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How much do landlords really care about your credit?

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Your credit can determine a lot in your life, from the interest rate on your mortgage, to whether you can get a cellphone contract. But can poor credit (or no credit) really cost you a new apartment?

Property owners can and do check potential tenants’ credit.

“In a nutshell, it is to make sure that an applicant has shown previous financial responsibility, which is usually a good indicator that they would make a reliable tenant,” says Niccole Schreck, senior brand manager of credit history

Yet what exactly they’re looking for and whether your credit will harm your chances of being approved depends on the situation. We asked a couple experts from the rental industry to share their insights.

How important is my credit?

Your credit is not the only factor considered, or even the most important one, says Bart Sturzl, president elect of the National Association of Rental Property Managers and owner/broker at Bella Real Estate in Austin, Texas.

At his company, which provides property management services (including tenant screening) for individual residential property owners, “credit is not the number-one important thing we look at.”

Previous rental references and your income lie above credit on the importance scale.

“If they don’t make the necessary income, we don’t even start the process of running their credit,” Sturzl says.

Your criminal record also plays a role in a landlord’s decision.

Are landlords looking at my credit score, or my credit report?

The answer will vary, but his company, Sturzl says, first takes a peak at your credit sore.

“We look at the FICO score,” he says. “And our company is looking for 600 or better.”

Texas state law (and the law in many other states) requires property management companies to put their criteria (including credit criteria) in writing, hence the need for a clear-cut limit. Have a score above the limit? Assuming you meet the other written criteria, you’re in.
Fall below that limit? It doesn’t mean automatic denial, but it does mean a deeper dive into your credit report.

“If you’re above 600, I’m not looking further,” Sturzl says. “If you’re below 600, I’m going to start digging.”

During that deep dive, the reason for your low score may make a big difference.

“Sometimes people have low credit scores, not because of defaults or collections, but because they have too many inquiries,” Sturzl says. “If their score is low, but we find that there are no defaults or collections, they could be OK.”

Other property management companies, meanwhile, may comb every, single credit report off the bat, Sturzl says. And, according to Schreck, some may look not only at defaults and collections, but at your payment history.

“Landlords are also looking at credit card activity to see if potential tenants are meeting the monthly minimum payments on or before the due dates, which can be an indicator of a potential tenant’s cash flow,” she says.

And then there are landlords who may not check your credit at all. Thousands of owners don’t use brokers, own just a single rental property or rent rooms in their own abodes. They might simply use online background checks or even just their gut (as these types of landlords aren’t bound by Fair Housing laws).

“A lot of these do-it-yourselfers meet the applicants, and if they like them, they rent to them, and if they don’t, they don’t,” Sturzl says.

Which debts look particularly bad?

Assuming your potential landlord takes that deeper dive into your credit reports, delinquencies, collection accounts and repossessions will be alarming, no surprise there.

“Anything that shows that the rental applicant has not been able to meet their required payments is a major red flag,” Schreck says.

Collection accounts from past rentals (coupled with bounced checks and late pays in your rental references) may also be grounds for automatic denial, Strurzl says.

Harsh? Perhaps, but property owners can take only so much of a risk.

“A lot of people will pay their rent before they pay anything else. They have to have a place to live, and we understand that,” Sturzl says. “But if we see there are items you’ve defaulted on, it throws up a red flag that maybe you don’t make enough money, and here you are trying to rent this property. You’re in default, and you can’t meet your obligations currently.”

Some property owners may even be sticklers for particular types of debt. Sturzl recalls a story told to him by an industry colleague: A real estate agent had expressed surprise that a client had been turned down for “just medical debt.” The property manager responded that the owner was a doctor who saw unpaid medical bills as very troubling.

“You just don’t know who you’re dealing with on the other end,” Sturzl says. “Most property managers manage for other owners. I have 186 owners. That’s 186 different personalities that are willing to take different amounts of risk. ”

Is no credit as bad as bad credit?

Certain groups (migrant workers, the elderly and the young) are more likely to have no credit history.

With no credit history, it’s impossible to pull a credit score. But that doesn’t necessarily mean denial. Instead, the property management company may make a decision based on other factors, such as your rental history and income.

