Rise in Tourism in the U.S., Credit Card Experts Link it to Perks

A news release issued by the U.S. Bureau of Economic Analysis (BEA) earlier this morning shows that spending on travel and tourism increased in the first quarter of 2011. 

Specifically, the increase occurred at an annual rate of 0.6 percent, which is following an increase of 2.6 percent in the fourth quarter of 2010.           

  

According to the Central Valley Business Times, tourism is vital to the success of California’s economy. It helps fuel employment and generates high spending in the region. In fact, figures from the California Travel & Tourism Commission show that visitors to California spent $87.7 billion in 2009, and that travel spending in California directly supported 881,000 jobs.          

What’s the story behind the recent visits from tourists? 

The BEA said that the growth in prices for travel and tourism reflect strong price increases in gasoline and passenger air transportation. If one goes up, so, in turn, must the other.

But credit card experts suggest something else. Rupert McAllister, a senior analyst at Credit-Land.com says, “The recent rise in tourism has to do with the recent traveling perks that many well known credit card companies have begun offering.” 

Time magazine that recommends several credit cards to help you heap rewards while enjoying a vacation. 

Planning a stay at a Los Angeles Marriott Hotel?

If so, Doug Miller, senior analyst for banking and cards at consulting firm Corporate Insight, recommends the Chase Marriott Rewards Visa card. Miller told Time, “If you’re a frequent traveler and have a hotel chain or a series of hotel chains you like or use a lot you can rack up rewards quickly.” Using this card to pay for a room in one of 3,200 hotels in the Marriott family of brands, earns you three points per dollar spent. Points can then be cashed in for free nights at certain Marriott hotels.

Planning on going overseas?

Roman Shteyn, the founder of credit card comparison website Credit-Land.com gives Capital One Venture One Rewards card his nod of approval. “You get 1.25 miles per dollar spent and a one-time bonus of 10,000 miles. That can easily equal $100 in cash,” Shteyn said. “What’s great is that you can use it for booking flights, car rentals, or hotels.” Shteyn also said that for those traveling overseas, the card offers no foreign transaction fees, which can be a penny saver. 

Planning on Driving and Need an Automotive Bonus?

Both Shteyn and McAllister recommend the Discover More card.  According to them, the card offers a five percent cash back bonus in categories that change like travel, gas, groceries, and restaurants. These perks sound perfect for a road trip. “This one is my favorite for short-distance trips,” Shteyn said. 

Other perks of the card include up to 20 percent cash back Bonus at popular retailers when you shop online through Discover as well as unlimited cash rewards that never expire.

How much will this actually help you on your trip? Let’s look at the numbers. Say you charge $1000 on your card during your vacation. Anytime you refuel your car, pick up snacks for the kids, or book a night at a motel – that’s five percent that you’re getting handed back to you. That’s $50 that’s handed back to you so you can breathe a little bit easier and go back to enjoying your vacation. 

So remember, as you’re planning a fun-filled getaway this summer; keep in mind that you may be in store for some great rewards. All you have to do is know where to look.

Celebrity Endorsements: What were they thinking?

By now you’ve probably heard about the Kardashian sisters’ most recent win. This time, it isn’t a second hit reality show or another $2 million engagement ring. Instead, Khloe, Kourtney, and of course Kim Kardashian have secured a win in a lawsuit against them by a credit card company for which they were spokespersons.   

The drama began in January. According to Reuters, the girls and their mother, Kris Jenner, were sued by Revenue Resource Group, for forfeiting a contract to promote a celebrity debit card known as the “Karadashian Kard.”   

Initially the sisters agreed to speak positively about the card to the media and on their Facebook and Twitter pages. For their help, the girls would receive a flat fee, as well as a percentage of revenue from all the customers who signed up. But a problem occurred when the Kardashians learned that they were endorsing a prepaid debit card that was criticized for its high fees. According to the Huffington Post, the reality show stars felt they had no duty in promoting a product that might be considered unlawful.    

