Tag Archives: Financial services

Google Offers Credit Card Comparisons

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Google has up till now presented free (organic) search results accompanied by sponsored results.  The credit card comparison it now offers in the UK represents a significant departure.  As is noted in the footer:

Actual rates and other information may vary. Sponsored results shown only include participating credit card issuers. When you click on a card’s “Apply Now” link, the information you entered on this page will be shared with the issuer.

This new Google initiative is drawing the inevitable adverse criticism from the competition.  Here is how Moneysupermarket.com describes the additional values it brings to such credit card comparisons:

moneysupermarket.com’s successful formula comes from helping customers find the right card for them, with the option to search the whole credit card market, whilst providing help and support, such as independent reviews, to guide the customer’s decision making process.

In this latest move Google has abandoned its successful search model which comes from showing customers a combination of whole of market results, ordered by what is most relevant, plus sponsored results based on how much the advertiser pays. In this test they are simply listing cards that are prepared to pay to advertise, regardless of whether they are a great deal for customers. We are disappointed that Google has chosen to only feature sponsored products in this solution with nothing to support customers.

As well as seeing just a fraction of the credit card market customers who use this Google tool whilst it is in trial will miss out on at least one fantastic exclusive card coming soon only to moneysupermarket.com.

Paul Carpenter has a different concern about the Google credit card comparison website:

Verticals and niches are, to me at least, all about domain expertise and experience and I rely on brand perception to tell me where to find that.  As Google races against Bing to operate in verticals like this, it will be interesting to see whether its brand will resonate outside its core function. I suspect not, and I really don’t know why the tech market is so fetishistic about this stuff. Would you buy Coke jeans, or Marlboro branded microwave meals? Brands that are malleable enough to cross boundaries are vanishingly rare – an honourable exception being Virgin, who work in everything from cruises to space travel.

Clearly this test is very different from search activities that Google has worked on in the past.  Whatever the result of this test, it has big implications for where Google will be putting its efforts.

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U.S. Credit Card Industry Faces Much Greater Regulation

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The CBS News headline, U.S. Tightens Screws On Credit Industry, was not unexpected.

With the government cracking down on credit card companies’ ability to increase rates and impose penalties, some wonder just how lenders will make up for the vast amounts of revenue they stand to lose.

And as credit card issuers ponder the ramifications of the proposed rule changes passed by the Senate Tuesday, they may face more bad news.

The Obama administration, trying to rein in abuses exposed by the financial crisis, is considering creation of a regulatory commission to protect consumers of financial products such as credit cards and mortgages, according to administration and industry officials.

On Tuesday, the 90 Senators passed what is being called a credit card bill of rights. This is expected to be signed into law by the end of the week. Under that legislation, lenders would have to give 45 days notice before a rate increase, extend promotional rates for at least six months, place bans on rate hikes on new cards during the first year and deny cards to anyone under 21 unless they can pay off their bills.

In Canada, earlier in the month, Jim Flaherty, Federal Finance Minister, indicated that Credit card regulations could come by the end of the month. Although the lenders may have concerns, their customers will be very supportive of these credit card changes.

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Credit Cards – Good News, Bad News

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Part of the solution to the recovery from the recession will be to restore confidence in US financial markets.  President Obama realizes that is a key task for him and is currently pulling out all the stops in the Confidence Game

The banking system and its willingness to provide necessary credit is critical here.  It is unfortunate that the system has been severely stressed over the past months so a variety of initiatives are being pursued.  Credit cards, which have exceptional consumer acceptance, are the subject of some good news items and some less good news items.  It all depends which side of the bank counter you are on.

Bill Tightening Credit-Card Rules Advances in House is good news for consumers.

The House measure, yet to be approved by the full Financial Services Committee would restrict card companies’ ability to raise rates on existing customers and ban certain controversial practices, such as applying payments to the portion of a borrower’s balance with the lowest interest rate. It would also prohibit issuers from charging interest on parts of the balance that were already paid on time, a practice known as double-cycle billing.

Although central bank interest rates may have gone down, Credit card interest rates are rising marginally.  The average annual interest rates charged on three popular types of credit cards inched up.

  • low-interest credit cards, offered only to customers with strong credit histories, 
  • balance transfer cards, which allow consumers to consolidate outstanding debt from one or more cards, and
  • cash back cards, which feature cash or other reward incentives and generally require a good-to-excellent credit rating for approval.

With such a variety of credit card arrangements, it is not surprising that they are widely accepted and can even lead to a troubling debt conundrum, where debt-to-disposable-income ratio in Canada is now close to 140% when it was about 86% in 1980 according to the Vanier Institute of the Family.   The US figures on debt and income are probably comparable.

