1 in 3 Americans Maxing Out Credit Cards Because of Inflation
The increase in credit card debt signals that many Americans are struggling to pay for basic needs. Roughly 45% of Americans said that inflation and rising prices are why they've relied so heavily on credit cards, the Debt.com survey said. Nearly 9% of all respondents said they got a credit card to pay for a financial emergency. Moreover, 35% of Americans said they have maxed out their credit cards in recent years. Of those who had maxed out their credit cards, 85% said they were pushed to use their cards to the limit because of price increases from inflation. Approximately 22% of Americans said they now owe between $10,000 to $20,000 in credit card debt, and 5% have more than $30,000. [Fox Business]
35% of Americans said they have maxed out their credit cards in the last few years
CFPB Credit Card Late Fee Rule Repeal Approved by House Panel
Lawmakers advanced legislation to block the Consumer Financial Protection Bureau’s rule capping credit card late fees at $8, setting up a vote in the US House of Representatives. The House Financial Services Committee voted 28-22 along party lines Wednesday to approve a measure from Rep. Andy Barr (R-Ky.) that would repeal the CFPB’s rule under the Congressional Review Act and bar the agency from introducing a similar proposal. The Democratic-controlled Senate is unlikely to approve any measure overturning the CFPB’s credit card late fee caps, especially given President Joe Biden’s strong support for the rule, though several Democrats have backed previous legislation seeking to block regulations from the CFPB and other agencies. [Bloomberg Law]
Americans Value Credit Card Rewards Over Trust
Americans place more importance on credit card features, like rewards, interest rates, and other perks, than how much they trust a credit card issuer, according to a survey from The Motley Fool Ascent. The survey also found that cash back credit cards are the most popular credit cards in America and Capital One is the most common issuer of credit cards. Different generations have different credit card priorities. Members of Gen Z are most likely to have a credit card with a solid sign-up offer bonus, while baby boomers are more likely to have a store or brand-specific credit card. [The Motley Fool]
Young People Are Overspending Online. How Social Media and Buy Now, Pay Later Apps Play a Big Role
Gen Z is the first age group to grow up with social media, and they might be the most likely to go into debt because of it. According to a Lending Tree survey, 62% of Gen Z-ers feel pressure to spend money and keep up with people around them, compared with the national average of 32%. Additional data released in March by Credit Karma shows that the average Gen Z-er’s credit card debt is more than double that of millennials. In 2023, Bankrate released a survey showing how influential social media can be when it comes to overspending. According to that study, 48% of social media users reported buying something impulsively that they saw advertised online, spending an average of $754 on impulse purchases in the previous year. Such spending habits were even more prevalent among Gen Z, with 60% of respondents ages 18-26 saying they’d impulsively purchased something they saw on social media in the last year. [Yahoo News]
As Consumers Lose Millions to Gift Card Scams, Lawmakers Pressure Businesses
Scammers drain a gift card by obtaining the bar code, CVV number, PIN number or activation code from beneath the slim cardboard packaging. They reseal the card, wait for a consumer to buy it and load it with money, and then spend the balance before the consumer can. In 2023, card draining and other gift card-related fraud made up $217 million of the record-high $10 billion in money lost from scams nationwide, according to the latest data released by the FTC. State attorneys general and legislatures are trying to combat gift card scams with consumer alerts, arrests and warning signs on store displays. Some are even telling gift card makers how to package their products. Retailers and card manufacturers, though, are pushing back, saying the micromanaging isn’t necessary and would hurt small businesses. [Stateline]
Klarna Credit Card Launches in the U.S. as Swedish Fintech Grows Its Market Presence
Klarna is launching its credit card in the United States. With the Klarna credit card, the company is now competing with the likes of Apple as well as rival BNPL player Affirm in offering a credit card in the United States. There is no annual fee for the card, and no foreign transaction fees. Users can earn up to 10% cash back on selected merchants when using the card in its app, and the card integrates with the company’s AI assistant to find deals on planned purchases, he said. Klarna’s virtual Visa card is compatible with Google and Apple Pay. [Tech Crunch]
Citi, Chase Will Cover Steeper Global Entry Fees for Premium Cardholders
Starting October 1, 2024, Citi and Chase will cover higher Global Entry fees for certain cardholders. The news comes after U.S. Customs and Border Protection decided to drive up Global Entry fees by 20%, from $100 from $120, by October, despite wiping application fees for minors. Global Entry permits pre-approved travelers a speedier entrance into the U.S. Chase and Citi are among the credit card companies that subsidize Global Entry fees for some clients. [Skift]
The Rise of Digital Wallets: A Look at the UK's Payment Revolution
If digital wallet technology has been around since 1997, then why is it only recently seeing such growth? While there was novelty in making payments via text message to buy a soda, the impressive rise of digital wallets and mobile payments is really the confluence of several highly advanced but disparate technologies becoming commonplace. For example, biometric authentication, such as fingerprint or facial recognition, in smartphones has significantly enhanced the security of digital transactions. Furthermore, near-field communication technology, which has allowed UK consumers to make contactless payments for a long time, has also been embedded in smartphones, allowing people to use their devices to pay for things in person. [Tech Radar]
Mastercard Brings Commercial Cards to Digital Wallets
Continuing the industry’s migration of business payments and expense management to digital platforms, Mastercard announced that it is bringing its commercial cards to mobile wallets. The move comes in the form of a mobile virtual card app engineered to provide financial institutions with options for delivering secure, contactless payment services—a demand increasingly voiced by the companies’ banking and corporate customers. The app will use Mastercard’s robust virtual card and tokenization technology to offer enhanced data security and spend control features, accessible via a consumer-like interface. It extends Mastercard’s commitment to business payments and management across various sectors, including healthcare, insurance, and corporate travel. It also comes at a time when business travel and expense management has changed with the advent of remote working and addresses the shifting payment preferences by younger demographic groups. [PYMNTS]
Robinhood Introduces its First Credit Card
With free accounts and trades starting at just $1, Robinhood has become a popular platform for beginning investors. Expanding on this popularity, the Robinhood Gold Card launched in March 2024. This credit card earns unlimited 3% cash back on every purchase, and includes complimentary perks like travel and purchase protections. A Robinhood Gold subscription is required to be eligible for the card, which costs $5 per month (or $50 per year). [US News & World Report]
How Safe Are Banking Apps, Really?
Mobile banking apps have a range of built-in security features to put fences around your information that are difficult for hackers to scale. And this isn’t limited to the biggest banks with the resources to invest in the latest and greatest tech. Even some smaller credit unions and community banks use tools like biometric authentication, using physical characteristics like your fingerprint or face, to limit your account access to the only person who should be able to get in: you. Many banks also use multifactor authentication, which requires a second form of identification such as a text message to your phone to prove it’s really you attempting to access the account. Many banks also use end-to-end encryption, which prevents anyone from seeing your information while it’s being transmitted. [CNet]
