Banks and Retailers Move on the Chip for Credit Cards

Banks, Retailers Speed Up Drive to Add Chips to Credit, Debit Cards

Data Breaches Spur Effort to Boost Security; End of the Swipe?

GLEN ALLEN, Va.— Morgan Montgomery inserted a credit card into a device, pulled it out and tried to pay for her groceries. But the transaction failed because she didn’t realize the card was supposed to stay in the machine while she signed for the purchase.

“I don’t like letting go of it,” she said of the card. “I’m worried about leaving it behind.”

Ms. Montgomery, a 30-year-old business owner from Richmond, Va., was one of 10 consumers who swiped, dipped, tapped and fiddled their way through imaginary purchases earlier this month as part of research being conducted by MasterCard Inc.MA +1.98% into new credit cards that are coming to American wallets in an attempt to combat fraud.

EMV Contactless Card on Ingenico 1CT

The push for the new cards is taking on greater urgency following a number of high-profile data breaches in recent months that have exposed millions of consumers to potential fraud. Just last week, grocery chain Supervalu Inc. SVU +2.15% disclosed that it was investigating a breach that could affect shoppers at roughly 1,000 supermarkets.

Major lenders, regional banks and credit unions are rolling out the new cards, which contain a computer chip in addition to the traditional magnetic strip on the back. Merchants, too, are installing new terminals at the cash register to accept the cards.

The Supervalu incident follows a rash of other breaches, from the massive hack atTarget Corp. TGT +1.51% during last year’s holiday shopping season to smaller ones at restaurant chain P.F. Chang’s China Bistro Inc. and Goodwill Industries International Inc. thrift stores.

In all, U.S. lenders will issue more than 575 million chip credit and debit cards by the end of 2015, representing roughly half of the one billion cards now in circulation, according to an industry-group projection.

Chip cards have been used widely in Europe, Asia and Canada for years. But they have been slow to take hold in the U.S., in part because of a “chicken-and-egg” battle between the card industry and merchants. Businesses didn’t want to invest in new technology until the card companies issued the plastic to consumers, while the card companies didn’t want to give them to customers until there was a place where they could be used.

Now, the breaches are making both sides eager to roll them out. Bank of AmericaCorp. BAC +1.45% , the nation’ second-largest credit-card issuer after J.P. Morgan Chase JPM +0.80% & Co., and regional lender SunTrust Banks Inc. STI +0.94%are among the institutions now putting chips on plastic sent to new customers or existing customers whose cards are expiring.

“By the time we get to holiday shopping, there will be a good base of chip cards in the market,” said Carolyn Balfany, who is overseeing MasterCard’s transition to chip cards.

Merchants, too, are upgrading the computer terminals at the cash register to accept the new cards. Wal-Mart StoresInc. WMT +0.74% is using the technology at more than 4,600 of its nearly 5,000 stores in the U.S. and expects to have the rest upgraded by the end of the year, according to a company spokesman.

Each transaction made with a chip card has a unique code attached to it, reducing the chance that stolen card data can be used to make counterfeit plastic. Such cards likely wouldn’t have prevented the hacking at Target, but the card data would have been useless to thieves, experts say.

U.S. credit-card-fraud losses totaled roughly $18 billion last year, according to Javelin Strategy & Research, a consulting firm that is a unit of Greenwich Associates. About a third of those losses are attributed to the counterfeit cards, according to consulting firm Aite Group.

The new cards come with changes to the basic way people are accustomed to paying for purchases. Although the cards still have a magnetic strip on the back to be used at merchants that haven’t upgraded their technology, the computer chips don’t work with a swipe at the register. Instead, shoppers slide the card into the bottom of the terminal and leave it there while the purchase is processed.

“It’s going to take some patience and time with the merchants’ staff and the customers that are making the purchases,” said Mike English, executive director for product development at Heartland Payment Systems Inc. HPY +1.55% The Princeton, N.J., company, which processes transactions on behalf of merchants, is training its customers to use the new equipment.

