Coinstar has mobilized its network of supermarket-based consumer coin counting machines to accept donations on behalf of the American Red Cross. The company says if just half of the Americans who live within two miles of a Coinstar machine donate a handful of change, it can raise $65 million for the American Red Cross. Coinstar machines located in financial institutions, as well as in Farmer Jack, Food Lion, Harris Teeter, Meijer and Weis stores are not enabled with the Red Cross donation feature. Linked by a sophisticated interactive network, the company has more than 8,800 machines throughout North America, as well as in the United Kingdom. In the second quarter, Coinstar began selling prepaid ‘MasterCards’ through five of its machines, making Coinstar the only self-service machine to distribute a major cash card.
Americans will not spend less and won’t necessarily change their personal behavior apart from cutting down on their flying, particularly over the next few days in the wake of Tuesday’s terrorist attacks. Harris Interactive conducted an Internet poll of more than 4600 U.S. adults since Tuesday, which found that only 23% of consumers will spend less and only 19% will keep more cash on hand as a result of Tuesday’s terrorist attacks. Harris did find that 64% would be afraid to fly on an airplane in the next few days and that 37% would avoid flying for the next few months. Only 15% said they would cancel or reduce overseas travel.
Major credit card issuers have indicated they will waive late fee charges due to the disruption in the mail service caused by Tuesday’s tragic events in New York and Washington. Discover, MBNA, and Bank One are among the first to relax the policies regarding late fees. Discover announced late Thursday that it is eliminating all late fee charges effective immediately until normal mail service is restored. Discover Card said it is also providing additional assistance to its cardholders with special services including necessary emergency credit line increases and the issuance of replacement Discover Cards. MBNA and Bank One confirmed yesterday they will reverse late fees if customers call. However other issuers have indicated this morning they are reviewing the issue and may follow Discover’s decision to waive all late fees until full mail service resumes. CardWeb.com received a significant number of calls yesterday from consumers concerned about the impact of slow mail service on their credit card payments.
There is a growing consensus that the Federal Reserve will chop interest rates by 50 basis points, sooner, rather than later. The next scheduled policy meeting is October 2. Bond prices rose in London as speculation mounted the Fed will cut rates to protect the U.S. economy in the wake of this week’s terrorists attacks. A 50 bps cut would drive the prime rate down to 6.00%, the lowest level in ten years.
The days of walking to the gate with only a credit card to check-in, are over. The US Department of Transportation now requires travelers to present a printed airline ticket on the designated airline OR a printed e-ticket confirmation or e-mail itinerary which includes passenger name, identification number, flight number, date and either a confirmation number or ticket number OR a printout of a Web site confirmation, if the flight was booked via an airline Internet site. If a confirmed passenger is not in receipt of one of these documents, they can request a printed confirmation at the appropriate airline’s check in counter. Passengers without one of these documents will not be allowed to board their flights. Only ticketed passengers will be allowed to proceed past airport screeners to boarding areas under the new heightened security procedures.
Stock market analysts are encouraging investors to hold onto stocks next week and not react in fear. Analysts are pointing to past declines in market indexes that occurred in reaction to events, that reversed themselves within days or weeks. The NAIC says immediately following the Japanese attack on Pearl Harbor in 1941, the DJIA dipped 5.9%, but it recovered to its previous level within two days. The Dow dropped 6.5% following Iraq’s 1990 invasion of Kuwait but recovered within two days. One of the largest market reactions to a national crisis, a 17.9% drop in the Dow following announcement of the 1973 Arab oil embargo, also was short-lived. Credit card stocks may be impacted by lower charge volume but there is evidence that more consumers are revolving balances this year than last year. This is the first time since 1991 that the number of revolvers has increased, according to CardData’s mid-year issuer data. Rising interest revenue and declining merchant revenue could be off-setting trends that stabilize credit card related stocks for the remainder of 2001.
Already hammered credit card stocks could slide further next week when the financial markets open. However, Federal securities regulators and major securities firms and corporations have reached an agreement that could stabilize prices. Reportedly the SEC will allow major firms to buy back shares if the market enters into a free fall. The temporary rule changes may affect the volume of the stock that can be bought back, as well as permitting such trades at the beginning or at the end of the trading session. The SEC also indicated Thursday that short selling will be restricted. All credit card stocks posted recoveries on Monday after being beaten down last week. Providian which hit a new 52 week lows last week, posted a 2.3% gain on Monday. It is expected that American Express will be the hardest hit stock next week due to the destruction of its New York headquarters and the anticipated slowdown in travel related charges by American cardholders.
COMPANY CLOSE 52wk Hi 52wk Lo
Providian $26.30 $67.00 $25.55
MBNA $31.24 $40.12 $27.30
Metris $23.20 $42.94 $19.15
Capital One $50.37 $73.25 $45.88
Household $56.31 $69.98 $43.88
Amer Express $35.01 $63.00 $33.70
NextCard $ 7.85 $12.75 $ 4.56
Source: CardData (www.carddata.com)