Sunday, February 27, 2011

Low-wage jobs lead economic recovery

The U.S.'s economic recovery looks a bit bottom-heavy - it been dominated by the return of lower-wage jobs.

That's the assessment of the National Employment Law Project in a report released last week.

While more than 1 million private-sector jobs were added to the U.S. economy during the past year, they have been concentrated in mid- and low-wage industries, the project concluded.


"This snapshot suggests that the job opportunities currently available to workers have deteriorated compared to what was available before the recession," said Annette Bernhardt, policy co-director for the project. "If these trends continue, the slow recovery combined with imbalanced growth could make it much harder for workers to find family-supporting jobs and pose real obstacles to restoring consumer demand."

A disproportionate share of job growth has been in industries such as temporary employment services, restaurants, retail, and nursing and residential-care facilities, which pay median wages below $13 an hour, the organization reported.

The study also found: Lower-wage industries constituted 23 percent of job loss but 49 percent of recent growth; midwage industries constituted 36 percent of job loss and 37 percent of recent growth; and higher-wage industries constituted 40 percent of job loss but only 14 percent of recent growth.

While it is unclear if these early figures represent a long-term trend, Bernhardt said they "underscore the urgent need

by Jahna Berry The Arizona Republic Feb. 27, 2011 12:00 AM



Low-wage jobs lead economic recovery

Low-wage jobs lead economic recovery

The U.S.'s economic recovery looks a bit bottom-heavy - it been dominated by the return of lower-wage jobs.

That's the assessment of the National Employment Law Project in a report released last week.

While more than 1 million private-sector jobs were added to the U.S. economy during the past year, they have been concentrated in mid- and low-wage industries, the project concluded.


"This snapshot suggests that the job opportunities currently available to workers have deteriorated compared to what was available before the recession," said Annette Bernhardt, policy co-director for the project. "If these trends continue, the slow recovery combined with imbalanced growth could make it much harder for workers to find family-supporting jobs and pose real obstacles to restoring consumer demand."

A disproportionate share of job growth has been in industries such as temporary employment services, restaurants, retail, and nursing and residential-care facilities, which pay median wages below $13 an hour, the organization reported.

The study also found: Lower-wage industries constituted 23 percent of job loss but 49 percent of recent growth; midwage industries constituted 36 percent of job loss and 37 percent of recent growth; and higher-wage industries constituted 40 percent of job loss but only 14 percent of recent growth.

While it is unclear if these early figures represent a long-term trend, Bernhardt said they "underscore the urgent need

by Jahna Berry The Arizona Republic Feb. 27, 2011 12:00 AM



Low-wage jobs lead economic recovery

Low-wage jobs lead economic recovery

The U.S.'s economic recovery looks a bit bottom-heavy - it been dominated by the return of lower-wage jobs.

That's the assessment of the National Employment Law Project in a report released last week.

While more than 1 million private-sector jobs were added to the U.S. economy during the past year, they have been concentrated in mid- and low-wage industries, the project concluded.


"This snapshot suggests that the job opportunities currently available to workers have deteriorated compared to what was available before the recession," said Annette Bernhardt, policy co-director for the project. "If these trends continue, the slow recovery combined with imbalanced growth could make it much harder for workers to find family-supporting jobs and pose real obstacles to restoring consumer demand."

A disproportionate share of job growth has been in industries such as temporary employment services, restaurants, retail, and nursing and residential-care facilities, which pay median wages below $13 an hour, the organization reported.

The study also found: Lower-wage industries constituted 23 percent of job loss but 49 percent of recent growth; midwage industries constituted 36 percent of job loss and 37 percent of recent growth; and higher-wage industries constituted 40 percent of job loss but only 14 percent of recent growth.

While it is unclear if these early figures represent a long-term trend, Bernhardt said they "underscore the urgent need

by Jahna Berry The Arizona Republic Feb. 27, 2011 12:00 AM



Low-wage jobs lead economic recovery

Low-wage jobs lead economic recovery

The U.S.'s economic recovery looks a bit bottom-heavy - it been dominated by the return of lower-wage jobs.

That's the assessment of the National Employment Law Project in a report released last week.

While more than 1 million private-sector jobs were added to the U.S. economy during the past year, they have been concentrated in mid- and low-wage industries, the project concluded.


"This snapshot suggests that the job opportunities currently available to workers have deteriorated compared to what was available before the recession," said Annette Bernhardt, policy co-director for the project. "If these trends continue, the slow recovery combined with imbalanced growth could make it much harder for workers to find family-supporting jobs and pose real obstacles to restoring consumer demand."

A disproportionate share of job growth has been in industries such as temporary employment services, restaurants, retail, and nursing and residential-care facilities, which pay median wages below $13 an hour, the organization reported.

The study also found: Lower-wage industries constituted 23 percent of job loss but 49 percent of recent growth; midwage industries constituted 36 percent of job loss and 37 percent of recent growth; and higher-wage industries constituted 40 percent of job loss but only 14 percent of recent growth.

While it is unclear if these early figures represent a long-term trend, Bernhardt said they "underscore the urgent need

by Jahna Berry The Arizona Republic Feb. 27, 2011 12:00 AM



Low-wage jobs lead economic recovery

Low-wage jobs lead economic recovery

The U.S.'s economic recovery looks a bit bottom-heavy - it been dominated by the return of lower-wage jobs.

That's the assessment of the National Employment Law Project in a report released last week.

While more than 1 million private-sector jobs were added to the U.S. economy during the past year, they have been concentrated in mid- and low-wage industries, the project concluded.


"This snapshot suggests that the job opportunities currently available to workers have deteriorated compared to what was available before the recession," said Annette Bernhardt, policy co-director for the project. "If these trends continue, the slow recovery combined with imbalanced growth could make it much harder for workers to find family-supporting jobs and pose real obstacles to restoring consumer demand."

A disproportionate share of job growth has been in industries such as temporary employment services, restaurants, retail, and nursing and residential-care facilities, which pay median wages below $13 an hour, the organization reported.

The study also found: Lower-wage industries constituted 23 percent of job loss but 49 percent of recent growth; midwage industries constituted 36 percent of job loss and 37 percent of recent growth; and higher-wage industries constituted 40 percent of job loss but only 14 percent of recent growth.

While it is unclear if these early figures represent a long-term trend, Bernhardt said they "underscore the urgent need

by Jahna Berry The Arizona Republic Feb. 27, 2011 12:00 AM



Low-wage jobs lead economic recovery

Low-wage jobs lead economic recovery

The U.S.'s economic recovery looks a bit bottom-heavy - it been dominated by the return of lower-wage jobs.

That's the assessment of the National Employment Law Project in a report released last week.

While more than 1 million private-sector jobs were added to the U.S. economy during the past year, they have been concentrated in mid- and low-wage industries, the project concluded.


"This snapshot suggests that the job opportunities currently available to workers have deteriorated compared to what was available before the recession," said Annette Bernhardt, policy co-director for the project. "If these trends continue, the slow recovery combined with imbalanced growth could make it much harder for workers to find family-supporting jobs and pose real obstacles to restoring consumer demand."

A disproportionate share of job growth has been in industries such as temporary employment services, restaurants, retail, and nursing and residential-care facilities, which pay median wages below $13 an hour, the organization reported.

The study also found: Lower-wage industries constituted 23 percent of job loss but 49 percent of recent growth; midwage industries constituted 36 percent of job loss and 37 percent of recent growth; and higher-wage industries constituted 40 percent of job loss but only 14 percent of recent growth.

While it is unclear if these early figures represent a long-term trend, Bernhardt said they "underscore the urgent need

by Jahna Berry The Arizona Republic Feb. 27, 2011 12:00 AM



Low-wage jobs lead economic recovery

Low-wage jobs lead economic recovery

The U.S.'s economic recovery looks a bit bottom-heavy - it been dominated by the return of lower-wage jobs.

That's the assessment of the National Employment Law Project in a report released last week.

While more than 1 million private-sector jobs were added to the U.S. economy during the past year, they have been concentrated in mid- and low-wage industries, the project concluded.


"This snapshot suggests that the job opportunities currently available to workers have deteriorated compared to what was available before the recession," said Annette Bernhardt, policy co-director for the project. "If these trends continue, the slow recovery combined with imbalanced growth could make it much harder for workers to find family-supporting jobs and pose real obstacles to restoring consumer demand."

A disproportionate share of job growth has been in industries such as temporary employment services, restaurants, retail, and nursing and residential-care facilities, which pay median wages below $13 an hour, the organization reported.

The study also found: Lower-wage industries constituted 23 percent of job loss but 49 percent of recent growth; midwage industries constituted 36 percent of job loss and 37 percent of recent growth; and higher-wage industries constituted 40 percent of job loss but only 14 percent of recent growth.

While it is unclear if these early figures represent a long-term trend, Bernhardt said they "underscore the urgent need

by Jahna Berry The Arizona Republic Feb. 27, 2011 12:00 AM



Low-wage jobs lead economic recovery

Tips for transferring a credit-card balance

NEW YORK - Don't like the terms on your credit card? It could be time to take your business elsewhere.

