RFID and Smart Credit Cards: Making It Easy for Electronic Pickpockets

I have a love/hate relationship with RFID technology.

Every time I ease through the E-ZPass lane at a toll both, and slip passed non-E-ZPass users who have to wait in line to pay their toll in cash, I'm thankful.

Love E-ZPass. But I'm not a fan of RFID chips in my credit cards.

Smart credit cards use RFID technology. They allow cardholders to checkout faster than ever, with a simple wave of the card in front of a card reader. My main debit card offers super-fast "Blink" checkout, but I never use it (at least, I don't think I have!) When I checkout at e.g. Wal-Mart, I'm perfectly happy to swipe my card then sign the electronic signature pad. It's fast enough for me, and keeps me from worry too much about becoming a target of an electronic pickpocket.

How easy for it for someone to read the payment cards in your wallet? Much easier than you probably realize. Check out these YouTube clips:





Read the comments section of the above YouTube clip and you'll find criminals brazenly posting offers to sell -- and posting requests for -- card readers and all kind of hacking equipment. Shameless and disgusting.

Here's another clip from the Wall Street Journal:



So, what to do?

One solution: call your credit-card bank and ask them to replace any smart cards they've issued you with good, old fashioned dumb cards (sans RFID chips.) Unfortunately, many credit-card banks are so committed to smart cards that your request for a de-evolved card will probably be met with resistance.

In my opinion, it's worth it to try. My thesis: If enough people make the request, banks will get the message and will probably move to improve current smart card technologies, sooner rather than later.

I could use a metal wallet, but I don't like the idea of using something that bulky. I guess I could buy a bunch of thin, protective sleeves for each card, but I'm not ready to do that yet.

Maybe I should be.

Back in 2008, my debit card info was stolen and used (or sold) by a waitress at a popular seafood restaurant. She used one of those pager-sized card readers to swipe my card. I'm pretty sure she sold the info, because the fraudulent charge was for $150-worth of flowers from a retailer in Eastern Europe. Hard to prevent this type of theft, because restaurant staff always take your card away from you and out of sight when you pay. Needless to say, I've been using cash to pay for meals more often than I used to.

And because credit card info is being stolen from websites more often these days, I've gotten into the habit of using PayPal to pay for goods online. Another decent alternative is to use Google Checkout.

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The Future for Credit-Card Rates and Fees

BankRate's Greg McBride commented on credit-card and other interest rates in the following WSJ video clip:




I agree with Mr. McBride. For those with excellent credit, credit-card offers have been improving and will very likely continue to get better as 2011 progresses. Zero percent intro APR credit cards -- our favorite type of credit-card offer -- Keep getting more and more generous.

It's a shame that Discover's No Balance Transfer Fee 0% card is no longer with us. It was a special offer which expired at the end of February. Which bank will offer the next great 0% card? Bank of America? American Express? No one can know for sure, but I think it's a safe bet that the American consumer will be able to apply for at least one juicy, new, no balance transfer fee 0% card before the end of the year.

NB: Discover decided to keep their 24 Month Balance Transfer card alive (0% intro APR on transferred balances for a full 2 years!), so anyone can apply for it right now. This card is easily the best 0% credit card in the American market.

And what about the future for credit-card fees? Here's a clip from a great WSJ article titled "Surprise: Banks Ease Card Fees":

"...Some analysts, however, say lenders also are calculating that bad publicity from imposing fees is itself a threat to revenues. Amid persistent unemployment and a still-sluggish economy, credit-card companies want to tamp down on controversy.

'The motivation behind [easing credit-card fees] is to improve the persistent perception that card issuers are simply price-gouging,' says Sanjay Sakhrani, an analyst at Keefe, Bruyette & Woods.

That is especially important now, as the new Bureau of Consumer Financial Protection sets its enforcement priorities, say banking industry analysts. 'Banks would like to keep a low profile right now,' says Dennis Moroney, research director at advisory firm Tower Group..."

I'm totally on board with the reasoning and analysis in the above article. The folks at the nascent Consumer Financial Protection Bureau (CFPB) are very busy setting up shop, and setting up policies that are likely to influence how much profit banks can make from credit cards. So, right now, banks are highly motivated to play nice.

