Another non-bank moves into the banking arena after retailer Woolworths signed a deal with HSBC to issue the Woolworths’ credit card, due for release later this year.

The deal was a result of a global tender process undertaken by Woolworths’ financial services team last year.

“HSBC is a global leader in credit cards with world class technology and expertise,” Michael Luscombe, Woolworths’ CEO, said.

HSBC has long-term successful partnerships with large retailer card programs overseas, such as, Marks & Spencer’s in the UK and Saks in the USA.

“HSBC manages over 125 million credit cards worldwide, with established co-branded and white label alliances with over 100 of the world’s most respected companies, “ Stuart Davis, chief executive of HSBC Bank Australia, said.

Luscombe noted, “HSBC’s experience makes it a perfect partner for Woolworths to leverage our unique distribution reach and customer base in Australia.”

Woolworths stores process 114 million transactions or 11 per cent of all credit card transactions in Australia each year.

The companies are expected to sign a formal agreement by the end of first quarter 2008.

source [Full article here]

The new David Jones American Express card will be launched in time to capitalize on the busy Christmas trading period, which last year generated sales of about A$36 billion.

David Jones’ financial services business will deliver at least 7.5 percent earnings before interest and tax growth (EBIT) a year over fiscal year 2008, it said in the statement.

More on the David Jones Credit Card

It’s looking bad for over 350,ooo Victorians who are juggling more than 3 credit card or charge cards at the same time. Finance counselors are seeing people who can’t afford to pay off their credit cards debts by taking out more credit cards to pay off the debt of the initial credit card and subsequent cards.

” It’s not unusual for people we see to have six or more credit cards.” - Jan Pentland : Australian Financial Counselling and Credit Reform Association.

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Borrowers should be wary of banks seeking to recover the higher cost of credit due to the global credit crunch over coming months. Total personal lending and credit card debt rose by 13.2 per cent over the past year to $151 billion. Some credit card and fixed loan rates have already headed north and the big banks issued warnings over the closing months of 2007 that there would be more to come. Markets are also tipping that there is a strong possibility of an increase in the official cash rate when the Reserve banks meets again at the beginning of February. With Bendigo Bank’s variable home loan rate already at 8.60 per cent compared with a standard rate of 8.57 per cent it will pay for consumers to shop around for the best rates.

By News.com.au

Major Banks are looking to generate more consumer interest for the EFTPOS system by creating a new commmercial entity to help promote wider use of the EFTPOS system.

With the increased competition from credit card companies like Mastercard and Visa along with their prepaid debit cards major Banks are looking to for new innovative ways to generate awareness. EFTPOS systems have their definite advantages, their low fraud rate, low implementation costs. Currently Merchants have to change to their systems work with the new smartcards and have been recently been given an extension to have these new protocols in place.

In Australia alone, consumers already generate around 110 million purchases worth $7.5 billion every month making Eftpos is the most widely used system of its type.

Mortgage rates are creeping lower as increased concerns over the stumbling housing market reach into other markets. These concerns have brought mortgage rates down to their lowest levels in almost half a year.

This news was illustrated by the Primary Mortgage Market Survey put out by Freddie Mac. According to the survey, the 30-year fixed-rate mortgage is currently averaging 6.26 percent with an average 0.4 point for the week ending November 1, 2007. Just the week earlier, the mortgage rate was at 6.33 percent. Last year at this same time, the 30-year fixed rate mortgage was averaging about 6.31 percent.

These results show that the benchmark 30-year mortgage loan rate has is at its lowest since May 17, 2007, at which time it averaged 6.21 percent.

According to Frank Nothaft, Freddie Mac vice president and chief economist: “October’s consumer confidence fell to its lowest level since October 2005 as mortgage rates continued to decline this week to their lowest level in almost six months. Continued market concerns about weaker economic growth and further declines in the housing market have kept mortgage and mortgage refinance rates low over the last few weeks."

While this should be good news for buyers, the recent troubles with the sub-prime market has caused many lenders to tighter up credit, making it more difficult for some buyers to get these lower rate loans.