Balance-transfer offers are getting a whole lot sweeter for those with good to excellent credit. Introductory rates of 0 percent are now as long as 18 months, more than double the average time offered at the height of the recession.

The newfound generosity comes as banks compete to land the top spenders with clean credit records. These customers are increasingly prized now that new regulations have limited the penalty charges issuers can collect from less reliable cardholders.


Before jumping at the chance to switch cards, however, there are pros and cons that need to be weighed carefully. For example, it might turn out the introductory rate isn't worth the transfer fees or a higher regular rate that kicks in later. Moving your balance to another card could also ding your credit score.

Here's what you should know before making the leap:

The fees

It's intended to catch your eye - "0 percent introductory rate!" What isn't so prominently advertised is the fee you'll be charged for moving your balance.

This fee is typically 3 to 5 percent of your balance. And unlike before the recession, most issuers no longer cap how high that fee can go. So on a $10,000 balance, the fee would be between $300 and $500.

To properly size up the value of any balance transfer offer, you'll need to weigh the fee against any potential savings on interest charges. Luckily, the proliferation of online credit-card calculators means you don't have to put your math skills to the test.

Bankrate.com has a detailed balance-transfer calculator that can be found at tinyurl.com/6ceebrg. For a simpler version that looks solely at potential interest costs, try CardHub.com's calculator at tinyurl.com/6ao4n3u.

Remember that you need to be realistic about how quickly you intend to pay off your balance. Otherwise, your estimates on how much you stand to save will be way off base.

Rates and rewards

A 0 percent introductory rate on balance transfers is standard. The key is looking at the terms you'll face once the honeymoon ends.

To start, check the regular interest rate that takes effect after the introductory period. The offer will cite a range of rates; the exact rate you're approved for will depend on your credit profile. And don't forget that a late payment could trigger that interest rate earlier.

Also be aware that the interest rate on balance transfers doesn't always apply to new purchases during the introductory period. Or you may get 0 percent interest on new purchases for a shorter period than for your balance transfer.

You also want to evaluate any tradeoffs you'll be making in the rewards department.

To compare the different offers on the market, go to Bankrate.com, CardHub.com or CreditCards.com. It's also worth calling your issuer to see what offers are available.

Repercussions

Beyond the more obvious costs and savings, you'll also want to consider the impact a balance transfer could have on your credit score.

If you have strong credit, the impact of a balance transfer is usually minimal over time. But if you're planning on applying for a mortgage or other big loan in the near future, there are some issues to keep in mind.

Applying for a new card dings your credit score in the short term because it suggests you're in need of money. Your credit score can also take hits when an account is closed. This is in part because closing an account lowers your total credit line. A smaller component in your score is the length of your credit history. So you want to think twice before closing one of your oldest accounts.

If you're tempted by a balance-transfer offer but worried about hurting your score, see if you can use the offer to negotiate for better terms on your current card.

Even if you have a spotless payment record, however, don't expect to receive a matching offer of 0 percent for 12 months, said Ben Woolsey, director of consumer research at CreditCards.com

"The most you can expect is a reduction in your interest rate," Woolsey said.

In many cases, that may be all you were hoping for.

by Candice Choi Associated Press Feb. 27, 2011 12:00 AM



Tips for transferring a credit-card balance

Tips for transferring a credit-card balance

NEW YORK - Don't like the terms on your credit card? It could be time to take your business elsewhere.

Balance-transfer offers are getting a whole lot sweeter for those with good to excellent credit. Introductory rates of 0 percent are now as long as 18 months, more than double the average time offered at the height of the recession.

The newfound generosity comes as banks compete to land the top spenders with clean credit records. These customers are increasingly prized now that new regulations have limited the penalty charges issuers can collect from less reliable cardholders.


Before jumping at the chance to switch cards, however, there are pros and cons that need to be weighed carefully. For example, it might turn out the introductory rate isn't worth the transfer fees or a higher regular rate that kicks in later. Moving your balance to another card could also ding your credit score.

Here's what you should know before making the leap:

The fees

It's intended to catch your eye - "0 percent introductory rate!" What isn't so prominently advertised is the fee you'll be charged for moving your balance.

This fee is typically 3 to 5 percent of your balance. And unlike before the recession, most issuers no longer cap how high that fee can go. So on a $10,000 balance, the fee would be between $300 and $500.

To properly size up the value of any balance transfer offer, you'll need to weigh the fee against any potential savings on interest charges. Luckily, the proliferation of online credit-card calculators means you don't have to put your math skills to the test.

Bankrate.com has a detailed balance-transfer calculator that can be found at tinyurl.com/6ceebrg. For a simpler version that looks solely at potential interest costs, try CardHub.com's calculator at tinyurl.com/6ao4n3u.

Remember that you need to be realistic about how quickly you intend to pay off your balance. Otherwise, your estimates on how much you stand to save will be way off base.

Rates and rewards

A 0 percent introductory rate on balance transfers is standard. The key is looking at the terms you'll face once the honeymoon ends.

To start, check the regular interest rate that takes effect after the introductory period. The offer will cite a range of rates; the exact rate you're approved for will depend on your credit profile. And don't forget that a late payment could trigger that interest rate earlier.

Also be aware that the interest rate on balance transfers doesn't always apply to new purchases during the introductory period. Or you may get 0 percent interest on new purchases for a shorter period than for your balance transfer.

You also want to evaluate any tradeoffs you'll be making in the rewards department.

To compare the different offers on the market, go to Bankrate.com, CardHub.com or CreditCards.com. It's also worth calling your issuer to see what offers are available.

Repercussions

Beyond the more obvious costs and savings, you'll also want to consider the impact a balance transfer could have on your credit score.

If you have strong credit, the impact of a balance transfer is usually minimal over time. But if you're planning on applying for a mortgage or other big loan in the near future, there are some issues to keep in mind.

Applying for a new card dings your credit score in the short term because it suggests you're in need of money. Your credit score can also take hits when an account is closed. This is in part because closing an account lowers your total credit line. A smaller component in your score is the length of your credit history. So you want to think twice before closing one of your oldest accounts.

If you're tempted by a balance-transfer offer but worried about hurting your score, see if you can use the offer to negotiate for better terms on your current card.

Even if you have a spotless payment record, however, don't expect to receive a matching offer of 0 percent for 12 months, said Ben Woolsey, director of consumer research at CreditCards.com

"The most you can expect is a reduction in your interest rate," Woolsey said.

In many cases, that may be all you were hoping for.

by Candice Choi Associated Press Feb. 27, 2011 12:00 AM





Tips for transferring a credit-card balance

Tips for transferring a credit-card balance

NEW YORK - Don't like the terms on your credit card? It could be time to take your business elsewhere.

Balance-transfer offers are getting a whole lot sweeter for those with good to excellent credit. Introductory rates of 0 percent are now as long as 18 months, more than double the average time offered at the height of the recession.

The newfound generosity comes as banks compete to land the top spenders with clean credit records. These customers are increasingly prized now that new regulations have limited the penalty charges issuers can collect from less reliable cardholders.


Before jumping at the chance to switch cards, however, there are pros and cons that need to be weighed carefully. For example, it might turn out the introductory rate isn't worth the transfer fees or a higher regular rate that kicks in later. Moving your balance to another card could also ding your credit score.

Here's what you should know before making the leap:

The fees

It's intended to catch your eye - "0 percent introductory rate!" What isn't so prominently advertised is the fee you'll be charged for moving your balance.

This fee is typically 3 to 5 percent of your balance. And unlike before the recession, most issuers no longer cap how high that fee can go. So on a $10,000 balance, the fee would be between $300 and $500.

To properly size up the value of any balance transfer offer, you'll need to weigh the fee against any potential savings on interest charges. Luckily, the proliferation of online credit-card calculators means you don't have to put your math skills to the test.

Bankrate.com has a detailed balance-transfer calculator that can be found at tinyurl.com/6ceebrg. For a simpler version that looks solely at potential interest costs, try CardHub.com's calculator at tinyurl.com/6ao4n3u.

Remember that you need to be realistic about how quickly you intend to pay off your balance. Otherwise, your estimates on how much you stand to save will be way off base.

Rates and rewards

A 0 percent introductory rate on balance transfers is standard. The key is looking at the terms you'll face once the honeymoon ends.

To start, check the regular interest rate that takes effect after the introductory period. The offer will cite a range of rates; the exact rate you're approved for will depend on your credit profile. And don't forget that a late payment could trigger that interest rate earlier.

Also be aware that the interest rate on balance transfers doesn't always apply to new purchases during the introductory period. Or you may get 0 percent interest on new purchases for a shorter period than for your balance transfer.

You also want to evaluate any tradeoffs you'll be making in the rewards department.

To compare the different offers on the market, go to Bankrate.com, CardHub.com or CreditCards.com. It's also worth calling your issuer to see what offers are available.

Repercussions

Beyond the more obvious costs and savings, you'll also want to consider the impact a balance transfer could have on your credit score.

If you have strong credit, the impact of a balance transfer is usually minimal over time. But if you're planning on applying for a mortgage or other big loan in the near future, there are some issues to keep in mind.