Here are some clips from the CFPB site:

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Credit Card Rakings for January 2011

Here are the credit card rankings for January 2011. These rankings are based on the cards we recommend here on www.BalanceTransfer.cc. As always, these rank are based on both the volume of applications, and approvals. Here's the list:

1. The Discover® More No Balance Transfer Fee Card (click here)
   
   
2. Discover More Card - 24 Month Promotional Balance Transfer Card (click here)
   
   
3. The Classic Discover More Card (click here)
   
   
4. Slate from Chase (click here)
   
   
5. The Chase Freedom® MasterCard® with $100 Bonus Cash Back (click here)
   
   
6. The Chase Freedom® Visa® with $100 Bonus Cash Back (click here)
   
   

Not surprisingly, Discover's No Balance Transfer Fee card, and its 24 Month Promotional Balance Transfer card, were extremely popular last month, as these two cards are easily the best 0% credit cards in the United States right now. Here what these two cards are currently offering:

Discover® More No Balance Transfer Fee Card

• 0% Intro APR on transferred balances for 12 months.
• 0% Intro APR on new purchases for 12 months.
• No balance transfer fee
• No Annual Fee
  

Discover More Card - 24 Month Promotional Balance Transfer Card

• 0% Intro APR on transferred balances for 24 months.
• 0% Intro APR on new purchases for 6 months.
• Balance transfer fee: 5% of each transfer made, with a minimum transfer fee of $10.
• No Annual Fee

Moreover, both of the above cards come with Discover's industry leading cashback rewards program.

If you want to take advantage of the best 0% credit cards in the market right now, you have until the end of February to do so. Discover plans to shelve both cards on February 28, 2011.

The Classic Discover More card is still popular, because it's still offering a lot of value:

Classic Discover More Card

• 0% Intro APR on transferred balances for 12 months.
• 0% Intro APR on new purchases for 18 months.
• Balance transfer fee: 4% of each transfer made.
• No Annual Fee

And, of course, excellent cashback rewards.

The Blue from American Express® and Blue Cash® from American Express cards both generated a lot of interest from visitors to this site in January. Unfortunately, however, Amex approved a small fraction of the applications generated here at www.BalanceTransfer.cc. We're hoping Amex approvals improve over time, and they should as the economy continues to heal and the jobs picture gets better. But, for now, it's best to try one of the 3 top Discover cards from our January rankings above. Though American Express offers the best customer service around, Discover's customer service record is also very good. Bottom line: If you're attracted to the Blue from American Express or Blue Cash from American Express cards because they offer 0% intro APR on purchases for 12 months, you'd probably be better off going with one of the Discover cards discussed above, because your application has a better chance of getting that stamp of approval.

As always, your comments are very welcome.

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Discover Receives Prestigious Award for Customer Satisfaction

If you have a Discover credit card, then perhaps today's news really isn't news to you. For those of you thinking about signing up for a Discover credit card, and you really like the idea of a credit-card bank providing first-class customer service, then read on.

Discover just got top honors from the Service Quality Measurement Group (SQM) for providing the best call-center customer service in the credit-card industry. This is no easy feat, as American Express is very well known for their excellent customer service. I guess Discover just stepped up to the plate, and belted out a grand-slam home run.

Another interesting note: with so many American companies outsourcing their call-center business to Asia, it's refreshing that most of Discover's call centers are based right here in the US of A. Kudos! This is significant, considering that the unemployment rate is the US is still painfully close to 10% (the October 2010 figure was 9.6%), and probably won't ease in the near term.

Here's a clip from today's press release:

"...Discover finished with top honors in the first targeted customer service evaluation of credit card industry call centers by Service Quality Measurement Group (SQM), the leading benchmarking firm for more than 450 leading North American call centers.

Discover received SQM's award for Highest Customer Satisfaction for the Credit Card Industry, which was based on 400 random telephone surveys of Discover cardmembers within two business days of their calls to the company. SQM measured whether the call was resolved, the customer's overall satisfaction with the service representative and their overall experience.

