Pre-paid credit cards could soon become more common than phone cards as providers scramble to meet demand for more flexible payment options.
In recent weeks, MasterCard and Visa have launched a raft of pre-paid cards, hoping to cash in on markets previously beyond their reach - such as children, students and adults who have a poor credit history. Pre-paid cards, which could eventually be available at local convenience stores, allow the user to shop online, over the telephone or in person using credit paid for with cash when the card is purchased.
Users load the card with their desired credit amount, typically less than $1000.
The cards don't require a bank account, and can be given away as a gift, or a kind of electronic pocket money to children, allowing purchases such as music downloads.
Already common in overseas markets - including the US, where they are popular among illegal immigrants unable to open bank accounts - pre-paid cards are relatively new to Australia.
But MasterCard and Visa believe there is growing, unmet demand as credit card-style transactions become increasingly necessary for purchases such as airline tickets, hotel bookings and online items.
Infochoice analyst Denis Orrock says pre-paid cards may also prove popular with shoppers concerned about online security.
"In Australia, they will fill a void for people who want to shop on the Net but aren't comfortable using their credit card," Orrock says.
"With a pre-paid card, you know what you're in for."
MasterCard has launched two pre-paid cards, the Westpac Gift Card, available with pre-paid amounts of between $15 and $800, and the Commonwealth Bank travellers cash card, an ATM card
that allows travellers to withdraw pre-paid cash in foreign currency.
Last month, Visa launched the ANZ Gift Card, following up on its Heritage Building Society card, released in May, and the Visa BoPo, its first general-purpose pre-paid card.
Last month also saw the release of Visa's CashXpress, allowing users to send money overseas, and the Universal Visa Gift Card.
Although they miss out on the interest charges that accrue on a credit balance, card providers make money from the sale of individual cards, which cost around $5 each.
They can also re-invest the prepayments until the money is spent, earning returns on the short-term money market.
Based on US experience, most card users take about three months to spend a balance.
As well, Denis Orrock says card providers can usually bank on small sums of a few dollars each remaining unspent at the card's expiry date, generally around six months after purchase.
Source: Sunday Telegrah
Monday, December 18, 2006
Sunday, December 10, 2006
Twelve tips to protect yourself and your credit card from online fraud
Online banking fraud is on the rise and there are a number of ways you can protect your credit card and bank accounts if you transact over the internet:
1. Keep your computer secure and the access to it;
2. Don't send credit card or account details by e-mail;
3. Reject any email that asks you to follow a link to website and input account details for verification - even if the website looks authentic, its probably a fake replica
4. Make sure you log out of your online account when finished - especially at work, libraries and net cafes
5. Deal only with established and reputable merchants;
6. Only make payments to secure websites - look for the padlock symbol in the bottom-right of your browser and click for details
7. If using a new site, do business first in a small way;
8. Check your accounts and report discrepancies immediately;
9. Ignore the "remember my password option" on banking and shopping sites
10. Change your password regularly;
11. Cancel any card that has been used fraudulently;
12. Read a company's privacy policy before buying online
1. Keep your computer secure and the access to it;
2. Don't send credit card or account details by e-mail;
3. Reject any email that asks you to follow a link to website and input account details for verification - even if the website looks authentic, its probably a fake replica
4. Make sure you log out of your online account when finished - especially at work, libraries and net cafes
5. Deal only with established and reputable merchants;
6. Only make payments to secure websites - look for the padlock symbol in the bottom-right of your browser and click for details
7. If using a new site, do business first in a small way;
8. Check your accounts and report discrepancies immediately;
9. Ignore the "remember my password option" on banking and shopping sites
10. Change your password regularly;
11. Cancel any card that has been used fraudulently;
12. Read a company's privacy policy before buying online
Credit card fraud on the rise in Australia
Credit cards are more than ever set to trumpet the title of "fantastic plastic" this Christmas on predictions of a sharp increase in usage and a parallel rise in card fraud.
Spending on cards will rise by close to 25 per cent over Christmas to top the $17 billion mark for the first time, according to research house Cannex.