 

Some of the new credit cards also may require shoppers to enter a personal identification number instead of a signature. That was one of the trickiest changes for Canadians who weren’t accustomed to having a PIN for their credit cards, said Ellen Richey, vice chairman of risk and public policy at Visa Inc. V +1.92%

“Consumers aren’t used to it, they don’t remember it and they don’t think they need it. Then all of a sudden, they are at the cash register and can’t remember their PIN,” she said.

To ease the way for U.S. consumers, the card industry will be flooding mailboxes and websites in coming months with information about how to use the new cards. Some card terminals at the cash register will prompt shoppers through the transaction process and issue a series of beeps to remind them to remove the card at the end.

MasterCard recently tested consumer reaction to the cards at focus groups in St. Louis and Towson, Md. At the focus group earlier this month, consumers were escorted into a conference room to test a number of ways to use a chip card.

Ms. Balfany and a few members of her chip-transition team watched and took notes on consumers’ reaction from the other side of a two-way mirror.

After answering questions about how they typically pay for purchases, the consumers were given a chip card and led to two terminals where they were guided through a series of imaginary purchases. A few were initially uncertain about where to insert the card or how long to leave it in the device, but sailed through the process on the second or third try. Nearly all of them liked a process in which they tapped the card on the terminal’s screen.

Said Jerry Greenway, 67 years old, from Richmond, Va.: “If it helps make the cards more secure, I’m all for it.”

Read More: http://online.wsj.com/articles/banks-retailers-speed-up-drive-to-add-chips-to-credit-debit-cards-1408377051?KEYWORDS=ROBIN+SIDEL

Smart Ways to Use credit Cards for Your Wedding

3 Smart Ways to Use Credit Cards to Help Offset Wedding Costs

Simple.Thrifty.Living

This might sound like the worst idea, but sometimes putting some wedding costs on a credit card can actually make good financial sense. You just need to be careful with how you use it.

Most people think of credit cards as a slippery slope when it comes to big purchases, with interest rates and fees adding up to put you in debt. The problem is, most people don’t realize that if they pay the balance of their credit card off every month on time, they won’t be hit with those interest rates or fees.

This works perfectly for wedding spending. If you already have the money to pay for the wedding, using a credit card for the rewards can have huge benefits if you plan to pay off the balance right away. Here are three ways to use credit cards to help pay for your wedding.

Get Cash Back Rewards to Help Pay for the Wedding

If you need some help paying for the wedding, a cash back credit card can be a huge benefit. These credit cards will give you cash back for every dollar you spend and, in some cases, up to five percent cash back, depending on what you use the credit card to buy. Some credit cards offer higher rewards for spending on grocery stores or gas, while others will give you more rewards for shopping online. Regardless, you will at least be getting cash back for every dollar you spend.

The key to making the most cash back from your purchases is knowing your rewards. Pick a card that will give you the most cash back for what you will be buying. While most credit cards won’t give you extra cash back for charging your catering or DJ, some cards will give extra cash back on department store purchases (for rehearsal clothing or wedding party gifts) or online purchases (for invitations or party favors). Some store-branded credit cards, like the William Sonoma card, even offer great cash back rewards on your registry. Do some research and find the credit card that will work best for your wedding.

Get Travel Rewards for Your Honeymoon

If you have big plans for your honeymoon, using a travel rewards credit card to charge some of your wedding costs can pay off. The best travel credit cards will offer 2x the points for every dollar you spend, like the Barclaycard Arrival Plus World Plus Elite MasterCard. Putting a large balance on your credit card from your wedding costs can rack up a huge amount of points, which can translate into possible free flights or free hotel stays for your honeymoon.

If you already know your honeymoon plans, you can also apply for a loyalty credit card like a United Airlines card or a Starwood hotels card. These usually offer more points for buying flights and hotel stays within the brand. The only problem with these cards is there are usually restrictions when it comes to using your points, where general travel cards like the Barclaycard allow you to use your points to pay for any travel expenses already on your card, which means no black-out dates or restrictions. As with the cash back cards, you should make sure that you are able to pay off the balance immediately, otherwise the fees and interest that you might accumulate could outweigh the benefits of the rewards.