“No credit does not mean bad credit,” Sturzl says. “Just because someone doesn’t have credit doesn’t mean they’re not credit worthy.”

If I have bad credit, can I find a place to live?

Property owners have other risk-management tools at their disposal, in addition to outright denial. For example, a riskier renter might have to pay a higher deposit.

“If someone comes in with a score in the 500s, and we look into it and it’s not because of rental collections or anything like that, we’re going to recommend to our owner that they approve with a double deposit,” Sturzl says.

Despite that recommendation, it’s still up to the property owners, Sturzl says. A property that’s been vacant for months may increase the owner’s appetite for risk. Another owner might decide the risk isn’t worth it, even with a larger deposit. Property management companies have standards of their own, too, and your application might not even get seen by the property owner if your credit is bad enough, Sturzl notes.

I know my credit is bad. Should I be upfront about it?

Yes, say both Schreck and Sturzl.

Tenants have the right to ask for rental criteria before applying. Some companies put their criteria online and require applicants to initial the criteria as they fill out the application. So read carefully, because finding that your credit score falls short gives you an important head start.

“A lot of times, people will say up front, ‘I have poor credit, but I’m willing to pay extra in deposit,’” Sturzl says. “They’ll offer it immediately, and that goes a long way.”

In addition, include a letter with your application or schedule a meeting with a potential landlord to explain the circumstances behind your bad credit and why you’d still make a good tenant, Schreck recommends.

“At the end of the day, a credit check is just a series of numbers,” she says. “But when a rental applicant takes ownership and responsibility for what may surface during a check, that demonstrates character and financial maturity.”

Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

6 reasons to consider hotel rewards cards

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Airline cards get a lot of hype. After all, flying across the globe for free makes a great story. But the other sibling in the travel rewards family, the hotel card, deserves some praise, too. Here’s why: hotel cards for room

1. Transparent redemption

You’ve heard the story or perhaps experienced it yourself: You have a bunch of airline miles saved up, but, when you try to redeem them, there are no reward seats available for the lowest redemption amount. Instead, you’ll have to cough up twice as many points.

Things work differently, however, if you’re earning points in a hotel reward program. Many (although not all) of these programs have fixed redemption tiers.

Check out Starwood’s redemption chart, for example (Starwood’s co-branded credit card is the Starwood Preferred Guest card from American Express, a CreditCardForum advertising partner):

Starwood redemption chart 2015-01-26 15-15-36

If you want to book a category 3 hotel on a weekend, you’re paying 7,000 points (assuming a standard room is available). If you want a category 7 room on a Saturday, the most you’re paying is 35,000 points (again, assuming a standard room is available).

Exceptions may apply to ultra-luxurious properties (which may not have “standard” rooms) and at certain times of the year at resorts that see a seasonal influx. There’s also the “a standard room must be available” caveat, but you can remedy this somewhat by booking far in advance. Compare that with airline programs, which limit reward seat inventory, even months in advance when the plane is still half empty.

2. The sign-up bonus may be easier to use

One reason for this is simple math: A night in a moderately-priced hotel is usually less expensive than a flight in coach. So, if a hotel card gives you a glut of points as a sign-up bonus, it’s pretty safe to say you’ll have enough points for a night or two.

Some hotel cards make it even simpler by offering you a free night or two as a sign-up bonus. The Hyatt Credit Card, for example, rewards you two free nights at any Hyatt property worldwide after you make $1,000 in purchases in the first three months of getting the card.

3. You often get an anniversary gift every year (no minimum spending required)

Plenty of airline cards offer bonus points every year (either miles good for tickets, or “miles” good for status), but many of them require you to spend a certain amount on the card each year and pay the annual fee. Hotel cards, however, often give you a free anniversary night without an annual spending requirement.

The Marriott Rewards Premier card, for example, gives you an annual free night at any category 1-5 hotel.

4. You have a shorter climb to elite status

Some premium airline cards will give you a head start toward elite – and that head start is often tied to a spending requirement. Some hotel cards, meanwhile, automatically elevate you to the first tier of elite status, just for keeping the card open (find out which cards offer automatic elite status here).

