LowCards.com Weekly Credit Card Update–December 30, 2016
The Best Strategy for Paying Off Credit Card Debt
Many Americans struggle to pay down their credit card debts, a challenge exacerbated by the holidays when credit-card spending balloons. The Federal Reserve estimates that nearly half of U.S. households are unable to pay their credit card bills in full each month. These households owe more than $800 billion in card debt-an average of more than $15,000 per household spread across an average of four credit cards. To pay it down consumers must regularly decide how to allocate repayments, above minimum requirements, among their different accounts. What repayment strategy is most likely to motivate them to get them out of debt? Should they disperse payments equally across all accounts each month or concentrate payment on one account? Our research suggests that people are more motivated to get out of debt not only by concentrating on one account but also by beginning with the smallest. Story by Rumi Trudel for the Harvard Business Review.
Look for Credit Card Late Fees to Rise in 2017
If “pay credit card bills on time” isn’t on your New Year’s resolution list, maybe it should be. In 2017, more issuers may bump up your credit card late fees, which already run well above $30. Come January, at least one major issuer plans to increase late fees on existing accounts to the inflation-adjusted maximums set by the Consumer Financial Protection Bureau. Expect other companies to follow suit. Under the CFPB revision, the maximum penalty for making a late payment more than once in a six-month period is now $38, up from $37. The maximum penalty for a first-time miss remains at $27. About 1 in 5 credit card accounts incurred late fees in 2015, according to a CFPB report. In addition to that fee, the slip-up could cost you in unexpected ways. Story by Claire Tsosie for Nerd Wallet.
One-Third of Millennials Have Used Mobile Wallets
It’s no secret that Millennials are more likely to adapt to new technology than older generations, and that is certainly the case with the payment industry. One-third of late Millennials and 36% of early Millennials have used a mobile wallet, compared to just 16% of the entire adult population, according to a new study from Fiserv. For those not using mobile wallets, the biggest reason was convenience. 80% of survey respondents said debit and credit cards are easier to use than mobile wallets. 67% said they were worried about the security of mobile payments, and 65% said they didn’t see the benefit of mobile wallets. Others said they don’t have time to set up their mobile wallets, or don’t understand the various mobile wallets available to them. Story by Bill Hardekopf for LowCards.com.
Toys ‘R’ Us Asks Employees to Help CEO Get Bonus
Retailers during the Christmas shopping season use plenty of incentives to get employees to increase sales and new credit card accounts. Bonuses and in-store discounts could be among the most popular. But pressing employees to open credit card accounts because it would help boost the company’s Ebitda, an arcane term used infrequently outside the C-Suite? That is a new one. But that is exactly what the brass at Toys R Us did. The toy retailer has signs on tables in employee break rooms urging them to increase Ebitda, or earnings before interest, depreciation ad amortization, by pushing company credit card accounts. Story by Josh Kosman for the New York Post.
Holiday Inn Parent IHG Probes Breach Claims
InterContinental Hotels Group (IHG), the parent company for more than 5,000 hotels worldwide including Holiday Inn, says it is investigating claims of a possible credit card breach at some U.S. locations. Last week, KrebsOnSecurity began hearing from sources who work in fraud prevention at different financial institutions. Those sources said they were seeing a pattern of fraud on customer credit and debit cards that suggested a breach at some IHG properties – particularly Holiday Inn and Holiday Inn Express locations. Asked about the fraud patterns reported by my sources, a spokesperson for IHG said the company had received similar reports, and that it has hired an outside security firm to help investigate. Story by Brian Krebs for Krebs on Security.
Americans Use Debit Cards Twice As Much As Credit Cards
Credit cards have been making headlines recently for their tempting sign-up cash bonuses and flashy travel perks. In the meantime, another payment method has been the go-to source for many when making purchases: debit cards. In terms of frequency, debit card payments are actually outpacing the number of transactions made by credit card, according to the recently released Federal Reserve “Payments Study 2016.” Americans made 69.5 billion debit card payments in 2015, including payments with prepaid and non-prepaid cards, compared to 33.8 billion credit card transactions. (The Federal Reserve analyzed transactions using data from financial institutions and payment companies, including card networks and processors.) Previous studies have shown that debit cards were gaining on cash as the go-to payment for small purchases, even those less than $5. The percentage of cardholders who use debit cards for small purchases hit 27% in 2016, an increase of five percentage points since 2014. Story by Maria LaMagna for MarketWatch.
Banks Struggle to Close More Branches as Mobile Banking Plateaus
When mobile banking first started rolling out, adoption rates skyrocketed. But according to research from Bain & Co., the growth of mobile usage has plateaued. Between 2012 and 2015, the percentage of consumers using their bank’s app leapt from 32% to 52%, according to Bain. But it barely budged in 2016, inching up just slightly to 55%. In a survey encompassing 137,000 consumers in 21 countries around the world, Bain found that growth in mobile banking is leveling off in many countries, and actually declined in China. This suggests that those who were naturally inclined to migrate—early adopters like Millennials—have already done so. Story by Jeffry Pilcher for The Financial Brand.
Mastercard to Launch ‘Selfie’ Verification in Singapore in 2017
Mastercard expects to launch in 2017 its “selfie” function to verify online transactions in Singapore and parts of Asia, a top executive said. This function, known as Mastercard’s Identity Check, will allow consumers to use facial recognition technology to match selfies against facial identification, ensuring that the online transactions are the real deal. The “selfie” function adds a layer of protection to fill in the gaps of various tools of authentication such as biometrics, tokenisation, and behavioural analytics, even as these are already heightened forms of security. Story by Jamie Lee for Asia One.
The Average Credit Card Limit in America, by Credit Score
The higher your credit score, the more willing lenders are to give you credit and an attractive interest rate. Likewise, the lower your credit score, the less likely lenders are to give you a high credit limit and/or an attractive interest rate. One of the more interesting trends is that average credit limit amounts declined across all five categories on a year-over-year basis, although the steepest declines were expectedly seen in the near prime, subprime, and deep subprime categories, which were the groups most notably responsible for failing to pay their mortgage and leading to the housing bubble. This could signify that even with the U.S. economy modestly improving, lenders are still a bit gun-shy about handing out credit to consumers with subpar credit scores. According to Experian data from the first quarter of 2015, here are the average credit limits for Americans based on various tiers of credit scores. Story by Sean Williams for The Motley Fool.
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 14.90 percent, identical to last week. Six months ago, the average was 14.68 percent. One year ago, the average was 14.87 percent.