LowCards.com Weekly Credit Card Update–March 24, 2016
You Don’t Need a Credit Card to Earn Rewards
Debit card reward programs are still going strong at many of the nation’s largest financial institutions, according to a new report from the Mercator Advisory Group. A majority of the country’s top banks and credit unions offer debit card reward programs: 14 of the 25 largest banks and 13 of the 25 largest credit unions. A few years ago, it looked like these programs were about to disappear. But in today’s competitive marketplace, where checking accounts are no longer a must-have financial product, banks and credit unions want to reward their loyal customers and keep them from leaving. Story by Herb Weisbaum for NBC News.
Why Is the U.S. Determined to Have the Least-Secure Credit Cards in the World?
But despite having many other countries to use as models for how to go about updating credit-card technology, the first five months of the EMV transition in the United States have been fraught with delays, complications, and concerns about whether chip-enabled cards will really help mitigate fraud. Especially bewildering was the decision to provide chip-and-signature cards, rather than the chip-and-PIN cards (used in most of Europe) that require people to input a PIN in order to use their cards, rather than just signing for their purchases. If the whole point of the EMV transition is to bring U.S. payment technology up to speed with the rest of the world, why do most U.S.-issued cards still not allow for the more-secure PIN verification? Or, put another way, why is the United States so determined to have the least-secure credit cards in the world? Story by Josephine Wolff for The Atlantic.
Young Americans Are Shunning Credit Cards
Credit card usage is fairly robust in the U.S., with 33% of U.S. adults owning at least one or two credit cards, and another 34% owning three or more cards as of 2014. But there’s one key demographic that’s engineering a slide in credit card use: Millennials. And this trend provides a cautionary tale about future credit card usage. 49.7% of young Americans between the ages of 18-and-34, the so-called millennial generation, don’t own a credit card. Worse for the card industry, 35% of Americans aged 25 to 34 (an age group that should start earning some decent money) “has never applied for a credit card,” according to MyBankTracker. One big factor is the front row seat younger consumers had for the Great Recession, watching their parents and grandparents struggle with debt. Another is their own wrestling match with enormous debts of their own making. Story by Brian O’Connell for The Street.
Starbucks Launches Prepaid Visa Rewards Card
Starbucks gave customers a jolt Wednesday with plans to expand the availability of its coffee, and its loyalty program, outside its cafes. Following a year of record sales–which hit $19.2 billion in 2015–Starbucks executives outlined the company’s strategy at its annual shareholders meeting in Seattle. Expect to see the coffee giant expand its presence outside of its cafes while giving customers more incentives to buy Starbucks products. That includes the introduction of a Chase Visa prepaid rewards card at the end of the year. Customers will be able to use the card anywhere Visa is accepted and earn “stars” on every purchase, regardless of whether it’s for Starbucks items. Story by Hadley Malcolm for USA Today.
Debit Cards Gaining on Cash for Smallest Purchases
When is the last time you used plastic to make a purchase less than $5? For many Americans, it’s becoming more common. The percentage of cardholders who use debit cards for small purchases hit 27% in 2016, an increase of five percentage points since 2014, according to a new survey. Just 11% of cardholders say they use credit cards for those small purchases of less than $5, about the same number who said they did in 2014. Several experts said the shift is an indication that debit and credit cards are becoming more popular, and cash is a slightly less popular choice for purchases than in the past. Story by Maria LaMagna for MarketWatch.
Most Mobile Banking Consumers Use Payment Apps to Pay Bills
Nearly three-quarters of mobile banking app users use a mobile payment app to pay a bill, according to February 2016 research. That’s about three times as many as use one to send money to a friend. S&P Global Market Intelligence surveyed 3,897 adult US mobile banking app users. According to the data, 73% said they use mobile payment apps to pay a bill. Some 41% of mobile banking app users use one to pay for retail purchases, by either waving or tapping their phone. Additionally, more than a third of respondents said they use mobile payment apps to collect or use reward points, and 23% use them to send money to a friend. Story in eMarketer.
Cardholders Prefer Dynamic Security Codes for Online Purchases
Four out of five consumers would prefer using dynamic security codes over static CVV codes when making online purchases with debit and credit cards, according to a study by Oberthur Technologies. CVV codes are used for verification purposes. They are typically 3-4 digits long and printed on the back of most credit and debit cards. The “dynamic” security features referenced in the study are known as Motion Codes. The static number on the back of a card is replaced by a screen that changes numbers every hour. This is designed to protect the card if the information is stolen online because the verification code is no longer valid after an hour. Story by Bill Hardekopf for LowCards.com.
Durbin Supports Retailers over Credit Card Fees
As one of the most antagonistic lobbying battles in Washington escalates–where financial institutions like JPMorgan Chase and Visa are sparring with companies such as Wal-Mart Stores over credit card swipe fees–a powerful ally is again sticking up for the retailers. Sen. Dick Durbin wants to know whether a group owned by the world’s biggest payment networks is using credit card technology and security standards to hinder competition, according to a copy of a letter obtained by Bloomberg News. The questioning rekindles scrutiny of Visa, American Express Co. and MasterCard Inc. by the Illinois Democrat, who inserted a controversial amendment in the 2010 Dodd-Frank Act that significantly cut the fees the companies charge on debit card purchases. Story by Elizabeth Dexheimer for Bloomberg News.
Huawei Boosts Mobile-Payment Service in China
Chinese handset maker Huawei Technologies Co. is beefing up its mobile-payment service in China, creating yet another local competitor to Apple Inc.’s Apple Pay in the world’s largest smartphone market. Huawei, China’s biggest smartphone maker by shipments, has teamed up with state-run bank-card processor China UnionPay Co. to offer the service called Huawei Pay. Story by Juro Osawa for The Wall Street Journal.
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 14.80 percent, the same as last week. Six months ago, the average was 14.55 percent. One year ago, the average was 14.48 percent.