Applying for a new card dings your credit score in the short term because it suggests you're in need of money. Your credit score can also take hits when an account is closed. This is in part because closing an account lowers your total credit line. A smaller component in your score is the length of your credit history. So you want to think twice before closing one of your oldest accounts.

If you're tempted by a balance-transfer offer but worried about hurting your score, see if you can use the offer to negotiate for better terms on your current card.

Even if you have a spotless payment record, however, don't expect to receive a matching offer of 0 percent for 12 months, said Ben Woolsey, director of consumer research at CreditCards.com

"The most you can expect is a reduction in your interest rate," Woolsey said.

In many cases, that may be all you were hoping for.

by Candice Choi Associated Press Feb. 27, 2011 12:00 AM





Tips for transferring a credit-card balance

Tips for transferring a credit-card balance

NEW YORK - Don't like the terms on your credit card? It could be time to take your business elsewhere.

Balance-transfer offers are getting a whole lot sweeter for those with good to excellent credit. Introductory rates of 0 percent are now as long as 18 months, more than double the average time offered at the height of the recession.

The newfound generosity comes as banks compete to land the top spenders with clean credit records. These customers are increasingly prized now that new regulations have limited the penalty charges issuers can collect from less reliable cardholders.


Before jumping at the chance to switch cards, however, there are pros and cons that need to be weighed carefully. For example, it might turn out the introductory rate isn't worth the transfer fees or a higher regular rate that kicks in later. Moving your balance to another card could also ding your credit score.

Here's what you should know before making the leap:

The fees

It's intended to catch your eye - "0 percent introductory rate!" What isn't so prominently advertised is the fee you'll be charged for moving your balance.

This fee is typically 3 to 5 percent of your balance. And unlike before the recession, most issuers no longer cap how high that fee can go. So on a $10,000 balance, the fee would be between $300 and $500.

To properly size up the value of any balance transfer offer, you'll need to weigh the fee against any potential savings on interest charges. Luckily, the proliferation of online credit-card calculators means you don't have to put your math skills to the test.

Bankrate.com has a detailed balance-transfer calculator that can be found at tinyurl.com/6ceebrg. For a simpler version that looks solely at potential interest costs, try CardHub.com's calculator at tinyurl.com/6ao4n3u.

Remember that you need to be realistic about how quickly you intend to pay off your balance. Otherwise, your estimates on how much you stand to save will be way off base.

Rates and rewards

A 0 percent introductory rate on balance transfers is standard. The key is looking at the terms you'll face once the honeymoon ends.

To start, check the regular interest rate that takes effect after the introductory period. The offer will cite a range of rates; the exact rate you're approved for will depend on your credit profile. And don't forget that a late payment could trigger that interest rate earlier.

Also be aware that the interest rate on balance transfers doesn't always apply to new purchases during the introductory period. Or you may get 0 percent interest on new purchases for a shorter period than for your balance transfer.

You also want to evaluate any tradeoffs you'll be making in the rewards department.

To compare the different offers on the market, go to Bankrate.com, CardHub.com or CreditCards.com. It's also worth calling your issuer to see what offers are available.

Repercussions

Beyond the more obvious costs and savings, you'll also want to consider the impact a balance transfer could have on your credit score.

If you have strong credit, the impact of a balance transfer is usually minimal over time. But if you're planning on applying for a mortgage or other big loan in the near future, there are some issues to keep in mind.

Applying for a new card dings your credit score in the short term because it suggests you're in need of money. Your credit score can also take hits when an account is closed. This is in part because closing an account lowers your total credit line. A smaller component in your score is the length of your credit history. So you want to think twice before closing one of your oldest accounts.

If you're tempted by a balance-transfer offer but worried about hurting your score, see if you can use the offer to negotiate for better terms on your current card.

Even if you have a spotless payment record, however, don't expect to receive a matching offer of 0 percent for 12 months, said Ben Woolsey, director of consumer research at CreditCards.com

"The most you can expect is a reduction in your interest rate," Woolsey said.

In many cases, that may be all you were hoping for.

by Candice Choi Associated Press Feb. 27, 2011 12:00 AM





Tips for transferring a credit-card balance

Tips for transferring a credit-card balance

NEW YORK - Don't like the terms on your credit card? It could be time to take your business elsewhere.

Balance-transfer offers are getting a whole lot sweeter for those with good to excellent credit. Introductory rates of 0 percent are now as long as 18 months, more than double the average time offered at the height of the recession.

The newfound generosity comes as banks compete to land the top spenders with clean credit records. These customers are increasingly prized now that new regulations have limited the penalty charges issuers can collect from less reliable cardholders.


Before jumping at the chance to switch cards, however, there are pros and cons that need to be weighed carefully. For example, it might turn out the introductory rate isn't worth the transfer fees or a higher regular rate that kicks in later. Moving your balance to another card could also ding your credit score.

Here's what you should know before making the leap:

The fees

It's intended to catch your eye - "0 percent introductory rate!" What isn't so prominently advertised is the fee you'll be charged for moving your balance.

This fee is typically 3 to 5 percent of your balance. And unlike before the recession, most issuers no longer cap how high that fee can go. So on a $10,000 balance, the fee would be between $300 and $500.

To properly size up the value of any balance transfer offer, you'll need to weigh the fee against any potential savings on interest charges. Luckily, the proliferation of online credit-card calculators means you don't have to put your math skills to the test.

Bankrate.com has a detailed balance-transfer calculator that can be found at tinyurl.com/6ceebrg. For a simpler version that looks solely at potential interest costs, try CardHub.com's calculator at tinyurl.com/6ao4n3u.

Remember that you need to be realistic about how quickly you intend to pay off your balance. Otherwise, your estimates on how much you stand to save will be way off base.

Rates and rewards

A 0 percent introductory rate on balance transfers is standard. The key is looking at the terms you'll face once the honeymoon ends.

To start, check the regular interest rate that takes effect after the introductory period. The offer will cite a range of rates; the exact rate you're approved for will depend on your credit profile. And don't forget that a late payment could trigger that interest rate earlier.

Also be aware that the interest rate on balance transfers doesn't always apply to new purchases during the introductory period. Or you may get 0 percent interest on new purchases for a shorter period than for your balance transfer.

You also want to evaluate any tradeoffs you'll be making in the rewards department.

To compare the different offers on the market, go to Bankrate.com, CardHub.com or CreditCards.com. It's also worth calling your issuer to see what offers are available.

Repercussions

Beyond the more obvious costs and savings, you'll also want to consider the impact a balance transfer could have on your credit score.

If you have strong credit, the impact of a balance transfer is usually minimal over time. But if you're planning on applying for a mortgage or other big loan in the near future, there are some issues to keep in mind.

Applying for a new card dings your credit score in the short term because it suggests you're in need of money. Your credit score can also take hits when an account is closed. This is in part because closing an account lowers your total credit line. A smaller component in your score is the length of your credit history. So you want to think twice before closing one of your oldest accounts.

If you're tempted by a balance-transfer offer but worried about hurting your score, see if you can use the offer to negotiate for better terms on your current card.

Even if you have a spotless payment record, however, don't expect to receive a matching offer of 0 percent for 12 months, said Ben Woolsey, director of consumer research at CreditCards.com

"The most you can expect is a reduction in your interest rate," Woolsey said.

In many cases, that may be all you were hoping for.

by Candice Choi Associated Press Feb. 27, 2011 12:00 AM





Tips for transferring a credit-card balance

Tips for transferring a credit-card balance

NEW YORK - Don't like the terms on your credit card? It could be time to take your business elsewhere.

Balance-transfer offers are getting a whole lot sweeter for those with good to excellent credit. Introductory rates of 0 percent are now as long as 18 months, more than double the average time offered at the height of the recession.

The newfound generosity comes as banks compete to land the top spenders with clean credit records. These customers are increasingly prized now that new regulations have limited the penalty charges issuers can collect from less reliable cardholders.


Before jumping at the chance to switch cards, however, there are pros and cons that need to be weighed carefully. For example, it might turn out the introductory rate isn't worth the transfer fees or a higher regular rate that kicks in later. Moving your balance to another card could also ding your credit score.

Here's what you should know before making the leap:

The fees

It's intended to catch your eye - "0 percent introductory rate!" What isn't so prominently advertised is the fee you'll be charged for moving your balance.

This fee is typically 3 to 5 percent of your balance. And unlike before the recession, most issuers no longer cap how high that fee can go. So on a $10,000 balance, the fee would be between $300 and $500.

To properly size up the value of any balance transfer offer, you'll need to weigh the fee against any potential savings on interest charges. Luckily, the proliferation of online credit-card calculators means you don't have to put your math skills to the test.

Bankrate.com has a detailed balance-transfer calculator that can be found at tinyurl.com/6ceebrg. For a simpler version that looks solely at potential interest costs, try CardHub.com's calculator at tinyurl.com/6ao4n3u.

Remember that you need to be realistic about how quickly you intend to pay off your balance. Otherwise, your estimates on how much you stand to save will be way off base.

Rates and rewards

A 0 percent introductory rate on balance transfers is standard. The key is looking at the terms you'll face once the honeymoon ends.