Get a 0% Intro APR Card to Pay for the Wedding Later

Not sure you can afford your dream wedding now? If you plan on postponing paying for part of your wedding, getting a 0% intro APR credit card might be a good idea. A 0% intro APR basically translates to no interest charged on your balance for a period of time. These credit cards let you pay for a big balance without generating interest for up to a year and a half. As long as you are paying off the minimum balance each month, you won’t be charged interest for as long as the 0% intro APR period is in effect. Discover it card now offers a 0% intro APR for 14 months, so that might be a good card to consider.

If you’ve already put a lot of your wedding costs on a current credit card, you can also apply for a balance transfer credit card with a lengthy 0% intro APR so you can stop paying interest on those wedding costs. If you are going to transfer a balance, the same Discover card also offers a different version of their it card that gives you a 0% intro APR for 18 months on balance transfers. Just keep in mind that most balance transfer credit cards charge a balance transfer fee, which is based on how much money you are transferring. As long as the balance transfer fee is less than the interest you would accrue by not transferring, a balance transfer is still a good idea.

Another Data Breach

JEWEL-OSCO OFFERS HELP TO SHOPPERS AFTER DATA BREACH

Sun-Times Media Wire
Friday, August 15, 2014
CHICAGO —
The parent company of Jewel-Osco announced Friday that some of its customers’ credit card data may be compromised after computer hacking – the company called it an “unlawful intrusion” – involving some of its stores, including those in Illinois and Indiana.

Customers who used a credit or debit card at Jewel-Osco between June 22 and July 17 may have their data compromised, according to a statement posted on the company’s website. However, the company, AB Acquisition, said they have since contained the intrusion and have yet to determine if any cardholder data was in fact stolen.

Jewel’s parent company is offering customers whose payment cards may have been affected 12 months of complimentary consumer identity protection services through allCLEAR ID. The number to call is 855-865-4449.

“We know our customers are concerned about the security of their payment card data, and we work hard to protect it,” Mark Bates, senior vice president and chief information officer at AB Acquisition LLC, said in a statement posted on the site. “It’s important to note that there is no evidence at this point that consumer data has been misused.”

“Consumers really need to be watchful, especially their bills, because everything’s computerized now. And I always tell consumers, check your bills, at least once a week to see what’s on there,” said Steve Bernas, Better Business Bureau.

The company has hired a third-party forensics team to investigate and the intrusion. AB Acquisition said it would release more have further information within the next day.

At the Jewel marketplace in River North, managers said they had seen little drop-off in customer traffic, but regulars were wary.

“I mean it makes me not want to shop here. If I had known that before I probably would have gone somewhere else,” said Lindsey Granville.

Cyber security expert Don Zoufal says last year the U.S. experienced 15 million identify thefts that cost $50 billion. When Target was hacked just before Christmas last year, he says a wake-up call went out to consumers. But the cascade of stolen information has carried on with restaurants, yacht clubs and even the U.S. government falling victim.

“One of the ways forward I think is to look at smart cards, which are cards that are encrypted with data about the individual so that ultimately the systems can identify the individuals,” said Zoufal.

There has also been a data breach at a number of Supervalu grocery stores, as well as at some of its stand-alone liquor shops.

The company said Friday that hackers accessed a network that processes store transactions. Account numbers, expiration dates, cardholders’ names and other information may have been stolen.

Stores in Minnesota, Virginia, Illinois, Maryland and Missouri may have been affected.

The cards from which data may have been stolen were used at 180 Supervalu stores, 29 Cub Foods stores and some liquor stores between June 22 and July 17.

Supervalu Inc. says that it hasn’t determined if any such cardholder data was actually stolen and that there’s no evidence of the data being misused, but that it was announcing the data breach out of “an abundance of caution.”

