LowCards.com Weekly Credit Card Update–August 18, 2017

August 18, 2017, Written By Lynn Oldshue

One Major Way U.S. Credit Card Debt Is Getting Worse
Americans are increasingly delinquent on their credit card debt. Credit card delinquencies have increased in recent months. Some 4.4% of credit card debt became newly delinquent in the second quarter of 2017, up from about 3.5% in the second quarter of 2016. This compares to rates between 8% and nearly 11% during the peak of the recession. The country also hit a scary milestone earlier this month: Americans now collectively have the most outstanding revolving debt—often summarized as credit card debt—in U.S. history. Americans had $1.021 trillion in outstanding revolving credit in June 2017. This beats the previous record in April 2008, when consumers had a collective $1.02 trillion in outstanding credit revolving credit. Story by Maria LaMagna for MarketWatch

Warren Buffett’s Berkshire Validates Another Credit Card Company
Warren Buffett’s Berkshire Hathaway is increasingly betting on the growing credit card industry. On Monday, Berkshire Hathaway disclosed it bought nearly 17.5 million shares of Synchrony Financial in the second quarter totaling nearly $521 million. That is a vote of confidence for the largest U.S. store credit card issuer, whose shares rose more than 4% on Tuesday. Berkshire Hathaway already owns $12.8 billion in American Express shares and smaller stakes in Visa and Mastercard. While Synchrony’s cards are mostly geared at the mass market with its cardholders comprising shoppers at stores ranging from Wal-Mart Stores to Dick’s Sporting Goods, American Express is more geared at affluent consumers. Coupled together, the holdings increase Berkshire Hathaway’s exposure to credit cards, an industry where overall outstanding balances in June were up about 6% from a year ago. Story by AnnaMaria Andriotis for The Wall Street Journal

Credit Cards Are Clamping Down On Payments To Hate Groups
Some major credit card companies are clamping down on payments and donations to white supremacists and other hate groups. Visa and Discover have stopped allowing websites run by violent hate groups to use their cards to accept payments. On Wednesday, a group called Color of Change launched a web page on its site called “Blood Money” to highlight the credit card issue. The group claims that $20 million in donations was processed for about 100 named white supremacist and so-called “alt-right” groups in 2014 and 2015 alone. Story by Kevin Dugan for The New York Post

Why Amazon Added Debit Card Rewards For Prime Customers
In June, Amazon announced a new reward program targeting Prime members who prefer to pay for their shopping with debit cards. The debit card reward program will earn shoppers 2% cash back, compared with 5% cash back for Prime customers paying with credit cards. The new reward program also has the potential to encourage Prime members to spend more on Amazon purchases. Prime members usually spend significantly more on Amazon shopping than do customers who are not part of the loyalty program. The move to extend rewards to debit card holders could be viewed as another step in Amazon’s efforts to attract more budget consumers to its loyalty program. Considering Prime customers’ significant spending, the loyalty program is vital to Amazon’s retail success. It’s no wonder the company is adding perks to Prime to make it more appealing to shoppers. Story by Rachel Gunter for Market Realist

How To Make Mobile Payments The Favorite Option For Consumers
Nearly half of U.S. consumers, 48%, are interested in mobile payments like Apple Pay or Android Pay, according to a study by my firm, NTT DATA. But there still seems to be hesitation among customers yet to adopt the tool. Some experts say what’s holding back consumer acceptance of mobile payments is coupon/rewards motivation, others say it’s security; some comment that the time spent on transactions due to the newly sanctioned chip and PIN authentication will force consumers to switch, others think a winning customer experience will be the turning point in driving users to mobile wallets. Story by Melody Callaway for Forbes

American Express Credit Cards Ranked Highest in Customer Satisfaction
American Express has been ranked highest in customer satisfaction, according to J.D. Power’s annual credit card satisfaction study. The company earned an overall satisfaction index score of 835, which beat the credit card industry’s average score by 33 points. Discover placed second with 827 points, and Capital One took third with 808. Credit cards that scored the highest in customer satisfaction are those that offer cash back rewards. Airline credit cards and store-branded Visa and Mastercard rewards cards have the lowest level of satisfaction among rewards cards. Websites and mobile apps are becoming an important factor in customer satisfaction. Story by Bill Hardekopf for LowCards.com

Mobile Banking Becomes Further Embedded in Consumer Lives
Nearly two-thirds—62 percent—of respondents to a recent Bank of America survey say they now use a mobile banking app, up 14 points from two years prior. The survey showed that consumers’ dependence on mobile to meet their banking needs is steadily increasing, particularly among the millennial generation. Three-quarters of millennials reported using a mobile banking app, while two-thirds of Gen Xers said they do, along with 47 percent of baby boomers and 40 percent of seniors. Fifty-five percent of respondents said they use their bank’s mobile app to have 24/7 access to their account information. Other top reasons cited for downloading their bank’s app were mobile check deposit (44 percent), reducing branch trips (29 percent) and paying bills (28 percent). Story in the ABA Banking Journal

Facebook Adds eBay’s Daily Deals To Its Marketplace On Mobile
Facebook is again getting into the daily deals space, this time in collaboration with eBay. The company has launched a new feature within its Marketplace section on its mobile app, where a selection of inventory from eBay’s Daily Deals program is now available. The deals can be shopped directly in Facebook’s app, but checkout takes place on eBay’s website through an in-app browser. The new addition expands the focus for Marketplace, Facebook’s answer to Craigslist. The section is prominently position in Facebook’s mobile app. Story by Sarah Perez for Tech Crunch

How Mastercard is Targeting Millennials
Mastercard has set its sights on millennials. Martina Hund-Mejean, Mastercard’s chief financial officer, says the company is positioning itself to take advantage of a shift toward greater use of credit cards by millennials as they become more confident about managing credit and debt. The number of credit cards held by millennials in the U.S. amounted to an average of just over two per person in 2016, up 52% from 2010, according to Experian, with an average balance per person of $3,542, up 32% from 2010. Grabbing as big a slice as possible of that growing market would help Mastercard compete with Visa in the overall credit card market, where Visa captured 53% of purchases in the U.S. in the first half of this year, compared with 22% for Mastercard, according to the Nilson Report, a trade publication. Story by Maria LaMagna for The Wall Street Journal

NAFCU Asks CFPB To Rescind Prepaid Account Rule
The National Association of Federally Insured Credit Unions (NAFCU) has requested that the Consumer Financial Protection Bureau (CFPB) rescind its rule regarding prepaid accounts, or at least exempt credit unions from it. In October 2016, the CFPB finalized a regulation for prepaid products that offers protections like those for credit cards. Specifically, it requires financial institutions to limit consumers’ losses when funds are stolen or cards are lost, investigate and resolve errors, and give consumers access to account information. The rule was set to take effect on April 1, 2018. While NAFCU supports the bureau’s efforts to identify amendments aimed at alleviating regulatory burden, it believes the CFPB should rescind the rule entirely to avoid the risk of disrupted service or loss of access to affordable prepaid products. Story by Dave Kovaleski for Financial Regulation News

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 15.41 percent, slightly lower than last week’s average of 15.43 percent. Six months ago, the average was 14.99 percent. One year ago, the average was 14.63 percent.

About Lynn Oldshue

Lynn Oldshue has written personal finance stories for LowCards.com for twelve
years. She majored in public relations at Mississippi State University.

View all posts by Lynn Oldshue