LowCards.com Weekly Credit Card Update–May 19, 2017
Delinquency Rates Rise For Student Loans, Credit Cards, and Auto Loans
A new report on debt and credit shows that in the first quarter of 2017, household debt just surpassed the previous peak of $12.7 trillion, seen during the Great Recession. Rising debt levels may become a problem. From the first quarter of 2009 to mid-2013, consumers paid down debt. Since mid-2013, households have taken on more debt. The composition of household debt has changed since the recession. During the housing bubble, mortgage debt made up the largest share of household debt. In 2006 and 2007, mortgage debt was over 73 percent of household debt. Today, mortgages make up 67 percent of household debt. As the share of mortgage debt has declined, the shares of auto loans and student loans have been rising. This quarter saw a notable uptick in credit card debt transitioning into delinquencies and in auto loans transitioning into serious delinquencies, while student loan transitions into serious delinquencies remained high. At the end of 2016, the 30-day delinquency rate on credit cards was 5.1 percent. In the first quarter of this year, the delinquency rate rose to 5.9 percent. The severely delinquent rate (90+ days) on credit cards increased from 3.5 percent to 4.1 percent. Story by Theodore Cangero for AIER.
Credit Card Limits Rise at the Top, Fall at the Bottom
The number of people with bank credit cards has passed pre-recession levels to reach a new high – 171.4 million – but only the consumers with the highest credit scores have seen a significant increase in the average amount of credit available to them. Since 2010, credit limits for “super prime” consumers increased by an average of $4,195, to $33,371, according to a report by TransUnion, one of the three major credit reporting bureaus, or companies that gather information used to calculate credit scores. For “subprime” consumers at the other end of the spectrum, credit lines decreased by an average of $1,069. Story by Melissa Lambarena for Nerd Wallet.
Nearly Half of Americans Don’t Pay Their Credit Card Bill in Full
Are you a “revolver” or a “transactor”? If you have an active credit card account, you fall into one of those categories. Based on recent data from the American Banker’s Association (ABA), you are far more likely to be a revolver (carrying a balance from month to month) than a transactor (paying off their complete balance each month), and that is good news for the credit card industry. According to the ABA’s Credit Card Market Monitor for the fourth quarter of 2016, revolvers hold 43.7% of all credit card accounts while transactors hold only 29.1%. The remaining 27.2% of accounts have no activity and are considered dormant. That means almost half of all credit card accounts – and 60% of active accounts – carry a balance. Story for KSDK.
Crime Confessions: How I Stole Your Credit Card
Roughly one in three Americans had their credit card information stolen in the past five years. If identity thieves get your card, they can ring up a huge shopping bill and it can take months to undo the damage. Kevin Hawke, a former identity thief, told us how he operated. After serving prison time he wants to give back to the community by sharing his secrets so you can avoid becoming a victim of credit card fraud. Story by Kyle Iboshi for KGW.
China Opens Market Access to U.S. Credit Card Networks
Markets reacted coolly to what could be great news for card networks Visa and Mastercard given the U.S.-China access agreement announced late last week. While China opening market access to these firms and others could be a significant victory for the companies, investors have seen this play out before only to find many restrictions for the U.S. card networks to expand there. Analysts caution China might not necessarily adhere to this provision—the agreement doesn’t explain what would happen if China doesn’t create an even playing field for the networks—and said in the best-case scenario, it would still take a long time for Visa and Mastercard to gain significant market share there. Among the obstacles: working through Chinese government red tape and gaining more bank and merchant acceptance. Story by AnnaMaria Andriotis for Dow Jones Newswires.
Why Credit and Debit Card Fraud Alerts Have Spiked
Have you received a credit or debit card fraud alert recently? You’re not alone. Some 44% of U.S. adults have received a fraud alert in their lives for their credit or debit card, according to a new survey. That’s up from 38% who said in 2015 they had ever received a fraud alert. The fact that alerts have increased could be seen as a good thing. Banks and credit card companies have increasingly caught unusual behavior, and let customers know about it. But fraud alerts can also be an annoyance when they are sent by mistake. Some 37% of people surveyed said they were contacted about potentially fraudulent transactions, but all of their transactions were legitimate purchases. And worse, some scammers have taken advantage of the rise in fraud alerts. They have now begun posing as consumers’ banks and credit-card companies, even finding ways to call and text them with a caller ID that appears to legitimately be from those banks. It’s a tactic called “social engineering.” Story by Maria LaMagna for MarketWatch.