To start, check the regular interest rate that takes effect after the introductory period. The offer will cite a range of rates; the exact rate you're approved for will depend on your credit profile. And don't forget that a late payment could trigger that interest rate earlier.

Also be aware that the interest rate on balance transfers doesn't always apply to new purchases during the introductory period. Or you may get 0 percent interest on new purchases for a shorter period than for your balance transfer.

You also want to evaluate any tradeoffs you'll be making in the rewards department.

To compare the different offers on the market, go to Bankrate.com, CardHub.com or CreditCards.com. It's also worth calling your issuer to see what offers are available.

Repercussions

Beyond the more obvious costs and savings, you'll also want to consider the impact a balance transfer could have on your credit score.

If you have strong credit, the impact of a balance transfer is usually minimal over time. But if you're planning on applying for a mortgage or other big loan in the near future, there are some issues to keep in mind.

Applying for a new card dings your credit score in the short term because it suggests you're in need of money. Your credit score can also take hits when an account is closed. This is in part because closing an account lowers your total credit line. A smaller component in your score is the length of your credit history. So you want to think twice before closing one of your oldest accounts.

If you're tempted by a balance-transfer offer but worried about hurting your score, see if you can use the offer to negotiate for better terms on your current card.

Even if you have a spotless payment record, however, don't expect to receive a matching offer of 0 percent for 12 months, said Ben Woolsey, director of consumer research at CreditCards.com

"The most you can expect is a reduction in your interest rate," Woolsey said.

In many cases, that may be all you were hoping for.

by Candice Choi Associated Press Feb. 27, 2011 12:00 AM





Tips for transferring a credit-card balance

Tips for transferring a credit-card balance

NEW YORK - Don't like the terms on your credit card? It could be time to take your business elsewhere.

Balance-transfer offers are getting a whole lot sweeter for those with good to excellent credit. Introductory rates of 0 percent are now as long as 18 months, more than double the average time offered at the height of the recession.

The newfound generosity comes as banks compete to land the top spenders with clean credit records. These customers are increasingly prized now that new regulations have limited the penalty charges issuers can collect from less reliable cardholders.


Before jumping at the chance to switch cards, however, there are pros and cons that need to be weighed carefully. For example, it might turn out the introductory rate isn't worth the transfer fees or a higher regular rate that kicks in later. Moving your balance to another card could also ding your credit score.

Here's what you should know before making the leap:

The fees

It's intended to catch your eye - "0 percent introductory rate!" What isn't so prominently advertised is the fee you'll be charged for moving your balance.

This fee is typically 3 to 5 percent of your balance. And unlike before the recession, most issuers no longer cap how high that fee can go. So on a $10,000 balance, the fee would be between $300 and $500.

To properly size up the value of any balance transfer offer, you'll need to weigh the fee against any potential savings on interest charges. Luckily, the proliferation of online credit-card calculators means you don't have to put your math skills to the test.

Bankrate.com has a detailed balance-transfer calculator that can be found at tinyurl.com/6ceebrg. For a simpler version that looks solely at potential interest costs, try CardHub.com's calculator at tinyurl.com/6ao4n3u.

Remember that you need to be realistic about how quickly you intend to pay off your balance. Otherwise, your estimates on how much you stand to save will be way off base.

Rates and rewards

A 0 percent introductory rate on balance transfers is standard. The key is looking at the terms you'll face once the honeymoon ends.

To start, check the regular interest rate that takes effect after the introductory period. The offer will cite a range of rates; the exact rate you're approved for will depend on your credit profile. And don't forget that a late payment could trigger that interest rate earlier.

Also be aware that the interest rate on balance transfers doesn't always apply to new purchases during the introductory period. Or you may get 0 percent interest on new purchases for a shorter period than for your balance transfer.

You also want to evaluate any tradeoffs you'll be making in the rewards department.

To compare the different offers on the market, go to Bankrate.com, CardHub.com or CreditCards.com. It's also worth calling your issuer to see what offers are available.

Repercussions

Beyond the more obvious costs and savings, you'll also want to consider the impact a balance transfer could have on your credit score.

If you have strong credit, the impact of a balance transfer is usually minimal over time. But if you're planning on applying for a mortgage or other big loan in the near future, there are some issues to keep in mind.

Applying for a new card dings your credit score in the short term because it suggests you're in need of money. Your credit score can also take hits when an account is closed. This is in part because closing an account lowers your total credit line. A smaller component in your score is the length of your credit history. So you want to think twice before closing one of your oldest accounts.

If you're tempted by a balance-transfer offer but worried about hurting your score, see if you can use the offer to negotiate for better terms on your current card.

Even if you have a spotless payment record, however, don't expect to receive a matching offer of 0 percent for 12 months, said Ben Woolsey, director of consumer research at CreditCards.com

"The most you can expect is a reduction in your interest rate," Woolsey said.

In many cases, that may be all you were hoping for.

by Candice Choi Associated Press Feb. 27, 2011 12:00 AM





Tips for transferring a credit-card balance

Tips for transferring a credit-card balance

NEW YORK - Don't like the terms on your credit card? It could be time to take your business elsewhere.

Balance-transfer offers are getting a whole lot sweeter for those with good to excellent credit. Introductory rates of 0 percent are now as long as 18 months, more than double the average time offered at the height of the recession.

The newfound generosity comes as banks compete to land the top spenders with clean credit records. These customers are increasingly prized now that new regulations have limited the penalty charges issuers can collect from less reliable cardholders.


Before jumping at the chance to switch cards, however, there are pros and cons that need to be weighed carefully. For example, it might turn out the introductory rate isn't worth the transfer fees or a higher regular rate that kicks in later. Moving your balance to another card could also ding your credit score.

Here's what you should know before making the leap:

The fees

It's intended to catch your eye - "0 percent introductory rate!" What isn't so prominently advertised is the fee you'll be charged for moving your balance.

This fee is typically 3 to 5 percent of your balance. And unlike before the recession, most issuers no longer cap how high that fee can go. So on a $10,000 balance, the fee would be between $300 and $500.

To properly size up the value of any balance transfer offer, you'll need to weigh the fee against any potential savings on interest charges. Luckily, the proliferation of online credit-card calculators means you don't have to put your math skills to the test.

Bankrate.com has a detailed balance-transfer calculator that can be found at tinyurl.com/6ceebrg. For a simpler version that looks solely at potential interest costs, try CardHub.com's calculator at tinyurl.com/6ao4n3u.

Remember that you need to be realistic about how quickly you intend to pay off your balance. Otherwise, your estimates on how much you stand to save will be way off base.

Rates and rewards

A 0 percent introductory rate on balance transfers is standard. The key is looking at the terms you'll face once the honeymoon ends.

To start, check the regular interest rate that takes effect after the introductory period. The offer will cite a range of rates; the exact rate you're approved for will depend on your credit profile. And don't forget that a late payment could trigger that interest rate earlier.

Also be aware that the interest rate on balance transfers doesn't always apply to new purchases during the introductory period. Or you may get 0 percent interest on new purchases for a shorter period than for your balance transfer.

You also want to evaluate any tradeoffs you'll be making in the rewards department.

To compare the different offers on the market, go to Bankrate.com, CardHub.com or CreditCards.com. It's also worth calling your issuer to see what offers are available.

Repercussions

Beyond the more obvious costs and savings, you'll also want to consider the impact a balance transfer could have on your credit score.

If you have strong credit, the impact of a balance transfer is usually minimal over time. But if you're planning on applying for a mortgage or other big loan in the near future, there are some issues to keep in mind.

Applying for a new card dings your credit score in the short term because it suggests you're in need of money. Your credit score can also take hits when an account is closed. This is in part because closing an account lowers your total credit line. A smaller component in your score is the length of your credit history. So you want to think twice before closing one of your oldest accounts.

If you're tempted by a balance-transfer offer but worried about hurting your score, see if you can use the offer to negotiate for better terms on your current card.

Even if you have a spotless payment record, however, don't expect to receive a matching offer of 0 percent for 12 months, said Ben Woolsey, director of consumer research at CreditCards.com

"The most you can expect is a reduction in your interest rate," Woolsey said.

In many cases, that may be all you were hoping for.

by Candice Choi Associated Press Feb. 27, 2011 12:00 AM





Tips for transferring a credit-card balance

Sectors spar over fee cap on debit use

Americans now make more than one-third of their purchases using debit cards, and all those swipes of the plastic have provoked a nasty battle.

The fighting between the retail and financial industrials is over interchange fees on debit transactions. After years of merchant complaints, Congress in December instructed the Federal Reserve to cut the fees to 12 cents per swipe, down from an estimate of 44 cents or higher, depending on whom you talk to. Regardless, the change adds up to billions of dollars.

Merchants have been griping that these fees cut into their already-thin profit margins and prevent them from passing along lower prices to consumers.


Banks, credit unions and card issuers say the fees pay to implement and operate their debit systems and help absorb fraud costs.

Consumers don't foot the costs directly, although some merchants add surcharges, and many others are vocal about the costs they absorb. But consumers will be affected by how this debate plays out.