Hotel programs’ elite perks vary and may include late check-out, complimentary in-room Internet, room upgrades and extra points for each stay. While it’s not always possible to assign a dollar value to these extras, it’s just plain nice to be elevated above the run-of-the-mill guest, especially when you’re weary from traveling.

5. You don’t have to travel to use your rewards and perks

Have a bunch of points stockpiled and no trips on the horizon (perhaps because you can’t afford plane tickets)? You can use your points (or free annual nights) for a staycation. Most large hotel chains are well represented in metro areas, so your card could get you a relaxing local getaway during which you enjoy any elite perks you get from the card.

6. Low annual fee

With rewards cards, you’ll often hear about the concept of “paying for itself.” In other words, do the monetary value of the perks and their ease of use justify the annual fee? With annual fees of $95 and lower (the Marriott card, for example, is $85 a year, while the Starwood card is $65), hotel rewards cards justify themselves, especially to low spenders. Even if you’re not spending enough on the card to earn regular free stays, the yearly free night alone can easily be worth more than the annual fee.

Words of caution

Airline cards are much more consistent when it comes to rewards, making it easier to compare them; you usually get 2 points per dollar on airline spending and 1 point per dollar everywhere else. With hotel rewards cards, though, there is a lot of variation in how many points you earn and how much they’re worth. So run a few test hotels through your desired card’s redemption page. A card that earns you more points per dollar may seem impressive – until you find that each point is worth far less than 1 cent each.

Also consider which properties you’d like to redeem your rewards for. If you’re comfortable staying in modest digs in metro areas, you’ll likely find you have a no trouble booking reward stays. Have your sights set on an exclusive resort in paradise? You’re more likely to run up against seasonal capacity issues and lack of availability many months in advance.

Tell us: Have you found hotel rewards cards to be rewarding? Or do you not have much use for them?

Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Adding a personal statement to your credit reports: Worth it?

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Your credit reports can have a profound effect on your financial life.

But what if your file doesn’t tell the whole story? Myriad life issues, billing snafus and identity theft can leave your credit with dents that you believe aren’t your fault.picture of joint credit report

“People sometimes get really emotional about their credit report,” says Thomas Nitzsche, a credit counselor and financial educator with ClearPoint Credit Counseling. “They see it as a personal reflection of themselves.”

Fortunately, the Fair Credit Reporting Act allows you to amend all three bureaus’ reports with a personal statement that tells your side of the story. The question is: Is that a good idea?

What is a personal statement?

It’s a brief addendum to your credit report that provides extra information about anything listed in your report. You’re limited to 100 words in most cases.

For each of the credit bureaus’ specific policies (including how to add a statement and how long it remains on your report), use our chart below.

Some creditors may care, some won’t

Before putting time into crafting your statement, know that some lenders won’t even see it.

“It really depends on the individual lender and the particular type of product, and on the consumer in some cases,” says American Bankers Association spokeswoman Nessa Feddis.

For example, if a lender uses credit scores as a means to weed out applicants, it might go no further than that three-digit number. However, if your score is on the border of what is acceptable, a lender may take a closer look at your report, Feddis says.

The type of credit you’re applying for also may play a role, says Nitzsche. Applying for a card online with a national bank? No human is likely reading your statement. A mortgage application, meanwhile, more likely warrants a deeper dive into your credit and a manual review, during which your personal statement may be seen and considered.

The bottom line: A personal statement, no matter how well it’s written, won’t change your credit score, and that’s all some creditors care about.

“But what we do find is that it can be kind of a psychological aid for consumers,” Nitzsche says. “They feel like they’ve been put in an impossible financial situation, and they need a formal place to get that out.”

When to skip the statement

You might think you’re firmly in the right in an unfair situation, but it’s vital to consider how a lender will view your attempts to explain that.

“It’s not an excuse section,” Nitzsche says.

With that in mind, nix the personal statement in these circumstances:

  • It’s really your fault: Nitzsche says he once charged a $27 pair of jeans on a store card and moved soon after. A mail-forwarding hitch meant he didn’t get the bill, and the issuer reported the payment as 30 days late to the credit bureaus.

    “It was aggravating because it was so stupid,” he says. “But the fact of the matter was, it wasn’t the fault of the creditor or postal service. It was my responsibility to proactively make sure the creditor had my correct address and, even though I didn’t get the statement, remember I made that charge.”