The judge agreed. The $75 million lawsuit against the girls was dismissed, and Revenue Resource Group was ordered to pay the Kardashians $6,825 in attorney's fees.

Interestingly enough, the “Kardashian Kard” was not the first of these celebrity credit cards that has not become widely popular. According to www.creditland.com Usher and band KISS are some popular entertainers who have formerly been the face of such a card. Currently, only a handful of these cards exist and most are phased out with time.  

Why does this happen? Prescott Perez-Fox is an expert brand developer and designer in New York City who blogs about branding at his site, Perez-Fox.com. He spoke to creditcards.com about this issue for celebrities. 

“The notion of 'member since' stamped on the front of a credit card helps customers reinforce this feeling of pride over time. Celebrities, however, exist in the here and now,” he said. “Since they go out of fashion with every changing season, most consumers aren't willing to throw away their hidden 'time equity' for someone who may be old hat by this time next year.”     

Perez-Fox continued to explain the most often, celebrities won’t agree to this sort of prepaid card contract just for the money. 

“Yes, celebs may earn a few dollars by lending their name to a financial product or service, but the damage to the celebrity 'brand' is far-reaching. It makes the celeb appear as a money-grubber, someone who doesn't value his own name and is willing to slap his face on any old thing that will sell.”

For the Kardashian girls, the bad stigma associated with wide-reaching fees from Revenue Resource Group, made them pull out of the agreement also. Luckily, their reputation was salvaged.

Can Technology Squash Shop-Lifting Once And For All?

Small business owners have had enough. They are cracking their knuckles, craning their necks, and whipping out the big guns – metaphorically speaking. Retailers are finally ready to combat their credit card fraudster arch nemeses once and for all.

According to an article that appeared in The Republic earlier this week, retailers are currently working to adopt new technologies to better protect against credit card fraud and counterfeit bills. They are putting tiny, hard-to-spot GPS devices in cargo shipments. They are attaching ink-dispensing tags to designer suits that will splatter ink all over your new outfit if you try to dismantle it without a store associate’s help. The article states that now there is even an alarm tag that can go into the meat soaker pad under a packaged T-bone steak. What’s next?   

Retailers are buckling down, and it is just in time. According to the article, retail theft is on the rise, with $37.14 billion lost nationally just last year. This is already almost a 2% increase from 2009 or 1.5% of total retail sales to be exact.

An annual study from the National Retail Federation said that the biggest share of those losses, 44%, was from employee theft, with shoplifting at a close second at 33%.     

For small business owners, these deficits can be killer.     

The article cited Bill Titus, the loss prevention manager of the Sears Holding Corp. "If you think the last 10 years were turbulent and required our stores to adapt, stand back for the next 10 years," Titus said.  "When are flash mobs organized on Twitter going to start stealing from our stores?"    

Why have shoplifting and credit card fraud grown worse with time? First Data North Bay, a leader in the credit card processing industry, said that the problem may lie with merchants themselves.  They cite four major reasons for this increase in fraud.  They deal with sales associates not comparing the signature on the back of the card with the cardholder’s signature at the time of purchase as well as merchants not calling cardholders to confirm major orders. A failure to check the credit card for the hologram (while making sure there are no alteration marks) and sloppily rushing through transactions are additional reasons for the increase.       

But while some merchants are giving up, other store owners are more optimistic and are not ready to give in to shoplifting and fraud just yet. In fact, they are raving about a new technology that can change the way loss prevention teams operate forever.

It’s name? Virtual Wallet. It’s availability? Slim – it’s still being tested. It’s effects? Wide-reaching. Virtual Wallet can possibly change the playing field of credit card transactions forever, and, thus, change the world of fraud. Once developed, this technology will allow you to sync your Visa, Discover, and MasterCard to your smartphone. As a result, you may never again need to bring an actual plastic card with you. All your information – bar code, security code, everything, will be safely stored on your mobile device.