The Fed's fee cap is set to be adopted by April 21 and take effect three months later. The financial industry, with sympathy from some members of Congress, is seeking a delay.

Retailer groups call the current system anti-competitive. They say it allows Visa and MasterCard to fix swipe fees with no opportunity for bargaining or competition. They say swipe fees have tripled over the past decade even as bank costs have decreased.

"Rates have gone up unchecked for the last 10 years," said Tim McCabe, president of the Arizona Food Marketing Alliance, which represents 1,400 supermarkets, convenience stores and other retailers.

"As technology has advanced and we have gotten away from paper, you'd expect these fees to decrease, but they haven't."

The Merchants Payments Coalition, a national group of which the Arizona Food Marketing Alliance is a member, estimates the cap will generate $13 billion in annual savings for merchants and consumers.

Retailers have accused big banks of "scare tactics" to rally small banks and credit unions to their side.

The proposal does provide a fee-cap exemption for smaller banks and credit unions - those with assets below $10 billion. But it doesn't require that debit-payment networks distinguish between the two.

The Fed has solicited comments for the past two months, and Congress has held hearings, so it's possible the new rules could be altered or delayed.

"Quite frankly, some small issuers are concerned networks may not provide a two-tiered structure once the rule is final or may not maintain it into the future," said Mary Mitchell Dunn, a senior vice president at the Credit Union National Association, in a recent letter to the Fed.

"Without a two-tiered structure, there is no exemption."

CUNA and the 70 percent of credit unions that offer debit are "extremely concerned about the impact of this proposal on their members, their debit-card programs and their operations generally," she wrote.

Credit unions can't pass the buck to shareholders - because they don't have any. Instead, their members would feel the pain through increased fees for various services or lower interest rates paid on deposits.

CUNA estimates credit-union debit customers could face an average new annual fee of $34, a transaction fee of 25 cents per swipe or some combination.

Paul Stull, a vice president at Arizona State Credit Union, estimates the proposed fee cap would cost his institution more than $5 million annually.

"In the end, our members would pay higher fees or will have reduced services," he said.

Swipe fees also help banks and credit unions absorb fraud losses, including those caused by a merchant's failure to check identifications or otherwise validate purchases.

Stull cited a recent case in which crooks installed card-reading skimmers at Tucson-area gas stations and used the cardholder information they obtained to make fake ATM cards, employing those to extract illicit withdrawals.

"Our losses from that came to more than $10,000 within a few days," he said. "But the gas stations got all their money, and our members didn't lose any money."

Small community banks, which have been hit much harder than their large counterparts by the soft economy, also are worried.

"A lot of people look at it as a big-bank issue," said Candace Wiest, president and CEO at West Valley National Bank in Avondale. "But in reality, (the proposal) fixed fees for us, too."

The Independent Community Bankers of America and Arizona Bankers Association, both of which mainly represent small institutions, also oppose interchange caps. The ICBA said 93 percent of its members plan to charge for services currently offered for free if the swipe-fee cap is implemented.

Smaller banks don't have the diversified revenue sources of large banks, or their economies of scale, and thus would be at a competitive disadvantage.

Wiest calls the fee cap another worry for small banks, which already are facing rising regulatory costs from the Dodd-Frank reform legislation.

Twelve Arizona banks have failed since mid-2009, and two-thirds of the survivors lost money last year.

"A number of banks still have hurt coming at them if the economy doesn't improve substantially," Wiest said, adding that bankers will be forced to "find other ways to pass along the costs to consumers" if the fee cap takes effect.

The debate really boils down to switching revenue, or shifting costs, from one industry to the other. If the swipe-fee cap takes effect, it's anyone's guess how much of the savings would be passed along by retailers to consumers. How would anyone even measure this?

But there's no free lunch. Consumers will be affected, and likely pay, one way or another.

by Russ Wiles The Arizona Republic Feb. 27, 2011 12:00 AM



Sectors spar over fee cap on debit use

Sectors spar over fee cap on debit use

Americans now make more than one-third of their purchases using debit cards, and all those swipes of the plastic have provoked a nasty battle.

The fighting between the retail and financial industrials is over interchange fees on debit transactions. After years of merchant complaints, Congress in December instructed the Federal Reserve to cut the fees to 12 cents per swipe, down from an estimate of 44 cents or higher, depending on whom you talk to. Regardless, the change adds up to billions of dollars.

Merchants have been griping that these fees cut into their already-thin profit margins and prevent them from passing along lower prices to consumers.


Banks, credit unions and card issuers say the fees pay to implement and operate their debit systems and help absorb fraud costs.

Consumers don't foot the costs directly, although some merchants add surcharges, and many others are vocal about the costs they absorb. But consumers will be affected by how this debate plays out.

The Fed's fee cap is set to be adopted by April 21 and take effect three months later. The financial industry, with sympathy from some members of Congress, is seeking a delay.

Retailer groups call the current system anti-competitive. They say it allows Visa and MasterCard to fix swipe fees with no opportunity for bargaining or competition. They say swipe fees have tripled over the past decade even as bank costs have decreased.

"Rates have gone up unchecked for the last 10 years," said Tim McCabe, president of the Arizona Food Marketing Alliance, which represents 1,400 supermarkets, convenience stores and other retailers.

"As technology has advanced and we have gotten away from paper, you'd expect these fees to decrease, but they haven't."

The Merchants Payments Coalition, a national group of which the Arizona Food Marketing Alliance is a member, estimates the cap will generate $13 billion in annual savings for merchants and consumers.

Retailers have accused big banks of "scare tactics" to rally small banks and credit unions to their side.

The proposal does provide a fee-cap exemption for smaller banks and credit unions - those with assets below $10 billion. But it doesn't require that debit-payment networks distinguish between the two.

The Fed has solicited comments for the past two months, and Congress has held hearings, so it's possible the new rules could be altered or delayed.

"Quite frankly, some small issuers are concerned networks may not provide a two-tiered structure once the rule is final or may not maintain it into the future," said Mary Mitchell Dunn, a senior vice president at the Credit Union National Association, in a recent letter to the Fed.

"Without a two-tiered structure, there is no exemption."

CUNA and the 70 percent of credit unions that offer debit are "extremely concerned about the impact of this proposal on their members, their debit-card programs and their operations generally," she wrote.

Credit unions can't pass the buck to shareholders - because they don't have any. Instead, their members would feel the pain through increased fees for various services or lower interest rates paid on deposits.

CUNA estimates credit-union debit customers could face an average new annual fee of $34, a transaction fee of 25 cents per swipe or some combination.

Paul Stull, a vice president at Arizona State Credit Union, estimates the proposed fee cap would cost his institution more than $5 million annually.

"In the end, our members would pay higher fees or will have reduced services," he said.

Swipe fees also help banks and credit unions absorb fraud losses, including those caused by a merchant's failure to check identifications or otherwise validate purchases.

Stull cited a recent case in which crooks installed card-reading skimmers at Tucson-area gas stations and used the cardholder information they obtained to make fake ATM cards, employing those to extract illicit withdrawals.

"Our losses from that came to more than $10,000 within a few days," he said. "But the gas stations got all their money, and our members didn't lose any money."

Small community banks, which have been hit much harder than their large counterparts by the soft economy, also are worried.

"A lot of people look at it as a big-bank issue," said Candace Wiest, president and CEO at West Valley National Bank in Avondale. "But in reality, (the proposal) fixed fees for us, too."

The Independent Community Bankers of America and Arizona Bankers Association, both of which mainly represent small institutions, also oppose interchange caps. The ICBA said 93 percent of its members plan to charge for services currently offered for free if the swipe-fee cap is implemented.

Smaller banks don't have the diversified revenue sources of large banks, or their economies of scale, and thus would be at a competitive disadvantage.

Wiest calls the fee cap another worry for small banks, which already are facing rising regulatory costs from the Dodd-Frank reform legislation.

Twelve Arizona banks have failed since mid-2009, and two-thirds of the survivors lost money last year.

"A number of banks still have hurt coming at them if the economy doesn't improve substantially," Wiest said, adding that bankers will be forced to "find other ways to pass along the costs to consumers" if the fee cap takes effect.

The debate really boils down to switching revenue, or shifting costs, from one industry to the other. If the swipe-fee cap takes effect, it's anyone's guess how much of the savings would be passed along by retailers to consumers. How would anyone even measure this?

But there's no free lunch. Consumers will be affected, and likely pay, one way or another.

by Russ Wiles The Arizona Republic Feb. 27, 2011 12:00 AM




Sectors spar over fee cap on debit use

Sectors spar over fee cap on debit use

Americans now make more than one-third of their purchases using debit cards, and all those swipes of the plastic have provoked a nasty battle.

The fighting between the retail and financial industrials is over interchange fees on debit transactions. After years of merchant complaints, Congress in December instructed the Federal Reserve to cut the fees to 12 cents per swipe, down from an estimate of 44 cents or higher, depending on whom you talk to. Regardless, the change adds up to billions of dollars.

Merchants have been griping that these fees cut into their already-thin profit margins and prevent them from passing along lower prices to consumers.


Banks, credit unions and card issuers say the fees pay to implement and operate their debit systems and help absorb fraud costs.

