LowCards.com Weekly Credit Card Update–December 16, 2016
Yahoo Discloses New Breach of 1 Billion User Accounts
A newly discovered data breach exposed the private information of more than 1 billion Yahoo users, the company said, dwarfing the scope of another recently disclosed hack and casting doubt on Verizon’s planned acquisition of the internet company. The 2013 theft is separate and twice as large as a 2014 hack that Yahoo Inc. disclosed earlier this year. That hack had been billed as likely the largest-ever theft of personal data. Unidentified hackers penetrated Yahoo’s network in August 2013 and stole data including names, email addresses, telephone numbers, dates of birth and passwords, the company said. Yahoo said it believes the incident is distinct from the 2014 hack, and that the hackers are no longer in its corporate network. Story by Robert McMillan, Ryan Knutson and Deepa Seetharaman for The Wall Street Journal.
What the Fed’s Rate Hike Means to Your Credit Card
The Federal Reserve voted unanimously to raise the federal funds rate by a quarter percentage point. This was just the second rate hike in nearly a decade. Revolving loans with variable interest rates will incur a corresponding increase of 0.25%. Since almost 90% of credit cards in America have variable rates, this means a rate hike for nearly every credit card will take place in the next few weeks. In general terms, consumers will be paying about $25 in the next year for every $1,000 in credit card debt. There are several things consumers can do to minimize their credit card interest payments in 2017. Story by Bill Hardekopf for LowCards.com.
Mexican Banks Cut Credit Card Exposure on Trump, Rate Risks
Some Mexican banks are lowering credit card spending limits and raising consumer lending standards in the face of an economic slowdown, rising interest rates and the U.S. election victory of Donald Trump. After a period of robust overall credit growth, Mexican banks are cutting credit card exposure to counter a potential rise in consumer defaults and the risks of an economic shock should Trump restrict U.S. trade and business with Mexico. The moves come on concerns Latin America’s second largest economy could see more turbulence in 2017 after its peso currency lost 19 percent this year, largely on fears of a Trump administration. Story by Natalie Schachar for Reuters.
Why More Borrowers are Falling Behind on Their Credit Cards
More U.S. consumers are likely to fall behind on their credit card and car payments next year because of rising interest rates and increased lending to subprime borrowers. That forecast, from credit reporting bureau TransUnion, comes as delinquency rates are inching up. Still, the rise in late payments is not alarming, remaining well below their highs during the financial crisis. According to TransUnion, the percentage of credit card accounts held by subprime borrowers is at its highest level since 2010. In addition, percentage of car loans held by people with weak credit is at its highest point since 2013, a trend that worries some economists. The Federal Reserve Bank of New York recently estimated that at least 1 million people are at least 90 days late on their car payments. Story by Jonathan Berr for CBS MoneyWatch.
Campus Credit Cards Continue Decline
Credit cards offered in conjunction with colleges, universities and affiliated organizations have continued to decline since the CARD Act was enacted in 2009, the Consumer Financial Protection Bureau said in a report today. The number of agreements between issuers and institutions has fallen by nearly 75 percent since then, while the total number of accounts has fallen by more than 60 percent. New account figures also reversed growth and fell by about 10 percent in 2015. The number of issuers in the campus card market remained steady. Story in the ABA Banking Journal.
Bill in Israel to Separate Credit Card Companies from Banks Moves Forward
The Knesset’s Reform Committee approved Finance Minister Moshe Kahlon’s bill on Wednesday, to decentralize the Israeli banking market. The bill which seeks to separate the credit card companies from the big banks that own them, passed a first reading in the committee and will be up for a second- and third-reading in the Knesset Plenum. The bill is expected to allow real competition in the retail credit card market in Israel by giving non-bank actors the possibility issue credit cards and clear payments. Allowing private entities to compete with the banks and with each other means that the new credit card retailers will have to vie for consumer attention by offering better services, attractive promotions, and lower commissions on credit transaction. Story by Michael Zeff for The Jerusalem Post.
Costco Reports 1 Million New Credit Card Accounts Since Switching from Amex to Visa
Costco Wholesale said its members have opened 1 million credit card accounts since the launch of the new co-branded Visa cards in June. Costco reported 730,000 sign-ups for the new cards in September. The most recent numbers highlight the fact that many of the “initial hiccups” related to the transition are now behind the company, UBS analyst Michael Lasser wrote in a research note. With 20,000 to 40,000 of the 1 million new accounts coming in the form of brand-new Costco members, Lesser said it is an “encouraging sign that the new Visa card’s value proposition is resonating with customers.” Story by Coral Garnick for Puget Sound Business Journal.
42% of Card-Present Transactions Worldwide Now EMV-Compliant
EMVCo, the technical body that manages EMV specifications, has published transaction data detailing year-over-year growth in the volume of card-present payments using EMV chip technology. The data shows that from July 2015 to June 2016, 42.4 percent of transactions globally were EMV-compliant, compared with 33 percent for the previous 12 months. For a transaction to be considered EMV-compliant, both the card and terminal used must be EMV-enabled, according to a press release from the organization. EMVCo said real-time figures for transaction volumes today are likely to be higher than the July 2015 to June 2016 reporting period, given ongoing adoption of technology. Story in Mobile Payments Today.
Research Shows Mobile Banking Lifting Hundreds of Thousands from Poverty
In a study published Friday in the journal Science, economists at MIT and Georgetown have found that a service allowing users to send and receive money on their mobile phones has significantly reduced poverty in Kenya. According to long-term surveys, M-Pesa (short for “mobile money” in Swahili) helped 194,000 families, or 2% of Kenyan households, out of poverty between 2008 and 2014. Among other factors, the authors found that M-Pesa makes it easier to weather financial or health crises, both by increasing savings rates and allowing users to tap wider support networks. The effect was particularly pronounced for women and female-led households, which previous analysis has attributed to mobile banking’s tendency to give women more power in typically patriarchal societies. Story by David Z. Morris for Fortune.
Privacy Service Lets You Use ‘Burner’ Cards for Online Transactions
Worried about all the places online your debit card information is stored? A new service called Privacy lets you use virtual or “burner” cards for all your online transactions, making your financial details anonymous on the internet. Privacy, which has been in a closed beta since March 2016, is a free service that needs to be installed as a Chrome extension. It’s an online-only service that works with Visa debit cards, and all you need to do is link your bank account when you sign up. The extension will recognize any time you’re on a checkout page. You’ll see Privacy’s icon where you need to add your card information – click on the logo and you’ll get the option to create a new virtual card for the service. These cards can be reused with the retailer, or terminated after a one-time transaction. Story by Julian Chokkattu for Digital Trends.
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 14.89 percent, higher than last week’s 14.75 percent. Six months ago, the average was 14.70 percent. One year ago, the average was 14.62 percent.