LowCards.com Weekly Credit Card Update–June 1, 2018

LowCards.com Weekly Credit Card Update–June 1, 2018

June 1, 2018         Written By Bill Hardekopf

Many Rewards Credit Card Holders Don’t Shop Around
Many consumers don’t do their research when it comes to credit cards, according to a U.S. News & World Report survey. Nearly half of respondents didn’t research their card before signing up. Further, more than 50 percent of those surveyed don’t regularly shop around for better cards. Cash back is the most popular reward, followed by airline rewards and gift cards. The top three stated reasons consumers choose specific cards are no annual fees, the rate of earning rewards and loyalty perks or rewards. Most cardholders don’t maximize the value of their rewards cards. More than 25 percent of those surveyed carry a balance from month to month at least seven times a year, potentially costing them more than the rewards they earn. Story in US News & World Report

Credit Cards Help Merchants Perfect Their Targeting Programs
Credit card companies are taking the next step in using their points programs to influence what millions of customers buy, going as far as influencing what color blender you might purchase. American Express is piloting a program that will allow merchants to reward customers for purchasing specific items at their stores, starting with online merchant Boxed. Amex is starting small: giving bonus rewards points to Boxed customers who buy Dove soap, Planters nuts, Cheerios cereal and a handful of other items. But Amex expects to open the program to nearly all their merchants in the coming months. Customers will benefit by expanding the number of ways they can earn points. The program also helps Amex, by giving merchants another reason to keep accepting American Express cards, which tend to be the most expensive for merchants to process. Story by Ken Sweet for the Associated Press

Nearly 1 In 2 Say They’ve Never Been Taught “Credit Cards”
Where did you learn how to handle credit cards? According to a new survey, there’s almost a 50% chance that you’re self-taught. 45% of consumers never had a proper education on credit cards. Of those who received their credit card education in school, 22% were taught in high school, followed by 18% in college, and 8% in middle school. Approximately 7% of consumers got their education on credit cards while filling out their application at the bank, a bit like learning how to drive just before you pull off the car lot and onto the freeway. Just as driver’s education is important to reduce the risk of an accident, credit card education is important to reduce the risk of a financial mishap. In both cases, learning the hard way can have lasting consequences. Story in Madison.com

Consumer Debt is Set to Reach $4 Trillion by the End of 2018
Americans are in a borrowing mood, and their total tab for consumer debt could reach a record $4 trillion by the end of 2018. Americans owe more than 26 percent of their annual income to this debt. That’s up from 22 percent in 2010. It’s also higher than debt levels during the mid-2000s when credit availability soared. Debts on auto loans and credit cards are climbing by more than 7 percent annually, while housing debt is rising at a little more than 2 percent. Still, credit card delinquency rates, which are at 2.4 percent, are low. Story by Lorie Konish for CNBC

Chase Axes Perk from its Sapphire Reserve Card–Why Your Issuer Could Do the Same
Chase is no longer offering price protection as a perk on its Sapphire Reserve card. That perk, which allows cardholders to be reimbursed for purchases they make, if the item can be found for cheaper at a different retailer, will no longer be offered, starting Aug. 26, 2018. The company is also cutting the number of guests cardholders can take with them to Priority Pass lounges. They were previously unlimited, but this will now be limited to two guests per visit. Card companies in recent years have been catering their cards more toward travel. That may be one reason lesser-known perks like price protection are going away, while travel-specific benefits like large sign-up bonuses or hotel points rise in popularity. Another perk that’s catching on: Cell phone protection. Companies, including Wells Fargo and Chase on its Ink Business card, offer this service as long as customers pay their phone bills using their card. If they do, the card issuer offers to replace or fix the cell phone if it becomes damaged. Story by Maria LaMagna for MarketWatch

Citigroup To Market Digital Bank To Credit Card Customers
Citigroup does not plan to use high deposit rates to attract customers to its new digital bank accounts when it begins marketing this fall, the chief of its global consumer bank said on Tuesday. Stephen Bird said offering high rates tends to attract “hot money” depositors rather than loyal customers. Instead, the bank will market the accounts nationally to its credit card customers, such as holders of its Double Cash card and cards it issues for American Airlines, Costco and Home Depot. Bird said that offering additional American Airlines mileage credits will attract stable deposits to the bank. Story by David Henry for Reuters

AmEx Is Likely To Become The Second Largest U.S. Card Processing Company This Year
The U.S. card processing industry is likely to see a shakeup among the four incumbents for the first time in decades, as American Express looks poised to nudge ahead of MasterCard to become the second largest processor of credit card purchases in the country later this year. While Visa remains the undisputed market leader with a market share of almost 53% in Q1 2018, MasterCard and American Express both captured a nearly identical market share of 22% each. However, while MasterCard’s market share has fallen marginally compared to Q1 2017, American Express has done well to report a slight improvement year-on-year. This is impressive progress for American Express since its loss of the lucrative Costco card partnership in 2016. The company’s revamped business model should lead to accelerated growth in its card purchase volumes over coming years, something that will help cement its claim to the #2 spot going forward. Story by the Trefis Team for Forbes

Why Americans Aren’t Using Their Phones to Make Payments in Stores
Americans who travel to China will find one thing somewhat unusual: In restaurants, stores and markets, people will take out their phones instead of credit cards when they’re ready to pay. Despite all the buzz and excitement, mobile payment in stores still hasn’t gained much steam in the U.S. Mobile transactions barely accounted for $1 out of every $100 spent in-stores last year. And analysts don’t expect mobile payment usage to rise anytime soon: the percentage is expected to reach just 3.4% by 2022. This year, 25.3% of smartphone users in the U.S. are expected to pay for physical purchases by phone, compared with an estimated 77.5% in China. Story by Krystal Hu for Yahoo Finance

Detecting Cloned Cards at the ATM, Register
Much of the fraud involving counterfeit credit, ATM debit and retail gift cards relies on the ability of thieves to use cheap, widely available hardware to encode stolen data onto any card’s magnetic stripe. But new research suggests retailers and ATM operators could reliably detect counterfeit cards using a simple technology that flags cards which appear to have been altered by such tools. Researchers at the University of Florida found that account data encoded on legitimate cards is invariably written using quality-controlled, automated facilities that tend to imprint the information in uniform, consistent patterns. Cloned cards, however, usually are created by hand with inexpensive encoding machines, and as a result feature far more variance or “jitter” in the placement of digital bits on the card’s stripe. Story by Brian Krebs for Krebs on Security

Synchrony Can Sustain More Credit Card Pain
Private label credit cards are seeing their highest default rate in 7 years, and Synchrony is the largest issuer of private label credit cards. Despite the problems, Synchrony remains capitalized well in excess of regulatory requirements. Loan losses would have to rise 75% to put their “well-capitalized” designation in jeopardy. Story by Matt Hylland for Seeking Alpha

Don’t Expect Your Bank’s Virtual Cards to be the Ultimate Security Solution
Capital One is the latest bank to offer a possible solution to fraud and online shopping scams: merchant-specific virtual card numbers. Virtual card numbers are temporary, randomly generated digits used in place of real account numbers. Because virtual cards don’t require users to share their actual debit or credit card numbers, they’re meant to make online shopping safer. But whether creating a virtual credit card is worth your time is debatable. Some experts question whether certain virtual cards make shopping online more secure. Story by Amanda Dixon for Bankrate


About Bill Hardekopf

Bill Hardekopf is the CEO of LowCards.com and covers the credit card industry from all perspectives. Bill has been involved with personal finance for over 15 years. He is a frequent contributor to Forbes, The Street and The Christian Science Monitor.
View all posts by Bill Hardekopf
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