This will make it more difficult for criminals to hack into or steal your personal data, loss prevention experts say. In turn, shoplifting and card theft may be dramatically altered. Joe LaRocca, the National Retail Federation's loss prevention staff expert, said that while it won't happen overnight, new technology will have a strong effort in making major retail theft obsolete.

A Domino Effect: What Happens in Greece Comes to America?

It is but one year later and Greece is in trouble again. Investors are currently concerned that if Greece defaults on its debt, financial hardship could hit a lot further than its home economy.  Speculation in the media suggests that this turmoil would spread to other troubled European economies – Spain, Portugal, and Ireland at the lead. Moreover, this possible financial collapse may stretch even further, all the way to the American coast.

Let’s look at the numbers. Greece is currently 340 billion euros ($481.5 billion) in debt. This is more than 30,000 euros per person in a nation of 11.3 million.  

But how can havoc in this southern European nature trouble Americans? ABC News lists a variety of effects that the default in Greece can cause, and none of them are pretty.   2
The top concern is this: If Greece defaults on its debt, any unit that bought bonds (banks, governments and private investors, for example) would suffer major losses to their balance sheets. Capital that might have been used to spend elsewhere, will no longer be available to leverage.
    
Following suit, if the European countries come to an agreement to bail out Greece, a hefty bulk of money will flow out of these nations and into the shaky Greek economy. This, in turn, will lead those countries to have less money to spend on American goods and services.
  
And, as the U.S. knows all too well, if Europe is in shambles and unable to purchase our products, job losses might accelerate here over the following months. Ironically enough, reports from the Associated Press, say that fewer people applied for unemployment benefits last week, though applications remain elevated. Economists at Credit-Land.com are also reporting a decrease in credit card applications in comparison to consumer real spending(see graph.) But though this nation is doing slightly better, the potential of Greece defaulting might prompt credit markets here to ice over, as happened after Lehman's collapse when banks virtually stopped lending to each other.   

According to Reuters, the White House said yesterday that the Greek crisis was acting “…as a headwind to the U.S. economy.” Opinions however are varying as to the level of exposure for the U.S. banks.  

“Large European banks are very intertwined with American banks,” Richard Bove, an analyst at Rochdale Research, told ABC News. “The question becomes, in the worst case scenario -- a wave of defaults. "Will these banks be able to absorb a number of defaults from a number of countries?” Bove asked.

Next week, European leaders will convene a summit to attempt to deal with the crisis, and another meeting is set for July 11.   

Move it, Economy: Implications for Savers and Borrowers

We were told that interest rates would be keep rates low by Ben Bernanke. We were told that we might be seeing low mortgage yields in the nearby future. They talked, and we listened. But after the Fed kept speaking positively while the economy continued to worsen, it became clear that maybe we shouldn’t believe everything we hear.

But now, as the Cinderella clock strikes that it’s almost too late, the Fed is finally admitting that the economic recovery is proceeding more slowly than they had initially predicted. Hallelujah. 

But in a recent press conference, Bernanke conceded that “…part of the slowdown is temporary and part of it may be longer lasting.We do believe growth is going to pick up but we don’t have a precise read on why this slower rate of growth is persisting.” 

Well, Mr. Bernanke, there may not be any one clear-cut reason, but here are some probable ideas. 

Why is the economy lagging?

• The U.S. budget is in shambles and this has created vast uncertainty and anxiety in the business and consumer worlds. It's hard to feel good and start spending when you hear that your government is going broke, regardless of whether it is true or not.
• An aging population means that more of our money is going to healthcare, leaving less for consumption of other products and services.
• Housing has not recovered from a once in a generation bubble; and it may not recover for years. Since houses were used ATM's over the last ten years, a vast source of spending has disappeared. Many people who still have their homes are paying more than they can afford or above market rates and this is sapping disposable income.
• China, Vietnam, Brazil, etc. are competing hard. The U.S. no longer has a business monopoly on the world and jobs are American workers must compete internationally.
• Energy prices are going up and will probably stay up. See the last point. A developing world is hungry for energy and since production and discovery is flat, prices go up.

