LowCards.com Weekly Credit Card Update–August 26, 2016
Silicon Valley Lender Raises Nearly $50 Million for Subprime Credit Card Push
LendUp Global Inc., the startup online lender that has attempted to reinvent the payday loan, is plotting to take on a more mainstream financial product: the credit card. The lender said it raised $47.5 million in an equity deal designed to expand its card business. By raising money to roll out a credit card for subprime borrowers, LendUp will be competing with mass-market banks such as Capital One. Last year, LendUp started a limited release of a credit card aimed at similar borrowers, called the L Card. The new effort will expand that brand. Unlike rivals LendingClub and other established startups that aim to give loans to middle-to-upper-class households, LendUp has targeted less-creditworthy consumers who have more difficulty accessing bank loans. Story by Peter Rudegeair and Telis Demos for The Wall Street Journal.
Costco’s Credit Card Nightmare Just Got Even Worse
Costco’s marriage to Visa has been rocky pretty much from the start—and this weekend shoppers faced a new problem, despite assurances that issues in the relationship were being ironed out. On Friday evening, a number of Costco members received emails from Citi, the issuer of the new Visa-Costco credit card, alerting them that their credit card accounts had been closed. In at least some cases, members reported that they received emails addressed to other people that contained the last four digits of other users’ account numbers, raising concerns that their accounts had been hacked. Story by Kate Taylor for Business Insider.
The Profitable Business of Lending to Subprime Borrowers
While fees are paid by credit card holders across the board, interest is charged only to those who carry a balance, which often are cardholders with poor credit, according to a report by the Consumer Financial Protection Bureau. The interest payments all cardholders make account for 80 percent of the total revenue card issuers receive from consumers. But while those considered prime borrowers generally are paying down debt, riskier consumers have been increasing their card balances: to $5,063, on average, from $4,891 one year ago, according to a separate study from credit-scoring company TransUnion. As a result, card issuers continue to increase the availability of credit – particularly to millennials and other consumers with lower credit scores. About 10 million new consumers entered the credit-card marketplace in the last year alone, the majority of which were subprime borrowers, according to TransUnion. Story by Jessica Dickler for CNBC.
Shoppers’ Credit Card Use Unaffected by Brexit, say Banks
The UK is a nation of shoppers unfazed by the EU referendum result when spending on plastic, says a trade body representing the major banks. Credit card use for purchases in shops has been highlighted by the British Bankers’ Association (BBA) as the key to rising borrowing on cards. There were 168 million purchases on credit cards in July, the first full month since the Brexit vote. This was higher than in June and the average of the previous six months. However, there was a drop in the number of mortgages approved for house purchases. Story by Kevin Peachey for BBC.
Mobile Banking Apps Are Worth More Than You Think
How angry would you be if your bank charged you to use its mobile app? Believe it or not, a significant minority would be willing to pay up, according to a new survey of nearly 4,000 U.S. bank app users by S&P Global Market Intelligence. Specifically, 21% of people said they’d pay as much as $3 a month for the service, while up to 40% of people said they’d be willing to pay $1 a month. Based on that willingness, S&P says banks could generate as much as $500 million more in annual revenue, the bulk of it going to Bank of America, Wells Fargo, and J.P. Morgan Chase. Those are the banks with the biggest mobile customer bases and the highest percentage of willing payers. Story by Telis Demos for The Wall Street Journal.
Many People Carry the Wrong Credit Card
At least one in five credit card customers are carrying the wrong card, according to a new research study. The J.D. Power 2016 U.S. Credit Card Satisfaction Study found consumers are not choosing cards that offer rewards best aligned to their purchasing habits. While choosing the wrong card does not necessarily affect customer satisfaction, it does have financial consequences for credit card companies. Customers with the wrong card spend less per month on their primary card than those who have the right credit card ($783 vs. $1,035), use their card for a smaller portion of their monthly expenditures (37% vs. 45%) and are more likely to switch cards (21% vs. 9%). Story by Bill Hardekopf for LowCards.com.
Eddie Bauer Stores Hit with Credit Card Breach
Eddie Bauer shoppers be warned: All of its North American stores were targeted by credit card thieves this year. The company said Thursday that it found and removed malware from registers at about 350 stores. The clothing store chain also said there’s reason to believe credit and debit cards used at those stores between January 2 and July 17 this year “may have been compromised.” Online purchases during that time period would not have been affected. Story by Jackie Wattles for CNN Money.
Should You Get the Chase Sapphire Reserve Credit Card?
Chase just entered the premier credit card space in a very big way. The bank’s new offering, the Chase Sapphire Reserve card, comes with a lucrative sign-up bonus, rich rewards, and hundreds of dollars of credits to reimburse money you spend on travel. But nothing comes free, and cardholders will have to countenance a $450 annual fee. Story by Taylor Tepper for Money Magazine.
Security Concerns Holding Back Mobile Banking Adoption
Fraud and security concerns are holding back adoption of mobile banking technologies, according to a new survey. The research, carried out by Kaspersky Lab and IDC Financial Insights found that 36% of respondents are not currently using any mobile banking apps. Of these, 74% cited security as the primary reason. The research also suggested that many people will never adopt mobile applications as their primary banking platform. Nearly one-third of respondents said they do not ever foresee using mobile as the primary channel. It is security that remains the primary concern, and the main reason people are not adopting mobile banking. Story by Steve Evans for Info Security.
Samsung Pay Clocks Up Nearly 100 Million Transactions
Samsung presented a number of statistics to show progress for its payment service in its first 12 months, including nearly reaching 100 million transactions. Samsung Pay first launched in the vendor’s home market of South Korea in August 2015 before debuting next in the US. It is now available in a total of eight markets. The others are Australia, Brazil, China, Singapore, Spain and Puerto Rico. The vendor also said there are more than 4 million membership and loyalty cards registered by users in the US and South Korea. Story by Richard Handford for Mobile World Live.
LowCards.com Weekly Credit Card Rate Report
Based on the 1,000+ cards in the LowCards.com Complete Credit Card Index, the average advertised APR for credit cards is 14.64 percent, slightly higher than last week’s average of 14.63%. Six month ago, the average was 14.83 percent. One year ago, the average was 14.60 percent.