Following calls from the Prime Minister and the Chancellor of the Exchequer for longer fixed term mortgage loan deals to be available to consumers, there is some evidence that homebuyers are beginning to take out medium-term mortgages as interest rate rises start to bite.

Homebuyers are choosing to go for three to five year fixed mortgages according to moneysupermarket.com, which is longer than the two-year fixed deals that had previously been popular. Interest rate increases have caused households to look for the security of known payments and with debt becoming more of a risk debt consolidation is often given as a reason for the new mortgage

Despite the likelihood of another rate rise having receded, homebuyers still feel uncertain following events in credit markets and with Northern Rock.

Two-year rates have traditionally been most popular, particularly as lenders offered the best rates for this period, but now 21% are going for two-year or less, and 27% are choosing three to five years. First-time buyer figures are even higher for the longer deals, as they value the security for the first few years of their mortgage life. Rates at around 6% now seem fairly reasonable to them. As well as first-time buyers many people nearing the end of their mortgage want to fix their rate for one final time before their mortgage is paid off.

Lenders are even beginning to reward forward loyalty with lower fees for longer deals. Secured loans are sometimes being used as an alternative.

However, there is still little appetite for longer deals (ten years or more), although there are around 200 on the market now. Banks and Building Societies are following Brown and Darling’s instructions, but the public is not.

There has been a lot of talk recently about how mortgage arrangement fees have been going up, with some hitting nearly £2,000. What about an arrangement fee that is nearly £10,000? That is the fee Abbey will charge for its larger mortgages. Industry watchers say this is the first fixed fee to reach nearly five figures. Percentage-based fees have had the capability of reaching big numbers of course.

Most high street mortgage lenders provide mortgages up to £250,000, but this fee is applied to loans of between £500,000 and £750,000 with an interest rate fixed at 5.59% for two years.

James Cotton of broker London & Country said the fee would seem “ridiculously big” to most borrowers. However, Nici Audhlam-Gardiner, head of mortgages at Abbey, said the fee was acceptable, and that the money would be used to offset the cost of arranging the mortgage and enabling them to offer customers a choice.

Higher fees are increasingly added to mortgages with low interest rates which enable lenders to keep their secured loans high in comparison charts. Borrowers have to keep a close eye on all charges involved in mortgages – not just on the headline interest rates.

Other mortgage lenders charge 2% fees on loans over £500,000, which would make for charges of £10,000 and over. For example, Halifax is offering a 5.59% two-year fixed rate mortgage with a 2% over £500,000. On a £750,000 loan the fee would be £15,000. This makes the fixed Abbey fee seem very competitive.

Cotton said: “Borrowers have to do their sums and check that the rate and fee together offer good value. If you are after a big mortgage, don’t just assume you have to pay a huge fee.”

A spokesman for Halifax said: “For some loans, a fixed percentage arrangement fee is much better than a set arrangement fee.”

Just like the large Department Stores Myer and David Jones, that offer the customers with instore credit cards. Woolmorths, Australia’s largest supermarket chain will be following suit by offering their customers the Woolworths credit card. The Woolworths credit card is due to be released next year.

Woolworths is expected to offers extra services like home and car insurance and loans.

Now it’s Woolworths, the credit card people

Major banks have earned an estimated 90million dollars in credit card fees, with majority of the fees stemming from credit card limit violations and late payments.

Several community groups like the St Vincent de Paul Society and the Family First Senator are supporting the move for reduced fees for low-income earners, which would place restrictions on penalty fees.

more: Bank nets $90Mil in Credit Card Fees

Research by research group Oxera has found that the typical median-income Australian family pays $222 each year for a transaction account, while an equivalent family in Britain only pays $48. The news is better on the credit card front though: our average interest free period of 35 days ranked in the middle of the 11 countries surveyed and our rates are not particularly high after taking into account differences in the cash rate. Penalty fees for late payment, overdrawing accounts or exceeding card limits can be up to $150 in Britain but are usually less than $40 here. Australian consumers are also offered a wider choice of account types which means that fees can be minimised by taking a basic bank product or higher fees can be paid for a product with more features.