Consumers don't foot the costs directly, although some merchants add surcharges, and many others are vocal about the costs they absorb. But consumers will be affected by how this debate plays out.

The Fed's fee cap is set to be adopted by April 21 and take effect three months later. The financial industry, with sympathy from some members of Congress, is seeking a delay.

Retailer groups call the current system anti-competitive. They say it allows Visa and MasterCard to fix swipe fees with no opportunity for bargaining or competition. They say swipe fees have tripled over the past decade even as bank costs have decreased.

"Rates have gone up unchecked for the last 10 years," said Tim McCabe, president of the Arizona Food Marketing Alliance, which represents 1,400 supermarkets, convenience stores and other retailers.

"As technology has advanced and we have gotten away from paper, you'd expect these fees to decrease, but they haven't."

The Merchants Payments Coalition, a national group of which the Arizona Food Marketing Alliance is a member, estimates the cap will generate $13 billion in annual savings for merchants and consumers.

Retailers have accused big banks of "scare tactics" to rally small banks and credit unions to their side.

The proposal does provide a fee-cap exemption for smaller banks and credit unions - those with assets below $10 billion. But it doesn't require that debit-payment networks distinguish between the two.

The Fed has solicited comments for the past two months, and Congress has held hearings, so it's possible the new rules could be altered or delayed.

"Quite frankly, some small issuers are concerned networks may not provide a two-tiered structure once the rule is final or may not maintain it into the future," said Mary Mitchell Dunn, a senior vice president at the Credit Union National Association, in a recent letter to the Fed.

"Without a two-tiered structure, there is no exemption."

CUNA and the 70 percent of credit unions that offer debit are "extremely concerned about the impact of this proposal on their members, their debit-card programs and their operations generally," she wrote.

Credit unions can't pass the buck to shareholders - because they don't have any. Instead, their members would feel the pain through increased fees for various services or lower interest rates paid on deposits.

CUNA estimates credit-union debit customers could face an average new annual fee of $34, a transaction fee of 25 cents per swipe or some combination.

Paul Stull, a vice president at Arizona State Credit Union, estimates the proposed fee cap would cost his institution more than $5 million annually.

"In the end, our members would pay higher fees or will have reduced services," he said.

Swipe fees also help banks and credit unions absorb fraud losses, including those caused by a merchant's failure to check identifications or otherwise validate purchases.

Stull cited a recent case in which crooks installed card-reading skimmers at Tucson-area gas stations and used the cardholder information they obtained to make fake ATM cards, employing those to extract illicit withdrawals.

"Our losses from that came to more than $10,000 within a few days," he said. "But the gas stations got all their money, and our members didn't lose any money."

Small community banks, which have been hit much harder than their large counterparts by the soft economy, also are worried.

"A lot of people look at it as a big-bank issue," said Candace Wiest, president and CEO at West Valley National Bank in Avondale. "But in reality, (the proposal) fixed fees for us, too."

The Independent Community Bankers of America and Arizona Bankers Association, both of which mainly represent small institutions, also oppose interchange caps. The ICBA said 93 percent of its members plan to charge for services currently offered for free if the swipe-fee cap is implemented.

Smaller banks don't have the diversified revenue sources of large banks, or their economies of scale, and thus would be at a competitive disadvantage.

Wiest calls the fee cap another worry for small banks, which already are facing rising regulatory costs from the Dodd-Frank reform legislation.

Twelve Arizona banks have failed since mid-2009, and two-thirds of the survivors lost money last year.

"A number of banks still have hurt coming at them if the economy doesn't improve substantially," Wiest said, adding that bankers will be forced to "find other ways to pass along the costs to consumers" if the fee cap takes effect.

The debate really boils down to switching revenue, or shifting costs, from one industry to the other. If the swipe-fee cap takes effect, it's anyone's guess how much of the savings would be passed along by retailers to consumers. How would anyone even measure this?

But there's no free lunch. Consumers will be affected, and likely pay, one way or another.

by Russ Wiles The Arizona Republic Feb. 27, 2011 12:00 AM




Sectors spar over fee cap on debit use

Sectors spar over fee cap on debit use

Americans now make more than one-third of their purchases using debit cards, and all those swipes of the plastic have provoked a nasty battle.

The fighting between the retail and financial industrials is over interchange fees on debit transactions. After years of merchant complaints, Congress in December instructed the Federal Reserve to cut the fees to 12 cents per swipe, down from an estimate of 44 cents or higher, depending on whom you talk to. Regardless, the change adds up to billions of dollars.

Merchants have been griping that these fees cut into their already-thin profit margins and prevent them from passing along lower prices to consumers.


Banks, credit unions and card issuers say the fees pay to implement and operate their debit systems and help absorb fraud costs.

Consumers don't foot the costs directly, although some merchants add surcharges, and many others are vocal about the costs they absorb. But consumers will be affected by how this debate plays out.

The Fed's fee cap is set to be adopted by April 21 and take effect three months later. The financial industry, with sympathy from some members of Congress, is seeking a delay.

Retailer groups call the current system anti-competitive. They say it allows Visa and MasterCard to fix swipe fees with no opportunity for bargaining or competition. They say swipe fees have tripled over the past decade even as bank costs have decreased.

"Rates have gone up unchecked for the last 10 years," said Tim McCabe, president of the Arizona Food Marketing Alliance, which represents 1,400 supermarkets, convenience stores and other retailers.

"As technology has advanced and we have gotten away from paper, you'd expect these fees to decrease, but they haven't."

The Merchants Payments Coalition, a national group of which the Arizona Food Marketing Alliance is a member, estimates the cap will generate $13 billion in annual savings for merchants and consumers.

Retailers have accused big banks of "scare tactics" to rally small banks and credit unions to their side.

The proposal does provide a fee-cap exemption for smaller banks and credit unions - those with assets below $10 billion. But it doesn't require that debit-payment networks distinguish between the two.

The Fed has solicited comments for the past two months, and Congress has held hearings, so it's possible the new rules could be altered or delayed.

"Quite frankly, some small issuers are concerned networks may not provide a two-tiered structure once the rule is final or may not maintain it into the future," said Mary Mitchell Dunn, a senior vice president at the Credit Union National Association, in a recent letter to the Fed.

"Without a two-tiered structure, there is no exemption."

CUNA and the 70 percent of credit unions that offer debit are "extremely concerned about the impact of this proposal on their members, their debit-card programs and their operations generally," she wrote.

Credit unions can't pass the buck to shareholders - because they don't have any. Instead, their members would feel the pain through increased fees for various services or lower interest rates paid on deposits.

CUNA estimates credit-union debit customers could face an average new annual fee of $34, a transaction fee of 25 cents per swipe or some combination.

Paul Stull, a vice president at Arizona State Credit Union, estimates the proposed fee cap would cost his institution more than $5 million annually.

"In the end, our members would pay higher fees or will have reduced services," he said.

Swipe fees also help banks and credit unions absorb fraud losses, including those caused by a merchant's failure to check identifications or otherwise validate purchases.

Stull cited a recent case in which crooks installed card-reading skimmers at Tucson-area gas stations and used the cardholder information they obtained to make fake ATM cards, employing those to extract illicit withdrawals.

"Our losses from that came to more than $10,000 within a few days," he said. "But the gas stations got all their money, and our members didn't lose any money."

Small community banks, which have been hit much harder than their large counterparts by the soft economy, also are worried.

"A lot of people look at it as a big-bank issue," said Candace Wiest, president and CEO at West Valley National Bank in Avondale. "But in reality, (the proposal) fixed fees for us, too."

The Independent Community Bankers of America and Arizona Bankers Association, both of which mainly represent small institutions, also oppose interchange caps. The ICBA said 93 percent of its members plan to charge for services currently offered for free if the swipe-fee cap is implemented.

Smaller banks don't have the diversified revenue sources of large banks, or their economies of scale, and thus would be at a competitive disadvantage.

Wiest calls the fee cap another worry for small banks, which already are facing rising regulatory costs from the Dodd-Frank reform legislation.

Twelve Arizona banks have failed since mid-2009, and two-thirds of the survivors lost money last year.

"A number of banks still have hurt coming at them if the economy doesn't improve substantially," Wiest said, adding that bankers will be forced to "find other ways to pass along the costs to consumers" if the fee cap takes effect.

The debate really boils down to switching revenue, or shifting costs, from one industry to the other. If the swipe-fee cap takes effect, it's anyone's guess how much of the savings would be passed along by retailers to consumers. How would anyone even measure this?

But there's no free lunch. Consumers will be affected, and likely pay, one way or another.

by Russ Wiles The Arizona Republic Feb. 27, 2011 12:00 AM




Sectors spar over fee cap on debit use

Sectors spar over fee cap on debit use

Americans now make more than one-third of their purchases using debit cards, and all those swipes of the plastic have provoked a nasty battle.

The fighting between the retail and financial industrials is over interchange fees on debit transactions. After years of merchant complaints, Congress in December instructed the Federal Reserve to cut the fees to 12 cents per swipe, down from an estimate of 44 cents or higher, depending on whom you talk to. Regardless, the change adds up to billions of dollars.