WLS-TV, the Sun-Times Media Wire and the Associated Press contributed to this report.

Credit Card Skimming: what to watch for

Don’t get ripped off by credit card skimming

When you swipe your credit or debit card, there is always a risk of giving ID-theft criminals what they need to steal your money through what is known as “skimming.”

Criminals install electronic devices at locations at which we use cards, such as an ATM, a grocery store or a gas pump. As you use your card for valid transactions, the device copies your credit or debit account information in the magnetic strip on the back of your card. This is skimming.

Recent news reports have shown that ID-theft criminals are installing card skimmers at bank ATMs and point-of sale-terminals. They deliver an opportunity to conduct illegal transactions — in your name, from your accounts.

The prize that ID-theft criminals value most is capturing debit card data complete with personal identification numbers. This allows them to make counterfeit cards to withdraw cash directly from your bank accounts at ATMs.

That said, credit and debit card transactions continue to be a big target for ID-theft criminals. These four types of skimming fraud lead the way:

• Pay-at-the-pump skimming. Devices are secretly placed inside the gas pump. Often these devices include a small video camera that records you as you enter your PIN or billing ZIP code. To make matters worse, currently there are approximately four universal keys that open the majority of gas pumps in the US. Criminals are aware of this and often duplicate these keys to install the skimmers.

• ATM skimming. Unlike gas pumps, financial institution ATMs require unique keys and codes. However, law enforcement has documented multiple methods of ATM skimming where criminals replace PIN pads on ATMs with manipulated devices that collect card details and PINs as customers use their cards.

• Point-of-sale skimming. POS skimming may occur at retail stores where customers swipe their credit/debit cards using point-of-sale terminals. If tampered with by ID-theft criminals, the skimmer can record all information for every credit and debit card processed through the card reader.

• Magnetic-card reader skimming. This occurs when your card is out of your sight, such as at a restaurant or in a drive-through, as a dishonest employee can swipe your card through a card reader that stores the information from the magnetic strip, allowing for the creation of a fraudulent credit/debit card.

Here are recommendations to reduce the risk of being a skimming victim:

• Never allow your debit card to be swiped away from your view.

• Cover PIN and ZIP code entries when in public.

• When using a debit card, do not type in your PIN; instead, select the credit option as consumers have greater protection under credit-card transaction laws.

Mark’s most important: Be aware that skimming is happening, and do your part to reduce the chances that you’ll become a victim.

Mark Pribish is vice president and ID-theft practice leader at Merchants Information Solutions Inc., a national ID-theft and background-screening provider based in Phoenix.

2 New York-area men arrested with 60 counterfeit credit cards, Westfield police say

By Dan Warner 
on August 13, 2014 at 11:33 AM

WESTFIELD – Two men were arrested this week in Westfield with dozens of counterfeit credit cards and more than 50 gift cards that they purchased as part of a scam, police say.

Felix Santos, 22, of Brooklyn, and Michael Gilbert, 22, of Dunellen, New Jersey, face charges in Westfield District Court, and at their Tuesday arraignments Judge Philip Contant held each on $500 bail.

Santos is charged with unlicensed operation of a motor vehicle, receiving stolen property of more than $250, possession of a counterfeit credit card press and attempt to commit a crime. Gilbert is charged with receiving stolen property, attempt to commit a crime and improper use of a credit card of more than $250.

Police say Gilbert was attempting to purchase $300 worth of prepaid visa cards at Rite Aid in Westfield when a manager recognized the ruse that had been plaguing other Rite Aids. The manager canceled the transaction and called police.

Officers encountered the men driving in the Big Y parking lot, the police report said. Santos was driving, but he only had a New York learner’s permit and Gilbert’s license was expired, the report said.

Santos was carrying two credit cards in his name, and police found 23 more in the vehicle, the report said. Gilbert had 10 cards on him, and 25 others bearing his name. Officers discovered they were counterfeit because they had incorrect customer service numbers on the back and the card numbers were not issued by the banks on the cards, the report said.