62% of Millennials Use Person-To-Person Payment Technology
The person-to-person (P2P) payment industry has seen tremendous growth over the last few years, particularly with young adults. Bank of America’s Trends in Consumer Mobility Report shows 36% of Americans use P2P technology, with 62% of Millennials sharing money digitally. For people who have not yet used P2P services, nearly half of Millennials, Gen Xers and Baby Boomers say they plan to in the coming months (47%, 48% and 49%, respectively). One in four seniors, the generation older than Baby Boomers, say they will use P2P payments in 2017. The majority of survey participants (68%) said they used P2P because it was convenient and faster than other money transfer options. Story by Bill Hardekopf for LowCards.com.
Google Is Turning Your Account Into a Mobile Wallet
Google is debuting a new way for consumers to use their Google credentials to pay for items in Android app, on the mobile web, or on a desktop website. The search giant has unveiled a new payments tool that lets developers of mobile apps and sites allow people paying for items to use a stored credit card in their Google Accounts. The new technology lets those hundreds of million of users who have stored a credit card with their Gmail, YouTube, or Google Play account be able to quickly purchase items within Android apps or on a mobile website. Users will see a “Pay with Google” button on apps where the new payments tool has been integrated and will be able to choose a credit card to pay with by logging in with their Google account email and password. It’s similar in some ways to Android Pay, a mobile wallet Google debuted that lets shoppers upload their credit and debit card information to the mobile app to pay for items in stores. The new API will work for Android Pay users as well, but the payments tool cannot be used for iPhone apps or for the desktop web. Story by Leena Rao for Fortune.
Chip Cards May Be Getting Faster Thanks to Mastercard’s M/Chip Fast Technology
Sure, they might be more secure, but in terms of quickness, chip cards seem to still have a ways to go. After all, swiping never seemed to take as long when inserting your credit card. Mastercard is hoping to ameliorate some of these frustrations, as it partners with “payments industry leaders to enhance and expedite the consumer checkout experience by leveraging the company’s M/Chip Fast technology.” And who are these leaders? First is Verifone, who will be incorporating M/Chip Fast into its products in the U.S. The M/Chip Fast technology is said to prioritize the parts of a transaction most important to security, thereby expediting the checkout process. And now that Verifone is adopting this methodology, the hope is that retailers across the country will soon see quicker checkout times. Global Payments will also make Mastercard’s technology available to merchants including fast food chains, grocery stores, transit vendors, and more, all of which value speed as a crucial component of the positive customer experience. Story by Lulu Chang for Digital Trends.
Credit Cards Gain Ground on Debit, Prepaid
The US purchase volume of credit, debit and prepaid cards increased 7% in 2016 compared to the previous year, according to The Nilson Report. That purchase volume hit $5.648 trillion, with the volume from American Express, Discover, Mastercard, and Visa credit cards increasing 8% year-on-year to reach a combined $3.059 trillion – the first time that figure has topped $3 trillion. The report shows a healthy and growing market for credit cards. By comparison, purchase volume for debit and prepaid cards increased only 5.8%, to $2.589 trillion. Credit cards also increased their market share in 2016, to 53.64%. That’s the fifth year in a row in which credit cards gained market share. American Express remained the largest issuer based on combined credit card purchase volume. Wells Fargo overtook Bank of America as the largest issuer based on debit and prepaid purchase volume. Story in Banking Technology.
LendUp Launches a Better Credit Card for People Looking to Improve Their Credit
LendUp has spent the last several years helping people who couldn’t get a loan build their credit and improve their financial well-being. Now the company is looking to empower those with little or no credit by giving them access to a credit card with low fees, financial education built in and incentives to spend less and pay off their balance. LendUp got its start providing an alternative to payday loans designed to be consumer-friendly and better for borrowers. With lower interest rates, an improved approval process and incentives designed to improve one’s credit and enable them to borrow more over time. The company was founded on a mission of financial empowerment, and the introduction of its credit card product provides one more tool its users can take advantage of. Designed for users with no credit or bad credit, the card features low fees, requires no security deposit and reports to all three major credit bureaus. Story by Ryan Lawler for Tech Crunch.
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 15.25 percent, slightly lower than last week’s average of 15.26 percent. Six months ago, the average was 14.65 percent. One year ago, the average was 14.72 percent.