Merchants have been griping that these fees cut into their already-thin profit margins and prevent them from passing along lower prices to consumers.


Banks, credit unions and card issuers say the fees pay to implement and operate their debit systems and help absorb fraud costs.

Consumers don't foot the costs directly, although some merchants add surcharges, and many others are vocal about the costs they absorb. But consumers will be affected by how this debate plays out.

The Fed's fee cap is set to be adopted by April 21 and take effect three months later. The financial industry, with sympathy from some members of Congress, is seeking a delay.

Retailer groups call the current system anti-competitive. They say it allows Visa and MasterCard to fix swipe fees with no opportunity for bargaining or competition. They say swipe fees have tripled over the past decade even as bank costs have decreased.

"Rates have gone up unchecked for the last 10 years," said Tim McCabe, president of the Arizona Food Marketing Alliance, which represents 1,400 supermarkets, convenience stores and other retailers.

"As technology has advanced and we have gotten away from paper, you'd expect these fees to decrease, but they haven't."

The Merchants Payments Coalition, a national group of which the Arizona Food Marketing Alliance is a member, estimates the cap will generate $13 billion in annual savings for merchants and consumers.

Retailers have accused big banks of "scare tactics" to rally small banks and credit unions to their side.

The proposal does provide a fee-cap exemption for smaller banks and credit unions - those with assets below $10 billion. But it doesn't require that debit-payment networks distinguish between the two.

The Fed has solicited comments for the past two months, and Congress has held hearings, so it's possible the new rules could be altered or delayed.

"Quite frankly, some small issuers are concerned networks may not provide a two-tiered structure once the rule is final or may not maintain it into the future," said Mary Mitchell Dunn, a senior vice president at the Credit Union National Association, in a recent letter to the Fed.

"Without a two-tiered structure, there is no exemption."

CUNA and the 70 percent of credit unions that offer debit are "extremely concerned about the impact of this proposal on their members, their debit-card programs and their operations generally," she wrote.

Credit unions can't pass the buck to shareholders - because they don't have any. Instead, their members would feel the pain through increased fees for various services or lower interest rates paid on deposits.

CUNA estimates credit-union debit customers could face an average new annual fee of $34, a transaction fee of 25 cents per swipe or some combination.

Paul Stull, a vice president at Arizona State Credit Union, estimates the proposed fee cap would cost his institution more than $5 million annually.

"In the end, our members would pay higher fees or will have reduced services," he said.

Swipe fees also help banks and credit unions absorb fraud losses, including those caused by a merchant's failure to check identifications or otherwise validate purchases.

Stull cited a recent case in which crooks installed card-reading skimmers at Tucson-area gas stations and used the cardholder information they obtained to make fake ATM cards, employing those to extract illicit withdrawals.

"Our losses from that came to more than $10,000 within a few days," he said. "But the gas stations got all their money, and our members didn't lose any money."

Small community banks, which have been hit much harder than their large counterparts by the soft economy, also are worried.

"A lot of people look at it as a big-bank issue," said Candace Wiest, president and CEO at West Valley National Bank in Avondale. "But in reality, (the proposal) fixed fees for us, too."

The Independent Community Bankers of America and Arizona Bankers Association, both of which mainly represent small institutions, also oppose interchange caps. The ICBA said 93 percent of its members plan to charge for services currently offered for free if the swipe-fee cap is implemented.

Smaller banks don't have the diversified revenue sources of large banks, or their economies of scale, and thus would be at a competitive disadvantage.

Wiest calls the fee cap another worry for small banks, which already are facing rising regulatory costs from the Dodd-Frank reform legislation.

Twelve Arizona banks have failed since mid-2009, and two-thirds of the survivors lost money last year.

"A number of banks still have hurt coming at them if the economy doesn't improve substantially," Wiest said, adding that bankers will be forced to "find other ways to pass along the costs to consumers" if the fee cap takes effect.

The debate really boils down to switching revenue, or shifting costs, from one industry to the other. If the swipe-fee cap takes effect, it's anyone's guess how much of the savings would be passed along by retailers to consumers. How would anyone even measure this?

But there's no free lunch. Consumers will be affected, and likely pay, one way or another.

by Russ Wiles The Arizona Republic Feb. 27, 2011 12:00 AM




Sectors spar over fee cap on debit use

Sectors spar over fee cap on debit use

Americans now make more than one-third of their purchases using debit cards, and all those swipes of the plastic have provoked a nasty battle.

The fighting between the retail and financial industrials is over interchange fees on debit transactions. After years of merchant complaints, Congress in December instructed the Federal Reserve to cut the fees to 12 cents per swipe, down from an estimate of 44 cents or higher, depending on whom you talk to. Regardless, the change adds up to billions of dollars.

Merchants have been griping that these fees cut into their already-thin profit margins and prevent them from passing along lower prices to consumers.


Banks, credit unions and card issuers say the fees pay to implement and operate their debit systems and help absorb fraud costs.

Consumers don't foot the costs directly, although some merchants add surcharges, and many others are vocal about the costs they absorb. But consumers will be affected by how this debate plays out.

The Fed's fee cap is set to be adopted by April 21 and take effect three months later. The financial industry, with sympathy from some members of Congress, is seeking a delay.

Retailer groups call the current system anti-competitive. They say it allows Visa and MasterCard to fix swipe fees with no opportunity for bargaining or competition. They say swipe fees have tripled over the past decade even as bank costs have decreased.

"Rates have gone up unchecked for the last 10 years," said Tim McCabe, president of the Arizona Food Marketing Alliance, which represents 1,400 supermarkets, convenience stores and other retailers.

"As technology has advanced and we have gotten away from paper, you'd expect these fees to decrease, but they haven't."

The Merchants Payments Coalition, a national group of which the Arizona Food Marketing Alliance is a member, estimates the cap will generate $13 billion in annual savings for merchants and consumers.

Retailers have accused big banks of "scare tactics" to rally small banks and credit unions to their side.

The proposal does provide a fee-cap exemption for smaller banks and credit unions - those with assets below $10 billion. But it doesn't require that debit-payment networks distinguish between the two.

The Fed has solicited comments for the past two months, and Congress has held hearings, so it's possible the new rules could be altered or delayed.

"Quite frankly, some small issuers are concerned networks may not provide a two-tiered structure once the rule is final or may not maintain it into the future," said Mary Mitchell Dunn, a senior vice president at the Credit Union National Association, in a recent letter to the Fed.

"Without a two-tiered structure, there is no exemption."

CUNA and the 70 percent of credit unions that offer debit are "extremely concerned about the impact of this proposal on their members, their debit-card programs and their operations generally," she wrote.

Credit unions can't pass the buck to shareholders - because they don't have any. Instead, their members would feel the pain through increased fees for various services or lower interest rates paid on deposits.

CUNA estimates credit-union debit customers could face an average new annual fee of $34, a transaction fee of 25 cents per swipe or some combination.

Paul Stull, a vice president at Arizona State Credit Union, estimates the proposed fee cap would cost his institution more than $5 million annually.

"In the end, our members would pay higher fees or will have reduced services," he said.

Swipe fees also help banks and credit unions absorb fraud losses, including those caused by a merchant's failure to check identifications or otherwise validate purchases.

Stull cited a recent case in which crooks installed card-reading skimmers at Tucson-area gas stations and used the cardholder information they obtained to make fake ATM cards, employing those to extract illicit withdrawals.

"Our losses from that came to more than $10,000 within a few days," he said. "But the gas stations got all their money, and our members didn't lose any money."

Small community banks, which have been hit much harder than their large counterparts by the soft economy, also are worried.

"A lot of people look at it as a big-bank issue," said Candace Wiest, president and CEO at West Valley National Bank in Avondale. "But in reality, (the proposal) fixed fees for us, too."

The Independent Community Bankers of America and Arizona Bankers Association, both of which mainly represent small institutions, also oppose interchange caps. The ICBA said 93 percent of its members plan to charge for services currently offered for free if the swipe-fee cap is implemented.

Smaller banks don't have the diversified revenue sources of large banks, or their economies of scale, and thus would be at a competitive disadvantage.

Wiest calls the fee cap another worry for small banks, which already are facing rising regulatory costs from the Dodd-Frank reform legislation.

Twelve Arizona banks have failed since mid-2009, and two-thirds of the survivors lost money last year.

"A number of banks still have hurt coming at them if the economy doesn't improve substantially," Wiest said, adding that bankers will be forced to "find other ways to pass along the costs to consumers" if the fee cap takes effect.

The debate really boils down to switching revenue, or shifting costs, from one industry to the other. If the swipe-fee cap takes effect, it's anyone's guess how much of the savings would be passed along by retailers to consumers. How would anyone even measure this?

But there's no free lunch. Consumers will be affected, and likely pay, one way or another.

by Russ Wiles The Arizona Republic Feb. 27, 2011 12:00 AM




Sectors spar over fee cap on debit use

Sectors spar over fee cap on debit use

Americans now make more than one-third of their purchases using debit cards, and all those swipes of the plastic have provoked a nasty battle.