The report said there were 51 $25 pre-paid Visa and American Express cards in the vehicle.

http://donup.org/1369

Target Hack Update

An Expensive Hack Attack: Target’s $148 Million Breach 

TOM GARA AP 1:34 pm ET Aug 5, 2014

The massive breach of Target’s computer systems in late 2013 was a costly one: Financial institutions alone spent more than $200 million in response to the hack, replacing millions of credit cards whose data had been compromised, while the company’s Chief Information Officer and CEO both left their posts in its wake.

And today, another sign of the hack’s full cost: Target TGT +0.17% says its coming second-quarter results will include $148 million in expenses related to the breach. It will get back $38 million of that via an insurance payout, but it’s still enough to be a drag on results. It means to total costs of the hack across all the parties involved is likely over $350 million.

Via Target’s statement, emphasis ours:

During fourth quarter 2013, Target experienced a data breach in which an intruder gained unauthorized access to its network and stole certain payment card and other guest information. In second quarter 2014, the Company expects to record gross breach-related expenses of $148 million, partially offset by the recognition of a $38 million insurance receivable.

Expenses for the quarter include an increase to the accrual for estimated probable losses for what the Company believes to be the vast majority of actual and potential breach-related claims, including claims by payment card networks.  Given the varying stages of claims and related proceedings, and the inherent uncertainty surrounding them, the Company’s estimates involve significant judgment and are based on currently available information, historical precedents and an assessment of the validity of certain claims.

These estimates may change as new information becomes available and, although the Company does not believe it is probable, it is reasonably possible that the Company may incur a material loss in excess of the amount accrued.  The Company is unable to estimate the amount of such reasonably possible excess loss exposure at this time.  The accrual does not reflect future breach-related legal, consulting or administrative fees, which are expensed as incurred and not expected to be material in any individual period.

Target lowered its earnings expectations, saying U.S. sales were flat and margins were lower due to discounts. Results will be reported on August 20.

Chipped Cards still need security…

Payment cards with chips aren’t perfect, so encrypt everything, experts say

Lucian Constantin PC World Aug 8, 2014 6:30

There’s a push to adopt chip-equipped payment cards in the U.S. following high-profile breaches at large retailers and restaurant chains during the past 12 months, but experts warn that switching to this payment system will not make fraud disappear.

The EMV (Europay, MasterCard and Visa) standard is widely deployed around the world, and for the past 10 years or so it has been the de facto payment card system in Europe, where it’s also known as chip-and-PIN. The cards authenticate with ATMs and payment terminals using the combination of a customer PIN and information stored securely on an integrated circuit.

In order to drive EMV adoption in the U.S., the credit card brands plan to shift liability in October 2015, after which parties that haven’t deployed the system will be held liable for fraudulent transactions.

However, the EMV specification suffers from both regulatory and security issues, some of which have already been exploited in real-world attacks, according to Ross Anderson, a security engineering professor at Cambridge University with 25 years of experience in payment systems security.

During a talk on Thursday at the Black Hat security conference in Las Vegas, Anderson highlighted some of the attacks that are possible against existing EMV implementations. Banks have tried to downplay these as impractical or too complex for cybercriminals to launch, he said.

The “preplay” and “no PIN” attacks are two examples. In a “preplay,” a card inserted into a rogue payment terminal can be charged for a transaction that’s done with a fraudulent card at a terminal somewhere else in the world. In the “no PIN” attack, a criminal uses a stolen card that’s wired to a portable device with a rogue card inserted into it. That lets the attacker bypass PIN verification at POS (point-of-sale) terminals in order to authorize rogue transactions.

More recently, Anderson’s team at Cambridge discovered that many EMV-capable ATMs and payment terminals generate random numbers in a predictable manner. This allows someone with temporary access to a credit card, such as a waiter, to calculate authentication codes that then can be used for transactions in the future. Worse, a rogue or compromised POS terminal can generate authentication codes for a card inserted into it, and those codes can later be used to authorize additional rogue transactions.

