a debit card, shoppers have increased purchasing liability protections,” said CPB spokeswoman Deborah Rausch. “Watch for signs of fraud on accounts by checking your credit report for free three times a year and more often if you think you may be the victim of identity theft.”

The difference between credit and debit cards? According to the article, with an ATM card, an unauthorized purchase reported after two days can be limited to $500. With a credit card, that loss is limited to $50 as long as it is reported within 60 days of receiving your statement. I found an article in the New York Times that very clearly explains the difference between credit and debit cards.

Think you might be a victim of identity theft? The Federal Trade Commission has a site that outlines the steps you should take, including contact information for the three consumer reporting companies to obtain your credit report.

Kristi Gustafson wrote an interesting article in today’s Times Union about how the economy has affected college students’ access to credit. I remember getting a lot of offers with some amazing limits as a college student, even when I had no significant income. I was fortunate though, because my parents explained the dangers of getting into too much debt before I even started. Throughout college I had one credit card with a $500 limit that I used for books and emergency expenses. For me, it was after college, when I actually started earning money, that I found I had a tough time managing spending.

The article goes on to explain the pros and cons of today’s credit crunch. A positive is that young people are forced to learn fiscal responsibility and to live within their means, because they can’t get the sky-high credit limits they used to. There is less risk of destroying your credit before you even begin your career. A negative is, it won’t be as easy for students to begin building their credit history while in school. When they get out and want to apply for a car loan or a mortgage, they may face higher interest rates. Read the whole story.

Share your thoughts. What do think is the best age to start using credit cards?