'Our commitment to the finest customer service available is a fundamental reason we have the most loyal cardmembers in our industry,' said Carlos Minetti, president of consumer banking and operations for Discover. 'We're honored by SQM's recognition and remain committed to making the necessary investments to maintain our leadership position in customer service.'

Discover employs more than 10,500 people, with the majority based in its call centers in Arizona, Delaware, Ohio and Utah. An industry leader in customer service, Discover won the 'Best Performance Leveraging Customer Service Feedback' category in the 2010 Call Center Excellence Awards from the International Quality & Productivity Center, finished first in the 2010 Brand Keys Customer Loyalty Engagement Index® for the past 13 years and was recently honored by InformationWeek magazine for creating technology that assists customer service representations during cardmember calls..."

It comes as no surprise to us that Discover has such loyal customers. The feedback we receive from Discover cardholders is invariably very positive. Discover cards offer a lot more value (great cashback rewards, long interest-free periods, etc.) than comparable credit cards offered by other reputable credit-card banks in the American market. That's why we've been recommending them for years. We're quite confident that Discover will continue to provide the kind of customer service that credit consumers want and deserve.

To review a list of the Discover cards we recommend here at www.BalanceTransfer.cc, visit this link.

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Credit Card Rakings for August

Here are the August credit card rankings for the cards we recommend here on www.BalanceTransfer.cc. As always, these rank are based on both the volume of applications, and approvals. This list is important because it gives credit consumers a good read on which banks are approving applications, and which banks are offering the most attractive credit card offers. Bottom line: no one wants to signup for an unpopular credit card deal, and no one likes it when a credit application is denied. Popular cards are popular for a reason, as smart card shoppers always go for the best possible deal. Here's the list:

1. The Discover® More Black Card (click here)
   
   
2. Discover More Card with $75 CashBack Bonus (click here)
   
   
3. The Discover More Card (click here)
   
   
4. The Discover More Biodegradable Card (click here)
   
   
5. The Chase Freedom® Visa with $100 Bonus Cash Back (click here)
   
   
6. Blue from American Express® (click here)
   
   
7. Chase Freedom Credit Card (click here)
   
   
8. Blue Cash® from American Express (click here)
   
   
9. Chase Sapphire® Card (click here)
   
   
10. Chase Freedom Visa with $50 Bonus Cash Back (click here)

It's no surprise that the Discover More Black Card is still #1. It offers the best 0% intro APR deal (12 months), as well 0% intro APR on new purchases for 9 months. And, as always, Discover offers the most generous cashback bonus of all the cards we recommend.

We really like American Express cards, as the customer service is truly excellent and the terms are invariably consumer-friendly. However, Amex has been quite stingy with approving applications lately, and that's why only 2 Amex cards made our list this month.

The Chase Freedom® Visa with $100 Bonus Cash Back Card has been climbing the list, as savvy card shoppers have been keen to take advantage of the bonus cash.

Thanks much for stopping by and reading. Stay tuned for next month's list.

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Will 0% No Balance Transfer Fee Credit Cards Return?

As you might have already guessed, American banks are not jumping for joy about the new the Credit Card Accountability Responsibility and Disclosure Act of 2009, also known as the Credit Card Act. The new law, together with new rules imposed on banks by the Federal Reserve in August of 2010, place limits on fees and other charges and, in general, make having a credit card in your wallet a much better financial arrangement for you.

If you think that banks have responded to the new credit card rules by coming up with creative ways to generate revenue, then you're right on the money.

For example, banks are no longer permitted to charge inactivity fees. However, some banks have figured out a clever way around this rule: charge an annual fee that's waived if the cardholder spends a certain amount on his or her card each year.

So what about 0% credit cards that don't charge a balance transfer fee? These offers were extremely popular during the pre-financial-meltdown credit boom, but they disappeared as the shockwaves from the 2008 banking crisis rippled through the American economy. "No fee balance transfer" cards still exist, but current offers from reputable banks don't feature the added benefit of a zero percent introductory annual percentage rate (APR) on transferred balances.