Some of these attacks don’t stem from issues in the EMV standard itself, but rather from the poor implementation of it by payment terminal vendors, according to Anderson. Banks don’t have enough incentive to act, because liability for fraud shifts to the merchants if EMV is not used in a transaction and to consumers if EMV is used with the correct PIN number, he said.

That tendency to blame the card owner is based on the premise that since EMV cards—or rather their chips—cannot be cloned, if a fraudulent transaction is done with such a card and the correct PIN, the card owner has been negligent.

Whether U.S. banks will try to shift liability to consumers for PIN-authorized EMV transactions remains to be seen, as consumer protection in the U.S. is better than in Europe, Anderson said. EMV adoption in the U.S. will be an interesting experiment because some banks want to implement chip-and-PIN cards, while others favor a chip-and-signature model, Anderson said.

The EMV specification as it exists today is vastly complex, and vendors have made additions on top of it, which means that it’s easy to make mistakes when implementing it, Anderson said. Depending on how much attention you pay, you can design a secure system using EMV or an awful one, he said.

Lucas Zaichkowsky, an enterprise defense architect at AccessData whose previous jobs involved investigating credit card breaches and assessing compliance with payment card security standards, agreed with Anderson.

“People think that if we switch to EMV, these breaches will go away, but that’s not true,” said Zaichkowsky, who also held a presentation about POS system architecture and security at Black Hat. During an EMV transaction, RAM-scraping malware can steal the same data that’s on the magnetic stripe if the chip is not implemented correctly, and several banks don’t do it properly, he said.

That data can then be used to create counterfeit magnetic stripe cards to conduct fraud in most countries, even those already using EMV because most EMV readers are also configured to accept the magnetic stripe in “fallback mode.”

In addition, most EMV-enabled POS terminals support both chip cards and traditional magnetic stripe cards. When you attempt to swipe an EMV card, the payment terminal should refuse it and ask you to insert it in the smart card reader instead. That doesn’t always happen, according to Zaichkowsky.

As an example, he said that his credit card was swiped at a POS terminal in Italy because the cashier was used to U.S. cards not having chips, despite his card having one. There was no error and the transaction went through, he said.

Even if everyone in the world would switch to chip-enabled cards and traditional magnetic stripe ones would disappear, fraud would most likely shift from card-present transactions to card-not-present transactions, such as those done online or over the phone, he said.

Fraud statistics up to 2012 actually show that this has happened in Europe since the deployment of EMV, Anderson said.

With an EMV transaction, a compromised POS terminal can still get the credit card number and expiration date, Zaichkowsky said. There are many places where this is all you need to place an order, because they don’t ask for the three-digit security code or verify the billing address, he said.

This means that cybercriminals will continue to have an incentive to compromise POS terminals, even with widespread EMV deployment.

The sophisticated EMV attacks that Anderson and his team at Cambridge identified aren’t widely used yet, partly because criminals have easier ways to abuse EMV cards today. That’s because they’re currently designed to also work with ATMs and payment terminals in countries where the system is not deployed, such as the U.S. Information captured from the magnetic stripe of a chip-equipped card can be used to create a counterfeit copy that doesn’t have a chip. That cloned card cannot be used in Europe but works in the U.S., where the chip isn’t needed anyway.

The fewer places in the world where cybercriminals can use such cards, the harder it will be for them to steal money from them. That might lead criminals to start using EMV attacks like those described by Anderson.

One technology that has a much better chance of preventing attackers from stealing card data is point to point encryption from the card reader to the payment processor, according to Zaichkowsky.

Security experts have recommended point to point, or end to end, encryption for card-present payments for years. Adoption has been slow because it requires replacing card readers and PIN pads with new ones that support the technology, a significant investment that most merchants were not prepared to make.

However, now that many of them will have to change their terminals anyway in order to support EMV, it would be better if they also took the opportunity to choose terminals that encrypt the card data at the reader, Zaichkowsky said.

