A New Survey Links Credit Card Usage and Stress
While credit cards might make it easier and even more financially rewarding to shop, they also have the potential to wreak havoc on your mental health. A recent survey by Debt.com found that 34% of credit card users feel stressed. That’s up from 21% who said the same in 2022. Also, this year, 43% of credit card users said that the simple act of looking at their monthly statements was a source of stress. Last year, only 39% said the same. [The Motley Fool]
Earnings Season Sheds Light on Rising Card Delinquencies
Drilling down into the supplementals and SEC filings from some of the payment networks and banks, the data shows that delinquency rates are rising, dovetailing with PYMNTS’ findings that credit cards have been a lifeline in managing daily expenses. The pressures seem to cut across all demographics. American Express, which has typically drawn more affluent clients, reported loans that are over 30 days past due stood at 1.2% in the most recent quarter, up from 1.1% in the fourth quarter and 0.8% in the first quarter of last year. Discover materials show the 30-day delinqumcy rate for its credit card loans was 2.8%, where that metric had been 1.8% last year. Capital One’s SEC filing noted that 30+ day performing delinquency rates were 3.7% in the first quarter of 2023, increasing from 2.4% last year. J.P. Morgan showed that the charge-off rate in its card services business was 2.1% in the first quarter, and that percentage had been 1.4% last year. [PYMNTS]
Americans Are Not Paying Off Their Credit Card Debt. We Should Be Concerned
The first-quarter dip never happened. Some observers say that’s a problem. Credit card balances hit $986 billion in the fourth quarter, but remain largely unchanged in the first quarter of the year, the Federal Reserve Bank of New York said. It looks increasingly likely that credit card debt is on track to hit the $1 trillion mark this year, and experts say that this number could be an indicator of a looming economic downturn. This has raised eyebrows among some observers, namely because people typically pay off their debts from the holiday season in the first quarter of the year. That did not happen. This was the first time credit card debt had not made its customary dip between the fourth and first quarters since the end of 2000 and the beginning of 2001, a recession marked by the end of the “dot-com” bubble. [MarketWatch]
Niche Credit Card Rewards Were Having a Moment. What Happened?
Beginning in 2020, a wave of credit cards offering non-traditional rewards and perks started hitting the market. Rather than focusing on traditional miles, points or cash back, the young financial technology companies (aka “fintechs”) behind these cards started leaning in to unique rewards—from crypto and wine to fitness and environmental benefits—to offer a more personalized experience. It seemed like a rewards evolution might be underway. Until it wasn’t. As of mid-2023, many of those new cards have shuttered. [The Exponent]
Mobile Payments a Growth Opportunity
Governments are incorporating digital payment choices to create a digitalized, cashless society. Bring your own device (BYOD), a surge in smartphone usage, and a large number of people without bank accounts are some of the key variables that are likely to provide profitable development prospects for digital payments. In addition, stores and services around the world are rapidly adopting and integrating mobile payment apps like PayPal, Samsung Pay, Apple Pay, AliPay, and WeChat Pay. These apps accept electronic payments. The global digital payment market was valued at $81 billion in 2021 and is expected to reach $272 billion by 2029, registering a CAGR of 16.37% during the forecast period of 2022-2029. [IT Online]
Many Americans Eye Buy Now, Pay Later to Gain More Financial Flexibility
Most Americans want financial flexibility when it comes to financing major life milestones and many are considering buy now, pay later installment loans to help finance big purchases. Major life events like weddings, attending college, buying a home, or having a baby can cause an emotional toll. However, 60% of Americans said that financing these milestones causes even greater stress, according to the Citizens Bank and Wakefield survey. Additionally, 39% said they had to plan and finance for at least one major life event in the next 12 months, and 78% said they would have to do it in the next decade. [Fox Business]
Citigroup Plans New Credit Card for Use with Multiple Retailers
Citigroup plans to debut a new credit card with multiple retailers that consumers will be able use for larger purchases. The new card, known as Citi Pay Credit, comes from the lender’s retail-services unit and will be digital only. Citigroup is lining up retail partners for the card and plans to add an installment-loan product for merchants in the program as well. [Bloomberg]
How Credit Cards Offer Superior Security Over Debit Cards
It’s important to recognize that not all plastic money is created equal, and using a debit card for shopping may not always be the wisest choice. Here are five reasons why relying solely on a debit card for your shopping needs may have its drawback: Varying levels of fraud protection. Limited potential for building credit. Insufficient purchase protection. Cash flow constraints. Limited recourse for disputes. [Outlook India]
Capital One Returns Fire at Walmart as Credit Card Deal Sours
The battle between Walmart and its exclusive credit card issuer is heating up, with Capital One Financial alleging that the retail giant failed to meet its marketing obligations because it was unhappy with the economic terms of the partnership. In a new court filing, Capital One also accuses Walmart of trying to abandon a long-term deal the two companies struck back in 2018 because the retail chain wants to move its credit card business to a fintech joint venture in which it has a controlling interest. The Walmart-backed fintech venture, known as One, has been in development for about two years. It currently offers a debit card to Walmart customers. [American Banker]
Mastercard Tightens Up Fraud Protection with Vesta Solutions Collaboration
Mastercard is making it possible for businesses to accept payments from anywhere in the world via a partnership with Vesta Solutions. The rise of e-commerce has also given rise to e-commerce fraud. In fact, a Juniper Research study found that losses tied to e-commerce fraud are expected to exceed $48 billion worldwide in 2023. Fraudulent chargebacks pose a significant cost to merchants, and many are simply not equipped to prevent or mitigate this type of fraud. By integrating Vesta’s solutions within its platform, Mastercard is aiming to protect merchants. Because of Vesta’s 100% guarantee against fraud, if a fraudulent transaction goes through the checkout process, Vesta will be responsible for the full amount of the transaction. By eliminating the cost of fraud, merchants can focus their efforts on business-building strategies. [Payments Journal]
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