The fighting between the retail and financial industrials is over interchange fees on debit transactions. After years of merchant complaints, Congress in December instructed the Federal Reserve to cut the fees to 12 cents per swipe, down from an estimate of 44 cents or higher, depending on whom you talk to. Regardless, the change adds up to billions of dollars.

Merchants have been griping that these fees cut into their already-thin profit margins and prevent them from passing along lower prices to consumers.


Banks, credit unions and card issuers say the fees pay to implement and operate their debit systems and help absorb fraud costs.

Consumers don't foot the costs directly, although some merchants add surcharges, and many others are vocal about the costs they absorb. But consumers will be affected by how this debate plays out.

The Fed's fee cap is set to be adopted by April 21 and take effect three months later. The financial industry, with sympathy from some members of Congress, is seeking a delay.

Retailer groups call the current system anti-competitive. They say it allows Visa and MasterCard to fix swipe fees with no opportunity for bargaining or competition. They say swipe fees have tripled over the past decade even as bank costs have decreased.

"Rates have gone up unchecked for the last 10 years," said Tim McCabe, president of the Arizona Food Marketing Alliance, which represents 1,400 supermarkets, convenience stores and other retailers.

"As technology has advanced and we have gotten away from paper, you'd expect these fees to decrease, but they haven't."

The Merchants Payments Coalition, a national group of which the Arizona Food Marketing Alliance is a member, estimates the cap will generate $13 billion in annual savings for merchants and consumers.

Retailers have accused big banks of "scare tactics" to rally small banks and credit unions to their side.

The proposal does provide a fee-cap exemption for smaller banks and credit unions - those with assets below $10 billion. But it doesn't require that debit-payment networks distinguish between the two.

The Fed has solicited comments for the past two months, and Congress has held hearings, so it's possible the new rules could be altered or delayed.

"Quite frankly, some small issuers are concerned networks may not provide a two-tiered structure once the rule is final or may not maintain it into the future," said Mary Mitchell Dunn, a senior vice president at the Credit Union National Association, in a recent letter to the Fed.

"Without a two-tiered structure, there is no exemption."

CUNA and the 70 percent of credit unions that offer debit are "extremely concerned about the impact of this proposal on their members, their debit-card programs and their operations generally," she wrote.

Credit unions can't pass the buck to shareholders - because they don't have any. Instead, their members would feel the pain through increased fees for various services or lower interest rates paid on deposits.

CUNA estimates credit-union debit customers could face an average new annual fee of $34, a transaction fee of 25 cents per swipe or some combination.

Paul Stull, a vice president at Arizona State Credit Union, estimates the proposed fee cap would cost his institution more than $5 million annually.

"In the end, our members would pay higher fees or will have reduced services," he said.

Swipe fees also help banks and credit unions absorb fraud losses, including those caused by a merchant's failure to check identifications or otherwise validate purchases.

Stull cited a recent case in which crooks installed card-reading skimmers at Tucson-area gas stations and used the cardholder information they obtained to make fake ATM cards, employing those to extract illicit withdrawals.

"Our losses from that came to more than $10,000 within a few days," he said. "But the gas stations got all their money, and our members didn't lose any money."

Small community banks, which have been hit much harder than their large counterparts by the soft economy, also are worried.

"A lot of people look at it as a big-bank issue," said Candace Wiest, president and CEO at West Valley National Bank in Avondale. "But in reality, (the proposal) fixed fees for us, too."

The Independent Community Bankers of America and Arizona Bankers Association, both of which mainly represent small institutions, also oppose interchange caps. The ICBA said 93 percent of its members plan to charge for services currently offered for free if the swipe-fee cap is implemented.

Smaller banks don't have the diversified revenue sources of large banks, or their economies of scale, and thus would be at a competitive disadvantage.

Wiest calls the fee cap another worry for small banks, which already are facing rising regulatory costs from the Dodd-Frank reform legislation.

Twelve Arizona banks have failed since mid-2009, and two-thirds of the survivors lost money last year.

"A number of banks still have hurt coming at them if the economy doesn't improve substantially," Wiest said, adding that bankers will be forced to "find other ways to pass along the costs to consumers" if the fee cap takes effect.

The debate really boils down to switching revenue, or shifting costs, from one industry to the other. If the swipe-fee cap takes effect, it's anyone's guess how much of the savings would be passed along by retailers to consumers. How would anyone even measure this?

But there's no free lunch. Consumers will be affected, and likely pay, one way or another.

by Russ Wiles The Arizona Republic Feb. 27, 2011 12:00 AM




Sectors spar over fee cap on debit use

Sectors spar over fee cap on debit use

Americans now make more than one-third of their purchases using debit cards, and all those swipes of the plastic have provoked a nasty battle.

The fighting between the retail and financial industrials is over interchange fees on debit transactions. After years of merchant complaints, Congress in December instructed the Federal Reserve to cut the fees to 12 cents per swipe, down from an estimate of 44 cents or higher, depending on whom you talk to. Regardless, the change adds up to billions of dollars.

Merchants have been griping that these fees cut into their already-thin profit margins and prevent them from passing along lower prices to consumers.


Banks, credit unions and card issuers say the fees pay to implement and operate their debit systems and help absorb fraud costs.

Consumers don't foot the costs directly, although some merchants add surcharges, and many others are vocal about the costs they absorb. But consumers will be affected by how this debate plays out.

The Fed's fee cap is set to be adopted by April 21 and take effect three months later. The financial industry, with sympathy from some members of Congress, is seeking a delay.

Retailer groups call the current system anti-competitive. They say it allows Visa and MasterCard to fix swipe fees with no opportunity for bargaining or competition. They say swipe fees have tripled over the past decade even as bank costs have decreased.

"Rates have gone up unchecked for the last 10 years," said Tim McCabe, president of the Arizona Food Marketing Alliance, which represents 1,400 supermarkets, convenience stores and other retailers.

"As technology has advanced and we have gotten away from paper, you'd expect these fees to decrease, but they haven't."

The Merchants Payments Coalition, a national group of which the Arizona Food Marketing Alliance is a member, estimates the cap will generate $13 billion in annual savings for merchants and consumers.

Retailers have accused big banks of "scare tactics" to rally small banks and credit unions to their side.

The proposal does provide a fee-cap exemption for smaller banks and credit unions - those with assets below $10 billion. But it doesn't require that debit-payment networks distinguish between the two.

The Fed has solicited comments for the past two months, and Congress has held hearings, so it's possible the new rules could be altered or delayed.

"Quite frankly, some small issuers are concerned networks may not provide a two-tiered structure once the rule is final or may not maintain it into the future," said Mary Mitchell Dunn, a senior vice president at the Credit Union National Association, in a recent letter to the Fed.

"Without a two-tiered structure, there is no exemption."

CUNA and the 70 percent of credit unions that offer debit are "extremely concerned about the impact of this proposal on their members, their debit-card programs and their operations generally," she wrote.

Credit unions can't pass the buck to shareholders - because they don't have any. Instead, their members would feel the pain through increased fees for various services or lower interest rates paid on deposits.

CUNA estimates credit-union debit customers could face an average new annual fee of $34, a transaction fee of 25 cents per swipe or some combination.

Paul Stull, a vice president at Arizona State Credit Union, estimates the proposed fee cap would cost his institution more than $5 million annually.

"In the end, our members would pay higher fees or will have reduced services," he said.

Swipe fees also help banks and credit unions absorb fraud losses, including those caused by a merchant's failure to check identifications or otherwise validate purchases.

Stull cited a recent case in which crooks installed card-reading skimmers at Tucson-area gas stations and used the cardholder information they obtained to make fake ATM cards, employing those to extract illicit withdrawals.

"Our losses from that came to more than $10,000 within a few days," he said. "But the gas stations got all their money, and our members didn't lose any money."

Small community banks, which have been hit much harder than their large counterparts by the soft economy, also are worried.

"A lot of people look at it as a big-bank issue," said Candace Wiest, president and CEO at West Valley National Bank in Avondale. "But in reality, (the proposal) fixed fees for us, too."

The Independent Community Bankers of America and Arizona Bankers Association, both of which mainly represent small institutions, also oppose interchange caps. The ICBA said 93 percent of its members plan to charge for services currently offered for free if the swipe-fee cap is implemented.

Smaller banks don't have the diversified revenue sources of large banks, or their economies of scale, and thus would be at a competitive disadvantage.

Wiest calls the fee cap another worry for small banks, which already are facing rising regulatory costs from the Dodd-Frank reform legislation.

Twelve Arizona banks have failed since mid-2009, and two-thirds of the survivors lost money last year.

"A number of banks still have hurt coming at them if the economy doesn't improve substantially," Wiest said, adding that bankers will be forced to "find other ways to pass along the costs to consumers" if the fee cap takes effect.

The debate really boils down to switching revenue, or shifting costs, from one industry to the other. If the swipe-fee cap takes effect, it's anyone's guess how much of the savings would be passed along by retailers to consumers. How would anyone even measure this?

But there's no free lunch. Consumers will be affected, and likely pay, one way or another.

by Russ Wiles The Arizona Republic Feb. 27, 2011 12:00 AM




Sectors spar over fee cap on debit use

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