High Interest Rates, Be Careful…

Watch out for credit cards issued by retailers

Lisa Kiplinger, USA TODAY 8:47 p.m. EDT August 7, 2014

You’re checking out at a store, and the cashier says, “You could save 15% today if you sign up for our credit card.” What do you do? “Say no, thanks,” says CreditCards.com senior industry analyst Matt Schulz.

 

Credit cards offered by retailers come saddled with an average APR of 23.23%, according to a CreditCards.com report out today. That’s more than twice the national average of low-interest-rate cards, 10.37%. And it’s 8 percentage points higher than the national average for all credit cards, 15.03%.

 

CreditCards.com surveyed 36 retailers from the National Retail Federation’s Top 100 Retailers of 2014, and the retail card with the highest rate was jeweler Zales, at 28.99%, followed by Staples and Office Depot, at 27.99%.

 

Interest rates are something people rushing through a checkout counter might not stop to consider, but they should.

 

“Anytime that you’re making a decision without taking the time to read through the contracts and terms of service, it’s not (a good idea),” Schulz says. “It’s always best when you’re offered one of these cards to take a step back and think about it.”

 

He recommends that shoppers take a brochure about the credit card home to look over before making any commitments. In the meantime, they should shop around to get the best card for their needs.

 

“As competitive as the credit card market is today, issuers are starting to get looser with their lending, so you should never have to settle for high interest rates,” Schulz says. You should shop around. … CreditCards.com, Bank of America, Chase, all the usual suspects. People have plenty of options.”

 

Don’t be swayed by that 15%-off offer: Higher rates can far outweigh the one-time deal for anyone who carries a balance, which is about 40% of American households, according to the Fed’s Survey of Consumer Finances.

 

For example, someone with a $1,000 balance on the average retail credit card who makes the minimum payments would rack up $840 in interest fees before paying it off. The same person with an average low-rate card would pay only $232 in interest.

 

“The key, as with any credit card, is to pay it off each month, so that interest rate is moot,” Schulz says.

 

For those who pay off balances in full, retail cards with reward programs can make sense. The programs are on the rise. Of the retailers surveyed, about two-thirds offer introductory financing rates, instant rewards or both.

 

Nordstrom is one such retailer with a tiered rewards program. It offers $20 “Nordstrom Notes” to use at its stores, early access to sales, free alterations and special events, based on a cardholder’s purchases.

 

“That is one way that Nordstrom can compete with a more generic Visa or MasterCard,” Schulz says. “And it gets people back in the store.”

 

RETAIL CARDS WITH HIGHEST RATES

 

• Zales: 28.99%

 

• Office Depot Personal Credit Account: 27.99%

 

• Staples Personal Account: 27.99%

 

• My Best Buy credit card: 25.24%-27.99%

 

• My Best Buy preferred credit card: 25.24%-27.99%

 

 

TOP 5 LOWEST-RATE RETAIL CARDS

 

• Army Air Force Exchange Military Star card: 10.24%

 

• OfficeMax Visa Signature Card: 9.99%-23.99%

 

• Nordstrom retail card: 10.90%-22.90%

 

• Nordstrom Visa Signature card: 10.90%-22.90%

 

• Williams-Sonoma Visa Signature card: 13.74%-21.74%

 

TOP 10 RETAILERS’ CARD RATES (based on National Retail Federation’s 2014 Top 100 retailer list that offer a consumer credit program)​

 

• Walmart: 22.90%

 

• Kroger: 13.99%-23.99%

 

• Costco: 15.24%

 

• Target: 22.90%

 

• Home Depot: 17.99%-26.99%

 

• Lowe’s: 24.99%

 

• Amazon store card: 25.99% / Amazon Rewards Visa: 14.74%-22.24%

 

• Best Buy: four different cards ranging from 17.99%-27.99%

 

• Macy’s: 24.50%

 

• Sears: 25.24%

 

Source CreditCard.com

Store Issued Credit Cards to AVOID

Don’t get credit cards from these 5 stores

Retail card interest rates climb to an average of 23.23%

By Catey Hill, MarketWatch Aug. 7, 2014, 9:48 a.m. EDT

Buyers beware: The insanely high interest rates on some stores’ credit cards make the markups they add to merchandise look like child’s play.