The sheer scale of usage could generate headaches on repayments and increase the risk of theft or fraud, simply from greater exposure.
Members Equity Bank said yesterday it was encouraging members to be extra cautious when using cards.
MEB head of workplace business Tony Beck said: "Criminals are getting smarter and the incidence of fraud is increasing."
Cannex said the country's 13.1 million-plus credit cards will each swipe about $1280.
Encouraging the use of plastic are discount deals to win debt transfers from competing cards.
In the past six months, Cannex has found eight more cards offering to transfer balances at zero interest on existing debt, making a total of 15 to do so.
A "whopping" 73 more cards offer balance transfers at an interest rate on debt of less than 5 per cent, or better than half the usual rate. A total of 106 cards will offer such a rate.
Cannex reported that "lenders are lining up with their fishing nets ready to catch customers who have maxed-out over the festive season and are searching for an escape route".
To make spending easier, 21 cards were offering an interest rate of less than 10 per cent and 54 had rates under 13 per cent - eight of which did not charge an annual fee; a total of 28 cards were not charging an annual fee.
Cannex research analyst Garfield Wright said people spent up to 25 per cent more in December than they did for the other 11 months of the year.
"For the past three years, Australia's annual pattern of credit card usage has been predictable, with spending soaring in December as credit cards are well and truly given a workout," Mr Wright said.
January, however, was a different story as consumers came to terms with the credit card debt that needed to be paid off.
"There will be a completely different kind of New Year's resolution made this January."
The Australian Bankers Association reminded consumers yesterday that any debt on a card needed to be repaid.
But it said most borrowers did so, pointing to Reserve Bank of Australia figures for the past three Christmas periods that showed borrowers repaid 99.6 per cent of their debt over December and January.
Last Christmas was a good one, with RBA figures showing credit card holders made repayments that exceeded transactions by $638 million.
Source: The Australian, Tim Blue
Spending on cards will rise by close to 25 per cent over Christmas to top the $17 billion mark for the first time, according to research house Cannex.
The sheer scale of usage could generate headaches on repayments and increase the risk of theft or fraud, simply from greater exposure.
Members Equity Bank said yesterday it was encouraging members to be extra cautious when using cards.
MEB head of workplace business Tony Beck said: "Criminals are getting smarter and the incidence of fraud is increasing."
Cannex said the country's 13.1 million-plus credit cards will each swipe about $1280.
Encouraging the use of plastic are discount deals to win debt transfers from competing cards.
In the past six months, Cannex has found eight more cards offering to transfer balances at zero interest on existing debt, making a total of 15 to do so.
A "whopping" 73 more cards offer balance transfers at an interest rate on debt of less than 5 per cent, or better than half the usual rate. A total of 106 cards will offer such a rate.
Cannex reported that "lenders are lining up with their fishing nets ready to catch customers who have maxed-out over the festive season and are searching for an escape route".
To make spending easier, 21 cards were offering an interest rate of less than 10 per cent and 54 had rates under 13 per cent - eight of which did not charge an annual fee; a total of 28 cards were not charging an annual fee.
Cannex research analyst Garfield Wright said people spent up to 25 per cent more in December than they did for the other 11 months of the year.
"For the past three years, Australia's annual pattern of credit card usage has been predictable, with spending soaring in December as credit cards are well and truly given a workout," Mr Wright said.
January, however, was a different story as consumers came to terms with the credit card debt that needed to be paid off.
"There will be a completely different kind of New Year's resolution made this January."
The Australian Bankers Association reminded consumers yesterday that any debt on a card needed to be repaid.
But it said most borrowers did so, pointing to Reserve Bank of Australia figures for the past three Christmas periods that showed borrowers repaid 99.6 per cent of their debt over December and January.
Last Christmas was a good one, with RBA figures showing credit card holders made repayments that exceeded transactions by $638 million.
Source: The Australian, Tim Blue
Sunday, December 03, 2006
Australians are spenders not savers
Most Australians lack a disciplined approach to saving money, but spending it is another matter, new figures show.