When will zero percent intro APR no fee balance transfer cards return to the American market? Nobody can say for sure, but it's a pretty safe bet that they will return eventually. Banks need time to figure out how to make credit cards as profitable as possible without breaking any of the new credit card rules. That might take many months, or even years. Moreover, don't expect these specific offers to return until the American economy is expanding at a decent pace, and sustainably.

Credit cards are still extremely useful financial tools that offer great benefits like purchase protection and cashback rewards. What's true now has always been true about credit cards: pay attention to the terms and conditions before signing on the dotted line, and do your best to avoid finance charges. Competition in the credit card market is still very healthy, so if you don't like the deal your current bank is offering, you can always pass and signup for a card elsewhere.

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Discounts for Using Cash

The Wall Street Journal's Brett Arends recently produced a great article titled "The Death of The Rewards Card."

As you probably already know, when you use a credit card to pay for a purchase, a small cut goes to the bank that issued your card. An even smaller cut goes to the "middle-man" bank, the bank that handles the processing. Invariably, these fees are paid by the retailer. When dealing with volume, these small fees add up fast. In fact, many retailers complain that these fees are so burdensome that they can't afford to hire new workers, and help this limping economy get back to prosperity.

With credit card banks like American Express and Discover, the processing is not handled by another party (no middle-man.) This doesn't mean that transactions handled by these banks are cheaper for the merchant. In fact, if you ask a merchant if the fees associated with accepting American Express are higher than those associated with accepting Visa or MasterCard, the merchant is likely to tell you: yes, they are. In my own real world experience, however, I found that accepting American Express cost me about the same. That's because my transaction volume was very low, and the middle-man bank I was using for Visa and MasterCard payments was charging me a hefty fee for keeping my merchant account active.

I canceled my merchant account 2 years ago. Got too expensive for my meager volume. I now use PayPal for credit card payments, as it's very convenient, and the fees are manageable.

OK, enough with the primer. Onto this article by Mr. Arends.

Legally, all types of merchants who accept credit cards, from gas station owners to web designers, have always had the freedom to offer a discount for paying with cash instead of a credit card, thus eliminating the fees associated with accepting credit cards.

Most merchants, however, were not in the habit of pursuing this money-saving option because the payment networks used "restrictions" to discourage the practice.

The Dodd–Frank Wall Street Reform and Consumer Protection Act(1), which is now law, eliminates those "restrictions" and gives retailers true freedom to offer discounts for using cash over a credit card.

Mr. Arends contends that this could spell the end for the rewards credit card. Mr. Arends predicts that consumers will eschew using a rewards card and take the discount for using cash instead. Bottom line: credit-card rewards are great, but cash is better. Mr. Arends' thesis statement goes something like this:

"...Plastic is so over. The new cash is, er, cash...."

I totally disagree.

My position:

• Consumers like using cards. In my opinion, most people would not be comfortable carrying around wads of cash so as to enjoy discounts offered by retailers and other merchants. Using credit cards is much safer, and convenient. Would you be comfortable carrying $1,800 in cash when you go to buy that new flat-screen TV you've always wanted? I don't think so. I know I wouldn't. What if I was in NYC visiting family and fell asleep in a super crowded subway car (I used to doze off on the subway all the time when I lived there)? I might wake up and find that my cash has been "borrowed." On the other hand, if I accidentally dropped my credit card on a subway train, all I'd have to do is make a quick, toll-free call to my credit-card bank, and all would be fine.
  
  
• Has Mr. Arends forgotten about purchase protection? How much protection do you get with cash? Zero. Recently, someone tried to cheat me by selling me a broken laptop LCD backlight inverter, which was supposed to be brand new. I tried to get the problem resolved but the retailer didn't answer his phone, and didn't respond to emails. Solution was easy: let my credit-card bank deal with it. Got my money back.
  

However, I do agree with the author's statement, that:

"...Credit cards are bad for your wealth..."

No doubt, this is true for anyone who carries even a small balance from month-to-month, and pays interest on it. But for those who know how to use credit wisely, credit cards are...well...cool.

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