Read: This is the sneakiest thing stores do to trick consumers.

According to a survey of 61 major retail credit cards released Thursday byCreditCards.com , a credit-card comparison website, retail credit cards are becoming increasingly bad deals for consumers. They have an average APR of 23.23% (compared with an average of just 15.03% for all credit cards), which is up from 21.22% in 2010. That means a consumer who spent $1,000 on the retail card, assuming an average retail card interest rate, and made only the minimum payments, would spend more than six years repaying that balance and end up paying a total of $1,840 for the $1,000 item. That is equivalent to an 84% markup — and it’s on top of the markup you already paid when you bought the merchandise to begin with.

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The rising rates may be due, in large part, to two factors — the fact that the 2009 Credit Card Act made stricter rules on fees that credit cards could charge consumers and that the industry wanted to make back some of the money it lost from this and from the hit it took financially during the recession, says Matt Schulz, a senior industry analyst for CreditCards.com. Furthermore, Schultz says that it’s likely that rates will keep rising as the Federal Reserve raises interest rates.

“A good retail credit card is hard to find,” says Charles Tran, the founder of credit card comparison site CreditDonkey.com . “Many store credit cards are skimpy on the benefits and loaded with high interest rates.”

MarketWatch radio: Your retail credit card is costing you more

Retail credit cards sometimes do have benefits that might be worth it to consumers who shop at the store often and pay off the balance in full and on time each month. Many come with perks like discounts, special sales or rewards for cardholders, as well as introductory 0% offers (these make financial sense if you pay off your balance in full before the intro periods end). For example, the Nordstrom JWN -1.07%   card lets cardholders earn two points for each dollar spent at Nordstrom, Nordstrom.com and Nordstrom Rack (and on some days triple points), offers early access to some sales, alteration reimbursements, and more — which, for people who shop often at Nordstrom, and pay off their bill on time, might be worth it. Plus, there are cards with low rates like the OfficeMax ODP -0.20%   card, which has an interest rate of just 9.99% for the most credit-worthy borrowers.

But miss a payment one month and you’ll be in trouble on most retail credit cards. And for some cards, that trouble is costlier than others. Here are five of the costliest retail credit cards for consumers, according to the CreditCards.com survey.

1. Zales , up to a 28.99% APR

2. Office Depot Personal Credit , up to a 27.99% APR

3. Staples Personal Account SPLS -2.36%  , up to a 27.99% APR

4. My Best Buy BBY -1.83%  , up to a 25.24% and 27.99% APR, depending on your credit score

5. My Best Buy Preferred , up to a 25.24% and 27.99% APR, depending on your credit score

Bottom line: In general, retail credit cards are a bad idea for anyone who doesn’t pay their balance on time and in full, because the interest rates tend to be so high, and for people who don’t shop at the store very often and thus likely won’t take advantage of the card perks.

Even for those who do pay their balance on time and in full, it may be more lucrative to use a cash-back card, where you earn cash that you can deposit right into your bank account rather than rewards you must use at the store, says Schultz.

Humor and Help the authorities, please

Police: Woman posed with stolen credit card

Associated Press, AP 9:04 p.m. EDT August 5, 2014 Photo Courtesy of Ocala Police

The Ocala Star-Banner (http://bit.ly/1nnAq0d ) reports the woman used the card moments after the picture was taken to buy more than $430 in beauty supplies at Looking Good Beauty Supply.Detectives say the card came from a wallet stolen July 4. The owner of the wallet called police Sunday to report more fraudulent activity on her card. Detective Mark Proco visited the stores where the card was used.A clerk at Looking Good Beauty Supply remembered being suspicious when a woman tried to make a purchase in July but didn’t have a photo ID. So she asked if she could take her picture.If anyone recognizes the woman, they are asked to contact Proco at 352-369-7105.

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