  • The ding is old and minor: Another reason to avoid writing a statement about that $27 pair of jeans: You don’t want to set off an alarm about such an insignificant mess-up.

    An old delinquency will have less of an effect on your credit score, but a statement will stick around (for exactly how long, see the chart below), drawing a lender’s attention.

    “They might think, ‘What else is there?’ ” Nitzsche says. “That might raise a red flag that you’ve had issues in the past and are a little flaky. If it’s an old debt or a minor thing, especially if it’s not anybody’s fault but your own, just let it slide.”

When to consider writing a statement

A statement might help if it fits the following qualifications:

  • It was a one-time medical issue: Collection accounts stemming from medical debt carry less weight in newer credit scoring models, and lenders may be more lenient about them as well.

    “They recognize there might be other issues around that debt,” Feddis says. Insurance issues and long recovery times, for example, may mean a bill goes into collections before the consumer has a chance to pay. A May 2014 report from the Consumer Financial Protection Bureau presents more reasons why medical collection accounts don’t necessarily make a consumer a bad risk.

    Even so, be careful how you phrase any personal statement regarding medical debts. If it’s tied to a one-time freak accident that has long since been resolved, say so. If it’s tied to a chronic issue, think twice.

    “Whoever’s manually reviewing your report could arrive at the assumption that you have an ongoing issue that could affect your finances continually,” Nitzsche says.

  • You’re dealing with errors and ID theft: Removing incorrect information from your credit reports can take time. If you must apply for a loan before you’ve cleared off all the errors, a personal statement can help explain the situation to a lender.

    Yet even more important than the statement is making sure you have documentation to present the lender, Nitzsche says. That might include any paperwork you’ve filed with the credit bureaus or the police report if you’re dealing with ID theft.

    “That way you can say to the lender, ‘There’s a problem on my report. I put a statement on it, and here’s all the documentation to back it up,’” Nitzsche says.

    In the case of truly stubborn errors, don’t put all your effort into the statement and stop there, Nitzsche says – save some for actually getting the errors removed. Go straight to the source (the institution reporting the incorrect information to the bureaus) and try an executive complaint to expedite your issue. Or complain to the Consumer Financial Protection Bureau.

Statement-writing tips

Decided writing a statement is the best route? Follow these tips:

  • Keep it short: You don’t have to use the 100 words allotted, and maybe you shouldn’t.

    “It is important to be precise and to the point,” wrote Clifton O’Neal, vice president of corporate communications for TransUnion, in an email. “For example, ‘Past due payments on Chase account was due to unemployment from 5/11 to 8/12.’ ”

  • Be factual: This is not a time for emotional appeals, an angry tone or criticisms of your lending institution.

    “Facts are best, and if they show it’s not something that was your fault, that’s the ideal situation,” Nitzsche says.

Better than a well-written statement, though, is a clean credit report. Pull your reports often so that you have plenty of time to fix errors before you need credit.

“We see this a lot,” Nitzsche says. “People will come to us, they need a loan right now, and they haven’t paid any attention to their credit, never pulled their credit report. So be aware of what’s on your report. Make healthy choices to try to keep it clean, so when you do need it, it’s ready to go.”

Credit bureaus’ policies

How to add a statement to your credit reports: The bureaus' policies
Options for submitting your statementSend to:
TransUnion LLC
P.O. Box 2000
Chester, PA 19022
Mail (instructions will be on your credit report), phone, or online Online or mail to:

Equifax Consumer Services LLC
PO Box 740256
Atlanta, Georgia. 30374-0256
Max number of words/statements1 statement; 100 wordsAllows multiple statements of 100 words each. One general statement (that applies to whole report) and one statement per item on the report. Can submit up to 10 online, more via phone.1 statement; 100 words (200 if you reside in Maine).
How long statement will remain on reportUntil consumer requests deletionUntil account statement is tied to is deleted (seven years from original date of delinquency) OR upon consumer's requestSeven years, or at the customer's request, which must be sent to the address above.

Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

“Shop with points” feature means real-time rewards

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Redeeming your rewards often requires delayed gratification, whether you’re redeeming for a flight to be taken months down the road or redeeming cash back into a bank account to be spent Shop with Points

Some cards, however, let you spend points in real time by using them as currency at checkout on partner shopping sites.

Before you take advantage of your card’s “shop with points” feature, read on for some benefits and stipulations. And check out our chart comparing popular cards that offer this benefit.

How “shop with points” works

This perk is generally attached to cards with rewards portal programs, such as Chase Ultimate Rewards or Membership Rewards from American Express (a CreditCardForum advertising partner). It’s just another redemption option in addition to travel, merchandise, etc.

To use the feature, you’ll need to link your card to your shopping account at the partner retailer (or to a third-party service that links your accounts). In other cases, simply having your rewards card details saved with the partner retailer is enough to automatically link your cards: Shop with Points discover

Whatever the case, the end result is the same: You’ll fill your online shopping cart, proceed to checkout and select the option to pay with your points. If you don’t have enough points to cover the entire purchase, you can usually pay the remainder with your card. The points will automatically get deducted from your rewards balance.


It can be practical or a splurge: Rewards card fans often fall into two camps: Those who want no-fuss cash-back rewards they can put in the bank, and those who want to redeem for fun stuff.

This perk can go either way. Shopping online for things you need anyway (like work clothes or school books)? Use your points to offset the cost. Splurging on jewelry, sports equipment and gadgets? Paying with points becomes like using a gift card to treat yourself.

It’s seamless: Once you’ve set things up, using your points becomes a one-step process. There’s no buying something and then having to remember to redeem for a statement credit later. As soon as you hit the online checkout, you can see how many points you have and use them immediately.

There’s (usually) no minimum: Rewards cards often have redemption minimums you have to meet before you can cash out your points. Yet those minimums are often waived when you shop with points, making this feature a good way to use left-over points – and keep you from waiting too long to redeem if you’re a low spender.


You don’t always get the highest value: A value of at least 1 cent per point is generally what you should shoot for when redeeming, and some cards offer less than that if you shop with points. Of course the flexibility and convenience may be worth sacrificing some value.

There are restrictions: Most of the cards that have a “shop with points” feature partner with Amazon. But before you get excited, realize that you can’t use your points to pay for digital downloads (that includes Kindle downloads) or groceries.

Compare your options

If the pros outweigh the cons for you, use our chart to find a card that lets you pay with points.

Credit card "shop with points" programs
Eligible cardsPartner retailersWorthMinimumExclusions
Chase Ultimate RewardsFreedom, Sapphire Preferred, InkAmazon.com1 cent/pointNoneMP3s, Instant Video, Kindle downloads, AmazonFresh, game/software downloads, cellphones and service, Amazon Prime membership and pre-order items.
American Express Membership RewardsEveryday cards, Premier Rewards Gold,, Ticketmaster0.7 cents/point (Amazon); 0.5 cents/point (Ticketmaster)None for Amazon, at least 2,000 points for TicketmasterAmazon:
Some digital goods, Kindle downloads, AmazonFresh, pre-orders

Ticketmaster: re-sale tickets
Citi ThankYouPrestige, ThankYou cards, Chairman, Citi Forward, Citi PremierPass Expedia, Live NationVaries (starts at about 0.8 cents/point)NoneDigital downloads, Kindle downloads, AmazonLocal, AmazonFresh, pre-orders
DiscoverDiscover it, Discover More, Discover Open Road, Discover Motiva, Miles by Discover, Escape by, iTunes (for iTunes codes),, Facebook (for gift cards)$1 in cash-back bonus = $1 on partner sitesNoneDigital downloads, Kindle downloads, AmazonFresh, pre-orders

Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Countdown to EMV: What to expect in 2015

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Today, a few of the cards in your wallet may be sporting EMV chips, and the occasional payment terminal may invite you to dip your card instead of swipe. As the year unfolds, however, you can expect more chips and dipping. chip and pin on card

What the payment industry calls the EMV (Europay Mastercard Visa) liability shift will arrive in October 2015, urging issuers and merchants to adopt EMV chip-card technology. This is what you can expect in the coming months:

The switch won’t be instantaneous

October 2015′s liability shift is not a hard break between the old way (swiping magnetic stripe cards) and the new (dipping EMV chip cards). Instead, it’s an incentive to get issuers to upgrade their cards and merchants to upgrade their equipment to facilitate EMV.
Right now, issuers are financially responsible for any counterfeit fraud that takes place. Starting October 2015, whichever party (the issuer or the merchant) is responsible for a transaction going through as a magnetic stripe transaction rather than an EMV transaction will be held responsible by the card networks (Visa, MasterCard, etc.).