Source: www.infochoice.com.au

Virgin Money are going to resist passing on to their customers any increases in funding costs for now, accepting reduced margins instead. Virgin’s home loans are funded by residential-backed mortgage securities from Macquarie bank which has a 10 per cent stake in the company. If the current level of expense in credit markets persists for a long period Virgin said that it would have to consider raising rates. The company also said yesterday that its credit card business was very profitable despite offering some of the lowest rates in the country.

source: http://www.infochoice.com.au

The Australian Bankers Association has called for an end to regulation of interchange fees on debit and credit cards by the Reserve Bank of Australia. Instead the association says that interchange fees should be set on commercial terms by the market, helping to restore regulatory certainty, and reducing the risk of sub-optimal levels of investment and innovation. In its submission to the review of payments system reforms American Express said that they had given merchants a significant and ongoing financial benefit, estimated to be at least $2.2 billion since 2003, but that there was no evidence of any decrease in the price of goods and services resulting from this.

Source http://www.infochoice.com.au

Those long waits at the checkout counter will be a thing of past if NAB and Telstra have their way. Both companys have teamed up with VISA to trial the new technology that allows customers to authorise payments by waving their mobile phone past special electronic markers.

The new mobile phone could potentiall replace the credit card as well as public transport tickets and building access security cards.

The new technology is currently being tested overseas, with Australia set to trial the PayWave technology early 2008.

Source: Infochoice.com.au

Customer of the ANZ bank that currently hold a Centrelink Health Care Card, Seniors Concession Card, Pensioners Concession Card, or Veterans Affairs issued Repatriation Health Care Cards, will receive a reduced dishonor fee for cash advances that go over the credit card limit. The cash advance dishonor fee will be reduces from $35 TO $10.
The new policy will take effect from 1 December.

Source: Infochoice.com.au

The abolition of ATM interchange fees could mean lower charges to consumers. The removal of the fee, typically $1 per transaction, should lead to a substantial reduction and perhaps even abolition of the fees that consumers are charged when using another bank’s ATMs. From October next year, the owners of ATMs must disclose fees charged, increasing transparency of any charges.

source from Infochoice.com.au

The latest figures from the financial review, Banks are starting to see a trend in the way Customers are using their Credit Cards. While the total credit card debt was up $508 Mil from the previous month, the growth rate for credit card debt is slowing. With a definite downward trend for the use of the credit card cash advances.

Which is a good indication that customers are starting to feel the effects of interest rates applied to the cash advances. The average outstanding credit card debt for bank customers is around the $3,014.

from Infochoice

NAB’s latest ATM fee rise should generate the company around $50 Million in the next year.

The fees effect NAB customers using other bank ATMs. unfortunately for NAB customers, the bank is currently upgrading their ATM’s, leaving NAB customers having to use competitor ATM’s.

Even when the ATM service returns to normal, NAB stands to reap an additional $4.5 million per month from the higher fee it extracts from its 3 million customers.

More About NAB’s ATM fee rise

Westpac, having revamped their marketing approach has proven there are tangible results in producing and promoting marketing campaigns involved with environmental, social or community causes. Corporate social responsibility is a widely circulating topic in recent years and since Westpac’s campaign launch, areas such as brand consideration, “product experience” and overall customer experience has increased strongly. Since October, Westpac reported an increase among existing accounts by 20 per cent, and the number of customers leaving the bank decreasing by 25 per cent.

Article from InfoChoice

For this frugal blogger, I couldn’t help mention HSBC’s new serious saver account. HSBC is offering customers great saving benefits with the HSBC Serious Saver Account:

* No bank fees
* No minimum opening or ongoing account balance
* Earn an incredible 6.40% p.a.* for every month you don’t make a withdrawal

For those of you saving for a rainy day, the HSBC serious saver account, will help you save for many rainy days.

Early this year HSBC won Money Magazines “Money Minder of the year” award.

HSBC has been named Money Magazine’s ‘2007 Money Minder of the Year’ second year in a row.

The ‘Money Minder of the Year’ award is for the organisation deemed most likely to have a deposit account delivering value for money, no matter how you do your banking..
….So no matter where you are or what you’re doing, HSBC can help you with your financial requirements, providing a range of products to suit every individual.