What can we do to make the economy can start moving again?

1. The Federal Government produces a credible long-term budget plan that reduces the debt using a mix of budget cuts and tax increases. The argument about keeping taxes low is specious. What's the point of low taxes if the pie is shrinking? People forget that it was after Clinton signed a bill raising taxes and balancing the budget that the economy took off in 2003.
2. The housing market is allowed to naturally adjust and recover. This may take several more years. But trying to prop up the housing market will only prolong the pain.
3. A viable, long-term energy policy is implemented. To some degree, the market will take care of this. Once the price of oil gets above $100, alternatives become much more attractive.

In the meantime, we are stuck with a low rate, low dollar policy. If nothing is done, short term rates may stay low but eventually long-term rates will move up, as the debt becomes an increasing problem.

Call Scam by ‘Tech Support’

Ring ring. It’s the telephone. You answer it.

 “We've detected rogue software on your computer. We can take care of it for you; we'll just need your credit card number,” says a voice. 

 

What do you do?

 

If you’re anything like one-fifth of the people who received this phony call, your response would sound something like: “Do you take Visa?” 

 

According to the Windows Security Blog, at least 1,000 Microsoft users received this sort of phone call from a “Tech Support Agent”. The agent, who said he was from Microsoft, said that he needed to remote access their PC to resolve the issue. 

 

Unfortunately for users, it was all a scam. The phone call, the agent, the ‘PC problems’ – none of it was legitimate. The Windows Security Blog said that this is the perfect way for hackers to access personal information. Often, users are even advised to install a remote access code so that scammers will have full access to the PC. 

 

Out of the 1,000 people, 234 people fell for the scam and 184 of them lost money. The average amount charged to each user’s credit card was $800.

 

In order to avoid such scams in the future, Microsoft is advising their customers to be more vigilant about giving out personal information over the phone. They also said that customers never receive legitimate phone calls from Microsoft where charges for automatic fixes will be applicable. 

 

Users were advised to never give control of your computer to a third party (unless you can confirm that it is a legitimate representative of a computer support team with whom you are already a customer.) Also, never give out your credit card or financial information to someone claiming to be from Microsoft tech. Microsoft rarely makes the first call if you did not initiate the call to them first. Also, be sure to ask upfront if you will have to purchase any software or pay a fee or subscription associated with the "service." If there is, Microsoft advises you to hang up.

Foursquare and Amex Check In to a Partnership

Foursquare announced a partnership with credit card company American Express on Thursday. Hoping to separate itself from the Facebook option of “checking in”, the Foursquare deal gives exclusive discounts to Amex cardholders at specific venues.

The discounts will begin at H&M, Sports Authority, and restaurants by the Union Square Hospitality Group. H&M will offer $10 back when you spend $75, and Sports Authority will offer $20 back when you spend $50, www.pcworld.com. Blue Smoke, Union Square Cafe, Untitled, and The Modern are also having special deals.  

This isn’t the first time they’re launching this. According to www.pcworld.com, American Express tested a similar feature with Foursquare at the SxSW conference in Austin, Texas. Anytime cardholders spent at least $5 at a local Austin merchant, the company credited $5 back to their accounts.  They said that the response to the offer was said to be "overwhelmingly positive."

Why are they doing this? 

It seems that with the popularity of Facebook’s new “checking in” option, more and more people are dropping Foursquare. Discounts on checking into various locations may bring more customers home. Amex also told The New York Times that they felt these offers would to give consumers more incentive to spend.

What do you do to make this offer a reality? 

Users simply have to link together their Foursquare and credit card accounts. Then, simply click on the 'load-to-card' option when checking in to a participating location.  Once the purchase is made, a discount will appear on your monthly bill of the American Express card.

"The savings are automatically credited to your account within a few days," says Tristan Walker, Foursquare's director of business development told PCworld.

More deals are coming soon.