“If the merchant has not installed an EMV-compliant device and tested it with their acquirer, and a chip card shows up at their store, and it is a counterfeit card, the merchant would be liable for that transaction,” says Philip Andreae, vice president of field marketing for Oberthur Technologies. “Conversely if the merchant does install an EMV-compliant device, gets it certified and turns it on, the issuer retains the same liability for any transaction at that device.”

If both parties upgrade, the issuers remain responsible, although EMV does give them increased protection from counterfeit fraud and, if the PIN is enabled, from lost and stolen fraud too, Andreae notes.

The shift also factors into the growing issue of data breaches. Because EMV transaction data is unique to each transaction, it’s practically useless to thieves who want to use it to make counterfeit cards, explains Stephanie Ericksen, vice president of risk products for Visa. Magnetic stripe data is more counterfeit-friendly. Because cards with EMV chips are still being manufactured with magnetic stripes as well, your chip card data could still be vulnerable at merchants who need you to swipe because their terminals don’t speak EMV yet.

Stats: EMV outlook for the U.S.
  • 575 million: Number of EMV payment cards in market by end of 2015 (Payment Security Task Force)
  • 70 percent: Percentage of credit cards in market that will be EMV by end of 2015 (Aite Group)
  • 41 percent: Percentage of debit cards in market that will be EMV by end of 2015 (Aite Group)
  • 47 percent: Percentage of merchants that will be EMV compliant by the end of 2015 (PSTF)
  • 4 to 5 years: The predicted amount of time after the liability shift for 90 percent of U.S. payment volume to be EMV compliant (Visa)

“If I use a chip card as a mag stripe card at a merchant that hasn’t yet upgraded to EMV, that’s going to be mag stripe data stored in their system,” Ericksen says. “If that data is stolen, a fraudster may be able to make a counterfeit mag stripe card. In that situation, the issuer is protected because it’s a chip card. And the merchant would be liable.”

So, while the change to EMV won’t be immediate, the liability shift gives issuers and merchants a powerful motivation to limit their exposure and upgrade. By the end of 2015, the Payment Security Task Force (PSTF) predicts roughly 575 million payment cards (about half the cards in circulation) will have EMV chips. Broken down into credit and debit, 70 percent of credit cards and 41 percent of debit cards will be converted before 2015 draws to a close, according to the Aite Group.

In fact, issuers are getting chipped cards to market more quickly than expected. Oberthur predicted normal reissuance (issuers replacing cards as they expire).
“Instead, what we are seeing is accelerated and mass reissuance,” Andreae says, meaning issuers are busy replacing all cards within a three-to-18-month time table.

Merchants won’t be far behind: About 47 percent of merchant locations will be converted to EMV by the end of 2015, according to the PSTF.

Consumers have to get used to new behaviors

The swipe-and-put-it-back-in-your-wallet routine has become pretty ingrained for U.S. shoppers. However, EMV terminals require you to leave your card in the slot for the duration of the transaction, meaning some consumers may forget to take their cards home, says Andreae.

“In every market, we’ve had the same problem,” Andreae says. “The consumer is used to swiping and putting the card back. Now they have to dip it and leave it. Consumers forget their cards a couple times, and the clerks get used to saying, ‘please don’t forget your card.’”

You’ll have to swipe at some terminals, dip at others

During the EMV transition, some stores will have EMV-capable terminals, while some won’t. And just looking at the terminal may not be enough to tell the difference. About a third of the terminals already in the U.S. market have EMV slots, Ericksen says, but they don’t necessarily have the software enabled to accept chip transactions.

“So there may be some merchants that look like they have chip-capable terminals, but the reader might not be activated,” Ericksen says.

