LowCards.com Weekly Credit Card Update–June 24, 2016
Millions of U.S. Consumers Are Escaping Subprime
The percentage of Americans with subprime credit scores has fallen to the lowest level in more than a decade, a development that could give bank lending and the overall economy a boost. The share of U.S. adults with credit scores that are considered “subprime” fell to 20.7% in April, the sixth consecutive year-over-year decline and the lowest level since at least 2005, when FICO started tracking the data. The ranks of subprime borrowers swelled during the financial crisis, peaking at 25.5% in 2010 as mortgage payments, credit card bills and other debts went unpaid. The improving trend could bring relief to big banks, which tightened credit standards in the wake of the crisis. An increase in more creditworthy borrowers could allow them to increase lending without lowering standards. Banks are desperate for revenue growth since the same superlow rates helping borrowers are also squeezing their own profits. Story by AnnaMaria Andriotis for The Wall Street Journal.
Average Cost of Data Breach Hits $4 Million
The average cost of a data breach has now reached $4 million, up 30% from 2013, according to a recent study. The average was $3.79 million last year. Identification and response speed also make a difference in the cost of a breach. Breaches identified in fewer than 100 days cost $3.23 million, while breaches identified after 100 days cost $4.38 million. The average time to identify a breach was 201 days, and the average time to contain it was 70 days. The study also found companies with a business continuity management plan discovered breaches 52 days earlier and contained them 36 days faster. Story by John Oldshue for LowCards.com.
Costco, Citi Deluged by Complaints in Rocky Credit Card Rollout
Costco customers have flooded the retailer’s Facebook page with hundreds of complaints about a new credit card from Citigroup, saying they endured lengthy wait times and had trouble activating accounts. Costco, the world’s largest wholesale club, told customers that the bank is working to deal with a deluge of calls about the new Costco Anywhere Visa cards. The cards were available for use starting on Monday. Story by Jennifer Surane and Shannon Pettypiece for Bloomberg.
A Shocking Percentage of Millennials Don’t Own Credit Cards
It’s not all that surprising that some millennials don’t own credit cards, but the percentage of this demographic that falls into this category is rather stunning. New data from Bankrate reveals that young adults in the U.S. are concerned about holding credit, which in turn has led to low levels of card ownership. In fact, a mere 33% of adults ages 18 to 29 had a credit card in May 2016. This compared to 55% for those ages 30 to 49 and 68% for those older than 65. Story by Andrew Meola for Business Insider.
As International Travel Takes Off, Credit Card Issuers Ground Foreign Transaction Fees
As international travel from the U.S. reaches an all-time high, more credit card issuers than ever are nixing foreign transaction fees. As travel has boomed, we’ve also started to see foreign transaction fees disappear from credit cards. Issuers tack these fees–usually 1% to 3% of the amount charged–onto purchases made outside the U.S. In the past three years, each of the largest 12 credit-card-issuing banks has either introduced a new credit card with no foreign transaction fees or eliminated the fees on an existing card. If these trends continue, foreign transaction fees on credit cards may soon become a thing of the past. Story by Claire Tsosie for Forbes.
Chinese Allow Phone Tracking in Exchange for Credit
Talkative people pay back loans. The very talkative default. Also, don’t take out a loan at 4 a.m. Those are lessons from online lenders in China that are tracking people’s behavior via apps on their mobile phones and taking it into account when deciding what their credit ratings should be. Chinese consumers don’t mind handing over personal details that would spark outrage in the West in exchange for lower interest rates. WeLab, a Hong Kong-based online lender that makes loans in China, looks at what apps people have downloaded, where they go using the phone’s GPS tracker, their social networks and their school records. It offers discounted interest rates for each extra piece of personal information that helps profile customers for credit ratings. Story by Shai Oster and David Ramli for Bloomberg.
How American Express Is Getting Killed by MasterCard and Visa
Credit card giant American Express once reigned supreme over competitors like MasterCard and Visa in the eyes of Wall Street. But now the company is now struggling to win back investors and keep its customers spending. Beginning in late 2014, AmEx’s stock begin to take a divergent path from those of its peers, MasterCard and Visa. While the latter two steadily rose, Amex fell. Now AmEx is the third worst performing stock of the Dow Jones Industrial Average over the past 12 months, behind Apple and Goldman Sachs. Even the S&P 500 has beaten the stock in the same period, falling just 0.87% while AmEx slid 23%. Since the stock’s all time high in the second quarter of 2014, AmEx has shed $40.8 billion from its market cap. Story by Lucinda Shen for Fortune.
Mobile Banking’s Popularity Continues to Rise
Nearly two-thirds–62 percent–of respondents to a recent Bank of America survey say they prefer to use mobile or online banking the most over other banking methods, up from 51 percent in 2015. The third annual survey showed that consumers’ dependence on mobile to meet their banking needs is steadily increasing, particularly among the millennial generation (those aged 18-35). Fifty-four percent of respondents reported using a mobile banking app, including 75 percent of millennials surveyed. Of those, 35 percent said they access the app at least once a day, and 84 percent said they check at least once a week. The majority of users say they use their mobile banking app to check balances and statements (85 percent), transfer money (58 percent) and pay bills (52 percent). The survey also found that an overwhelming majority–nearly nine in 10–use mobile banking alerts and notifications to stay on top of things like fraud, deposits made to their account or low balances. Story in the ABA Banking Journal.
Lose Your Debit Card? You Can Just Print a New One
If you’ve ever lost your debit card, you know the hassle of getting it replaced: You have to call (or go to the bank if you need a temporary card), pay a small fee for replacing the card, and then wait as much as two weeks before your new card arrives. PNC Bank is trying to take the hassle and the wait out of that process by printing new chip cards instantly for new checking accounts or to replace lost, stolen or damaged cards. The “instant card issuance” printers are in about two-thirds of PNC branches currently, according to a prepared announcement issued by the bank, and will be in 85% of branches by the end of the year. Story by Constance Brinkley-Badget for Fox Business.
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 14.70 percent, identical to last week. Six months ago, the average was 14.62 percent. One year ago, the average was 14.62 percent.