Friday Grab Bag - 5/15/2009

It's Friday again, and that means it's time for the weekly SpendOnLife grab bag post. Here we share some of the week's more interesting tidbits from the world of credit and identity theft. Enjoy!

Big brother is watching, and he knows you stopped into Sharx for beers on Friday night

Credit card companies might be looking at more than just your credit score to determine your creditworthiness. Everything from what you buy to how often you check your account online may be factored into whether to cut your credit limit and what interest rate to charge. The New York Times Magazine just put out a fascinating article on the up-and-coming field of data-driven psychology, in which credit card companies, debt collectors, and even employers use every piece of information they have about you to "learn your next move," so to speak. “If you show us what you buy, we can tell you who you are, maybe even better than you know yourself,” says leading data psychologist J.P. Martin.  Fascinating...and scary (especially for the two guys in the photo).

Advanta stops credit-card lending

If you are carry a credit card from Advanta, you'll want to retire it from your wallet come June 10th. The company is deactivating its cards at that time, effectively halting its credit-card lending division that primarily served small businesses. The reason? Advanta's books show that it has deemed a whopping 20% of its debt "uncollectible," which is enough to drive any creditor out of business. But don't think this means you as an Advanta customer get off scot-free. Collecting existing balances "will be the first order of business for the company," Advanta CFO Philip Browne says.

The Credit Card v. US Government saga continues...

Another chapter of the government's efforts to regulate the credit card industry unfolded this week: The Senate rejected putting a rate-cap clause into the bill which would have capped credit card interest rates at 15%. Backing off of the rate cap is a direct result of pressure from the banking industry, whose lobbyists have been swarming Washington for weeks to hinder legislative reform. Interesting fact: Over 30% of credit card holders are currently paying rates between 20 and 41%, so a 15% rate cap would have been enormously beneficial to a ton of people. The good news, though, is that the Senate bill (if it ever passes, that is) will prohibit rate increases unless the customer is past due 60 days or more. 

Don't forget us! Debit and ATM cards are at risk of ID theft too

A recent survey of financial institutions shows that ATM and debit card fraud is expected to increase by 10-14% this year. Skimming, in which ID thieves rig card swipes with illegal devices that store and record card information and PIN numbers, is happening more and more these days. (Check out how hackers recently stole $500,000 from ATMs, here.) The survey found that about 15% of financial institutions had to reissue debit and ATM cards to more than 20% of their customers because of past or potential fraud. While it's not likely you'll know if an ATM machine is rigged, there are some steps you can take to protect yourself: ATM machines inside a bank branch are usually safer than ones on the street; Be watchful of strangers "lingering" around machines; If your card gets stuck in the machine, or if you have any other trouble during your transaction, don't leave the machine until you get a hold of a bank representative on your cell phone (if possible). 

Bank of America lets you "Shop Safe" online

The Bank of America ShopSafe feature has apparently been around for awhile, but I just learned about it from a friend last weekend. The feature gives B of A credit card customers a way to shop online without ever giving out their real credit card number. Just visit the ShopSafe site to set up a spending limit and expiration date, and in return you'll get a temporary 16-digit number to use for your purchase. B of A will then cover the transaction by charging your real account. This even works with recurring credit charges, like Netflix and other subscriptions. Just use ShopSafe to set up the amount you think you'll spend each year for the subscription, and set an expiration date for a year from now.