That might be confusing to consumers who won’t know when to dip and when to swipe.

“As more of those terminals become activated with software, consumers just need to know to follow the prompts on the terminal,” Ericksen says. “If they try to dip it and nothing happens, they can still swipe it. They shouldn’t assume there’s something wrong with their card.”

Video: Watch how to use your chip card in a variety of scenarios.

So which merchants are likely to implement EMV the soonest? Big-box retailers (designated as level 1 merchants by the card networks) will likely be “100 percent compliant by the October 2015 liability shift,” Andreae says. On the opposite end of the spectrum, the small mom-and-pop operations (level 4 merchants), which have what the industry calls “stand-alone” payment devices, will likely have their limited equipment swapped out by their acquirer or independent sales operator fairly rapidly before and after the shift.

Lagging behind will be all the merchants in between – the level 2 and 3 merchants. Such merchants likely have customized software that interfaces with their point-of-sale devices for add-on capabilities, such as sending restaurant orders back to the kitchen or applying discounts. And those software creators are just beginning to understand EMV and how to upgrade to support it, according to Andreae.

“There are thousands of them floating around the United States, ranging from Brother Bob who built something for his relative who owns a chain of stores, to the larger organizations with thousands of terminals,” Andreae says. “So, on the merchant side, especially those located in middle of America, and the medium-sized organizations, are the ones that are going to be most challenged [by EMV].”

Debit will lag behind but catch up

The first cards in the U.S. market sporting chips were credit cards (travel rewards cards in particular), rather than debit cards. Part of the reason, Ericksen says, was issuers’ desire to cater to their globe-trotting clientele.

“The earliest issuance of EMV cards was to consumers who travel internationally frequently, so they’d benefit from the improved acceptance experience of having a chip card,” Ericksen says.

Yet the main reason debit is lagging behind is the complexity of integrating EMV into the 16-plus debit networks in the United States. Other countries have national networks, but in the U.S., there are regional networks, Andreae explains. The Durbin Amendment, passed in 2010 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, requires that debit cards support multiple unaffiliated debit networks (in addition to whichever one – Visa or MasterCard – is branded on the front). Turn your debit card over, and you might see which networks it supports.Debit card payment networks

The network used to process a transaction affects how much the merchant pays, and the Durbin amendment seeks to preserve network competition and the merchant’s ability to choose. Yet “all that choice creates confusion,” Andreae says, given that EMV wasn’t designed with the need to support routing card transactions through more than one payment network at the same merchant.

“Whether those unaffiliated networks are ready to support EMV is a factor,” Ericksen says. “Issuers are dependent not only on the primary network (Visa and MasterCard), but on the networks that they need to support and their readiness time frame.”

EMV debit is pushing ahead, though, with all parties involved working together to enable EMV debit transactions “with the objective of getting there by October,” Andreae says. There are EMV-compliant terminals that already support debit, he says, and networks that support EMV debit transactions as well. Bank of America, meanwhile, began issuing chipped debit cards in October 2014.

The U.S. is on target

While the U.S. is behind other countries in adopting EMV, now that it’s started, its migration won’t necessarily be slower.

“There’s a lot of really good progress happening in the U.S.,” Ericksen says. “We certainly have a very large market we’re moving to EMV, but in many ways we’re very much on par with the pace of migration we’ve seen in other major markets throughout the world.”

That’s an impressive feat, considering the United States is the oldest market in the world, in terms of having an electronic payments foundation. While other countries’ electronic payments infrastructures evolved with EMV, the United States didn’t have that benefit. Andreae compares implementing EMV in the U.S. to putting a water dispenser on a refrigerator built before the concept of water-dispensing fridges even existed.

“The later you are to market, the easier it is to embrace to today, while the earlier you are, the harder it is,” Andreae says. “Your children understand computers, and your mother is having problems. It’s a similar issue.”

So how long until EMV becomes the norm? It took four to five years in Australia, Canada and Brazil (markets that have already adopted EMV) for 90 percent of the payment volume to be conducted as EMV transactions, says Ericksen.

“That’s very much what we should expect in the U.S.,” Ericksen says. “Some momentum toward the liability shift date, and then a few years after the shift for gradual penetration and migration.”

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