Credit cards can be a great convenience if used wisely.  That can be true even when it may concern credit cards for bad credit applicants.  Some of those seeking bad credit credit cards may well have had an unfortunate series of mishaps that forced them to pay out perhaps unexpected medical bills.  Or perhaps they wish to consolidate a series of loans that may be at very high interest rates.  Finding a source of  bad credit loans can be the opportunity to get back on a sound financial footing.  The important discipline required as with all credit cards is to ensure the repayment plan is practical and livable within the overall family budget.

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Unjustified Bonuses Paid By Taxpayers

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AIG bonuses are ‘an outrage’ says President Obama, and he speaks for us all.  How can the senior executives in AIG be so out of touch with reality that they rely on legal niceties to do what is so morally wrong?  Perhaps that lack of judgment and apparent unawareness of how the real world functions explains their appalling track record.  Well they seem to have shot themselves in both feet this time:

Barack Obama is vowing to pursue “every legal avenue” to stop a clutch of top executives at American International Group Inc. from pocketing multimillion-dollar bonuses, including some to employees who designed the risky credit instruments that helped topple the insurance giant.

The U.S. President joined congressional leaders and state regulators on Monday in demanding that the failed insurance giant, which has so far received more than $170-billion (U.S.) in government bailout cash, roll back $165-million in bonuses paid to employees over the weekend.  Outrage was the word of the day as news spread of the payouts, some reportedly as high as $6.5-million.

Not surprisingly, the Bonuses overshadow foreign bank payments, which could have drawn equally violent reactions.

When it emerged on Sunday that foreign banks had received more than $50bn of US federal funds as part of the AIG bail-out, big beneficiaries such as Deutsche Bank and Société Générale must have braced themselves for an outcry in Washington.

Any senior executive of any financial institution should have a keen awareness of what is going on around the world and consider carefully the most appropriate reactions. In the UK, the Financial Services Authority (FSA) will set out a banking clampdown.

Britain’s financial regulator, the FSA,  plans to clamp down on risky mortgage lending and City bonuses in a shake-up of banking rules due this week according to the British Sunday newspapers.

The FSA is planning a crackdown on management bonuses that reward short-term risk taking and will propose new rules on how banks should be run, including forcing them to hold more capital against risky trading, according to the Financial Sunday Express.  The regulator will also table new vetting procedures to ensure bank bosses are qualified to run financial institutions.

This follows up on assertion by the UK Prime Minister, Gordon Brown, that We won’t pay for bankers’ one-way bets.  He laid out a four-point plan to end the excesses of the bonus culture

Everywhere I go in Britain, I sense and share the anger and dismay of millions of hard-working people who have watched in disbelief during a year in which irresponsible practices in global banks have brought the world’s financial system close to collapse.  Only bold action to protect those endangered through no fault of their own will do.

Responsible senior bank executives should not need to have the politicians clamp down on them in this way.  It goes beyond the issue of legality, it is a simple question of morality.  President Obama has a massive popular movement supporting him as he tries to do whatever it takes to re-establish this in the financial world.

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Women Need Financial Freedom

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Metro News points out that, on the subject of  Financial freedom, More women are looking to take control of their future.

A recent survey of Canadian women regarding their financial futures, conducted by Desjardins Financial Security, found that the number of women planning for retirement is on the rise.  While financial planning has traditionally been left up to the men, only 20 per cent of women questioned admitted they have little or no interest in preparing for retirement compared with 27 per cent of men.

Laura Rossiter, a consultant with Investors Group Toronto Midtown, says, “Women are getting involved and have the desire to learn and educate themselves and gain financial independence.”

Some may ask whether Women Need Separate Financial Advice. Yet clearly women have special financial concerns. Usually (not always) they are the spouse taking time off while raising kids and getting the kids in the case of divorce.  There are more unwed single female parents than male, women live longer, women are usually the ones taking care of aging parents, women work full time less and part time more, and the list goes on.

There are a number of resources to help Women Find The Best Financial Advice.  (Note that some of the links in that article do not work).   There are also experts like Suze Orman or Rhonda Sherwood in Vancouver.

If you are looking for an organization then something like WIFE (Women’s Institute for Financial Education) in California might be for you.

Every woman needs a WIFE, who counsels and empowers, who listens and advises, and offers comfort when needed.  The Women’s Institute for Financial Education (WIFE.org) is the oldest non-profit organization dedicated to providing financial education to women in their quest for financial independence. It is a charitable organization under Internal Revenue Code Sec. 501(c)(3). All donations to WIFE.org are tax-deductible.

Another alternative is an online course.  MS Money has a course to meet Women’s Unique Financial Needs

This introductory financial course is designed to give women the basic tools necessary to take control of their financial future. Financial Freedom can be achieved in a relatively short amount of time if the appropriate steps are followed. Because women have unique financial needs–they live longer and tend to work less than men–it is more important than ever for all women–single, married, divorced, or widowed–to take charge of their money and secure their financial future.

If as a woman you wish to attain Financial Freedom, then the sooner you start looking for the right solution for you, the better.

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