A survey conducted for online superannuation fund Max Super found that one in four of the 798 Australians surveyed kept nothing at all from their income to put towards their savings.
Only half of the respondents sometimes put part of their income towards their savings.
Max Super chief executive Andrew Barlow said many Australians were out for instant gratification and were willing to take on debt instead of saving for things in advance.
"This is great when you have years of income ahead of you, but may become an issue upon retirement," he said.
The survey found that three out of four respondents stated that over 50 per cent of their income went towards day to day living expenses.
Mr Barlow said it appeared many people were exhausting their pay packet on their household living costs and credit card bills instead of saving.
"It seems Australians feel confident spending their money, as the unemployment rate is at an all time low and property wealth has increased massively," he said.
The latest official figures show that unemployment fell to a 30-year low of 4.6 per cent in October, and combined with wages growth, the supportive economic conditions have encouraged Australians to spend and borrow more.
Retail spending continued to climb in October, rising 0.8 per cent to $18.372 billion, while credit card borrowings also continued to trend upwards with no sign abating.
In September, Australians had $37.176 billion on credit with credit limits surpassing a total $100 billion for the first time ever.
While the impact of the third interest rate hike for the year in November – which pushed the official rate up to 6.25 per cent – is still to be seen, borrowing for housing has continued to increase, although at a slower rate.
Reserve Bank of Australia figures showed that housing credit grew by 0.8 per cent in October to be up by 14 per cent over the year.
Mr Barlow said that while buying a home was a priority for most people, he said consumers should aim to put aside 10 per cent of their income towards their savings, and split it across both short-term and long-term investments.
"For instance, you might consider saving part in quick access investments for those emergencies in life, while salary sacrificing a component to your super to build up for needs later in life," he said.
Mr Barlow said it was unrealistic to expect people to budget down to the last cent or to deprive themselves of the odd luxury.
"However, what we do encourage is the concept of `paying yourself first' and taking good care of your finances now, for later," he said.
Source AAP
A survey conducted for online superannuation fund Max Super found that one in four of the 798 Australians surveyed kept nothing at all from their income to put towards their savings.
Only half of the respondents sometimes put part of their income towards their savings.
Max Super chief executive Andrew Barlow said many Australians were out for instant gratification and were willing to take on debt instead of saving for things in advance.
"This is great when you have years of income ahead of you, but may become an issue upon retirement," he said.
The survey found that three out of four respondents stated that over 50 per cent of their income went towards day to day living expenses.
Mr Barlow said it appeared many people were exhausting their pay packet on their household living costs and credit card bills instead of saving.
"It seems Australians feel confident spending their money, as the unemployment rate is at an all time low and property wealth has increased massively," he said.
The latest official figures show that unemployment fell to a 30-year low of 4.6 per cent in October, and combined with wages growth, the supportive economic conditions have encouraged Australians to spend and borrow more.
Retail spending continued to climb in October, rising 0.8 per cent to $18.372 billion, while credit card borrowings also continued to trend upwards with no sign abating.
In September, Australians had $37.176 billion on credit with credit limits surpassing a total $100 billion for the first time ever.
While the impact of the third interest rate hike for the year in November – which pushed the official rate up to 6.25 per cent – is still to be seen, borrowing for housing has continued to increase, although at a slower rate.
Reserve Bank of Australia figures showed that housing credit grew by 0.8 per cent in October to be up by 14 per cent over the year.
Mr Barlow said that while buying a home was a priority for most people, he said consumers should aim to put aside 10 per cent of their income towards their savings, and split it across both short-term and long-term investments.
"For instance, you might consider saving part in quick access investments for those emergencies in life, while salary sacrificing a component to your super to build up for needs later in life," he said.
Mr Barlow said it was unrealistic to expect people to budget down to the last cent or to deprive themselves of the odd luxury.
"However, what we do encourage is the concept of `paying yourself first' and taking good care of your finances now, for later," he said.
Source AAP
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