LowCards.com Weekly Credit Card Update–May 18, 2018

May 18, 2018, Written By Bill Hardekopf
LowCards.com Weekly Credit Card Update–May 18, 2018

Why the Credit Card Boom May Have Just Peaked
Following some of their strongest years ever, credit card issuers are grappling with an uneasy future. Rising loan losses and increased rewards expenses are putting pressure on card lenders’ returns. The result is that one of the most profitable consumer-lending categories in recent years may become more of a middling player. While cards remain highly lucrative for banks, the benefits of a rising interest-rate environment have been muted lately. The added revenue of cardholders paying more in interest payments each month has also been offset by growing competition from lenders trying to poach card customers by offering lower rates. Story by AnnaMaria Andriotis for The Wall Street Journal

Why Credit Card ‘Side Perks’ Are Disappearing
Rewards like points, cash back and miles typically get applicants through the door for major credit card issuers. But side perks, such as price protection and purchase protection, have long been standard features on some of the best rewards credit cards. That’s beginning to change. Discover recently eliminated extended product warranty, purchase protection, return guarantee, auto rental coverage and flight accident insurance from its credit cards, citing “prolonged low usage” of these features. Citi plans to change its Price Rewind program on July 29, 2018, so that cardholders will enjoy price protection of only $200 per item (currently $500) and a maximum benefit of $1,000 per calendar year (currently $2,500). And Chase has noted that as of June 1, the United MileagePlus Explorer Card will lose both price and return protection, and that its trip cancellation coverage will be lowered to up to $1,500 per trip (currently up to $10,000 per trip). Story by Chanelle Bessette for Nerd Wallet

Are Apple, Amazon and Facebook the Future of Banking?
Watch out, big banks. Silicon Valley is targeting finance as the next industry ripe for disruption. In the not-too-distant-future, Amazon could let customers zap each other cash with Alexa, and then deposit the money in an Amazon-branded checking account. Apple is reportedly on the verge of launching a joint credit card with Goldman Sachs that would carry the Apple Pay brand. And Facebook just formed a team to explore the power of blockchain that could include creating its own cryptocurrency for payments. Big Tech’s experiment with finance is aimed at deepening relationships with customers—especially younger ones—making it less likely they’ll go through the hassle of taking their business elsewhere. Story by Matt Egan for CNN

Cost Of Credit Card Debt Continues To Soar
Rising interest rates are providing welcome relief to savers. Earning at least a 2% APY on your savings from an FDIC insured bank account is now much easier. However, rising rates will make borrowing more expensive for people in debt. Credit card debt is set to become particularly expensive. According to a recent report , the average annual percentage rate (APR) on credit card debt reached 15.32% in March, an 18-year high. Most credit card contracts have variable interest rates and are tied to the prime rate. More worrying is that the spread (the difference between the prime rate and the average APR) has increased to 10.5%, compared to a 6% spread in 2000. As the prime rate continues to increase, we can expect credit card interest rates to reach historic highs. Story by Nick Clements for Forbes

Don’t Fall for This Expensive and Common Misconception about Credit Cards
International travelers, take note: You may be paying more while traveling abroad. Many credit cardholders don’t understand their card’s foreign transaction fees. In fact, they make a few common mistakes. More than half (52%) of people don’t even know if their credit card charges a foreign transaction fee. And some 86% of people don’t realize foreign transaction fees can apply both abroad and while the cardholder is in the U.S., making purchases from international merchants. Foreign transaction fees are often listed separately on your credit card statement, and they’re typically about 3%. Story by Maria LaMagna for MarketWatch

Ikea Launches a New Credit Card
Sure, credit cards that reward dining and hotels are great – if you’re a person who travels or eats out a lot. But for the many people who spend more time at home, Ikea is betting you want rewards, too. The furniture and housewares store is launching a new Ikea Visa card that offers store rewards and perks. The card offers 5% back on every Ikea purchase, including its Task Rabbit construction and installation service; 3% back on all dining, grocery and utilities purchases (including cell phone, electric, and radio and streaming subscriptions like Hulu, Netflix, Spotify and Sirius/XM); and 1% back on all other purchases. Rewards are put toward purchasing Ikea products. Story by Anna Bahney for CNN

Huge New Facebook Data Leak Exposed Intimate Details of 3 Million Users
Data from millions of Facebook users who used a popular personality app, including their answers to intimate questionnaires, was left exposed online for anyone to access. Academics at the University of Cambridge distributed the data from the personality quiz app myPersonality to hundreds of researchers via a website with insufficient security provisions, which led to it being left vulnerable to access for four years. Gaining access illicitly was relatively easy. The data was highly sensitive, revealing personal details of Facebook users, such as the results of psychological tests. It was meant to be stored and shared anonymously. Story by  Phee Waterfield and Timothy Revell for New Scientist

Ex-Citi, Comcast Execs Raise $100M for Ollo MasterCards
Fair Square Financial, the company that markets the Ollo credit card, says it has raised $100 million more from Orogen Group, the New York investment firm headed by former Citigroup CEO Vikram Pandit; Atairos Group, headed by former Comcast chief financial officer Michael Angelakis; and others. Pandit said Ollo’s “superior underwriting” and its “latest data and machine learning technology” give it an edge in lending to middle-class Americans, in competition with the handful of big banks that dominate MasterCard and Visa, the main U.S. credit card networks. Ollo’s Rewards MasterCard charges borrowers almost 25 percent a year, and gives them back 2 percent of purchases as a premium. Story by Joseph N. DiStephano for The Inquirer

Wells Fargo Lets Customers Pay From Home Screen of Mobile Banking App
Wells Fargo has introduced Pay with Wells Fargo to the bank’s mobile app. The feature allows customers to select their most commonly used payment features—including Zelle, mobile wallets, Card-Free ATM Access Code, and transfers—from the home page of the app without having to sign in. Pay with Wells Fargo is the first phase of a longer-term reinvention of FI’s mobile banking experience, aimed at meeting customers’ financial needs in a simple, user-friendly mobile experience. In a future enhancement, Wells Fargo plans to launch a mobile banking feature that allows customers to donate money to their favorite charities and nonprofits directly from the mobile app. Pay with Wells Fargo will be piloted with Wells Fargo team members next month and with customers later this year. Story in ATM Marketplace

Mastercard and US Bank to Pilot Connected Car Payments
Mastercard unveiled a new service to automatically integrate fuel and maintenance data from a connected car’s dashboard into the payment process. The service will streamline the process, providing fleet managers greater transparency and control. U.S. Bank will be the first to pilot these new features, giving fleet managers the flexibility, visibility and control to manage day-to-day expenses. With the new Mastercard service, fleet vehicles that roll into a gas station will automatically register vehicle data including location, odometer and fuel gauge readings when they arrive at the pump. Drivers will be able to refuel at the pump without having to manually enter their data. Story in FinExtra



The information contained within this article was accurate as of May 18, 2018. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.


About Bill Hardekopf

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.
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