Every Tuesday, Smithee presents an article about his own experiences with credit cards and observations about the credit card industry.

A few weeks ago I was the victim of debit card fraud. In my case the system worked very well. The bank’s automatic mechanisms noticed a few big-ticket items being purchased in Chicago, which is quite far from where I live. The first one went through, the second one was held up and I started getting calls from the bank’s fraud detection department.

So, that card number had to be canceled and I got a replacement with a new number within a few days. The money was also refunded, but the surprise came when I noticed the new card had that little “PayPass” logo on it. You know, the thing that’s supposed to let you tap the card against a reader instead of sliding it through the reader? (Think of the time saved!) The old one didn’t have PayPass on it, and I was ambivalent about the technology, having read reports about how it’s not all that much faster.

The bigger problem is that it uses RFID, which is not exactly ready for prime time. To make a long story short, people can easily, and cheaply, extract the data from your card without you knowing. Here’s a video with a demonstration:

Interesting side note: Mythbusters was going to do a show about this, before the idea was quashed.

Every Tuesday, Smithee presents an article about his own experiences with credit cards and observations about the credit card industry.

Two weeks ago I introduced you to a new credit card that offers 2% cash back that is deposited into a brokerage account. Then, a few hours later, I applied for the thing. In my experience, online credit card applications always say, “get a decision in minutes!” and then they feign some sort of technical difficulty, so you have to wait for the mail, anyway.

This was no different. But waiting didn’t matter, this time. Because for once, I had no plans to use the card to “extend” my “buying power.” I’m just using it for the rewards.

I’ve long scoffed at those commercials for credit cards which advertise “rewards”, internally thinking, “Sure, whatever, airline miles. But what good is it if you’re spending $100 a month on interest?” For years, that’s what credit cards were to me: devices that stole your current money because your previous self wanted to go out to dinner instead of eating soup at home.

I had $0.20 when I graduated college. But at least I got to go to college. I found a job quickly, but getting there meant spending money that I hadn’t earned yet. And the job did not pay well. Overwhelming credit card debt kind of snowballed from there. That was 11 years ago.

But later came ambition, smarter living, and marketable skills. Now I’m able to pay off my remaining credit card debt (roughly $6,400 right now) at a rate of $1,000 / month. It’s on a 0% card. I never charge anything on that card. But I do still pay for things. I set aside a little bit every month for lunch and movies with my wife. And lots of dog food.

So, I figure now’s an okay time to start getting in the habit of paying off one card in full every month. If it means 2% of what I’m charging gets redirected toward our future by way of investments, I can be that smart. The problem now is that I have to start learning about investing. But 2% back on my monthly charges will probably give me about a year before I have enough to buy a single share of anything. Got any advice for me that will still be good a year from now?

Every Tuesday, Smithee presents an article about his own experiences credit cards with and observations about the credit card industry.

The U.S. Federal Reserve is set to vote on Thursday (Dec. 18) on a set of rules which could change credit policy affecting all Americans. The full set of proposals is more than a thousand pages long, but here are the highlights:

Fewer interest rate hikes

It would no longer be allowed to raise the interest rate on an existing balance, and credit issuers would have fewer options for raising rates seemingly at random on their customers with good histories.

An end to Universal Default

Some companies would penalize customers for having a bad history outside of the issuer’s credit account, such as with a utility company. This will no longer be legal.

More on-time payments

Payments will have a due date at least twenty-one days after statements are delivered.

Payments to be applied first to the highest interest items

Currently, your credit card payments are likely going toward the part of your balance with the lowest rate. This benefits the credit issuer and extends the length of time you’ll be paying. This practice will be reversed.

New information design

From creditcards.com:

Credit card applications, monthly statements and other materials would clearly display terms in reader-friendly boxes with large type. Credit card issuers would have to disclose the consequences of only making minimum payments each month — namely, that it will take much longer to pay off the credit card balance. Issuers also must eliminate the use of the term “grace period” on credit card applications and solicitations. Instead the phrase “how to avoid interest” or similar wording would have to be used. The term “fixed rate” card can only be used if the rate will never change. Monthly statements would also carry boxes that provide year-to-date totals on the amounts paid in fees, interest and other charges.

This is probably my favorite of the new rules, as it most closely attempts to inform and educate consumers, instead of telling people what they can and can’t do.

More accurate credit offers

Credit issuers will have to work harder when attracting targeted future customers with low interest rates, in that the low interest rate quoted will have to be close to the rate that the customer is approved for. People are frequently surprised when they apply for a 9% card and are awarded a 23.99% card.

Naturally, credit issuers are decrying the proposals, saying they will end up hurting consumers by making it more expensive for the credit card companies to do business. This may turn out to be true, but at least in some cases, it’s obvious that credit card companies make money by being deliberately deceptive, and as a recipient of that deception, I’d like to see it stop.

The new proposals are expected to pass the vote, and companies will have up to a year to put the new practices in place.

More details are at Reuters, and there’s audio at NPR.

The name of the card has clearly too many symbols and arguably too many syllables, but when the daily financial news is consistently dire, I should just be happy to see something that is this innovative and attractive.

It’s a credit card that gives you free money for investing.

Of course, we at Consumerism Commentary always recommend against carrying a balance on a credit card from month to month (incidentally, so does Dave Ramsey, who proves it by not accepting them on his Web site), but if you’re put together enough to literally take advantage of a credit card’s bonus features, check this out:

• Unlimited 2% “cash” back on purchases
• the cash is actually a deposit made into a Charles Schwab brokerage account
• no minimum purchase or annual fee

See more details at MarketWatch.

I’m not a Charles Schwab customer, so I don’t know what kind of investment options you get when you sign up for the card. For example, maybe you’re limited to mutual funds with front-end load fees. Hopefully someone can help out in the comments below.

Anti-disclaimer: This is not an advertisement. I honestly found this when looking at the news and thought it was compelling enough to write about.

Meredith Whitney, an analyst with Oppenheimer & Co. is predicting that credit card issuers may cut as much as $2 trillion worth of available credit in the near future, representing about 45% of today’s levels.

The Motley Fool has decided to call this The Death of Credit Cards, but we’ll be co-existing with them for as long as people want to borrow from their future selves. (That, or you’re clever like my man Flexo, who only uses them for the rewards. I’m not that clever, but I’m working on it.)

Here’s the crux of the story:

Closing millions of accounts, cutting credit lines and raising interest rates are just some of the moves credit card issuers are using to try to inoculate themselves from a tsunami of expected consumer defaults.

We’ve already seen Citigroup raising rates for nearly all customers across the board (even though the national average credit card interest rate continues to decline).

Citigroup said it would be raising rates 2 to 3 percent, but from the comments we received on the story a couple of weeks ago, the average seemed to be about 7 to 10 percent. And this seemed to be happening even to people with good FICO scores and payment histories.

Now Citigroup, as well as Bank of America and JPMorgan Chase, are considering closing accounts, as well as lowering credit limits. Given Citigroup’s recent history, what are the chances that these actions will only be taken on customers with poor histories? If you’ve delicately balanced your available credit in order to keep a high FICO score, this could have serious repercussions.