LowCards.com Weekly Credit Card Update–May 25, 2018

LowCards.com Weekly Credit Card Update–May 25, 2018

May 25, 2018         Written By Bill Hardekopf

Sports Gambling’s Next Hurdle Is Credit Cards After Court Ruling
For U.S. states ready to legalize gambling, banks hold many of the cards. The Supreme Court ruled this week that states can allow betting on individual sporting events, but gamblers who want to place those wagers using a credit card face a major hurdle: The largest U.S. issuers, including JPMorgan Chase, Citigroup and American Express, don’t yet allow their cards to be used for sports gambling. The stakes are huge. Americans illegally bet an estimated $150 billion on sports games each year, a figure that’s enticing for credit-card issuers looking to gin up extra spending by their customers. Still, allowing cardholders to fund their gambling habit with a credit card could create problems for lenders, which are left on the hook if a borrower can’t repay. Story by Jennifer Surane for Bloomberg

Why Store-Branded Credit Card Delinquencies Hit 7-Year High
Delinquency rates on store-branded credit cards have reached a seven-year high, according to credit bureau Equifax, possibly signaling broader troubles for household debt down the road. The share of private-label credit cards with accounts at least 60 days delinquent is 4.65%, up from 4.08% in March 2017, Equifax said Wednesday. That’s the highest since early 2011. Equifax blames the trend in part on consumers who mistakenly believe they can avoid paying their credit card bills when retailers go out of business, declare bankruptcy or close local stores. Story by Paul Davidson for USA Today

Small Business Owners Carry Twice As Many Credit Cards As Consumers
Business owners are leveraging their personal credit in a major way, according to new data from Nav. While consumers carry an average of 2.32 credit cards, small business owners average at 4.78 cards. The average total limits on those cards among the two groups mirrors this as well, as average consumers hang in at about $18,401, and business owners at $35,291. What’s surprising about the data is that it pertains to personal cards – not business credit cards, which generally don’t show up on personal credit reports unless the cardholder defaults or misses payments. Another Nav survey found that 24% of small businesses owners used personal credit cards the last time their business needed funds. This not only confirms that finding funding for a business is difficult, but that some business owners could be over-leveraging their personal credit to fund their business. Story on Nav

American Credit Card Delinquencies Are Up
When it comes to debt, U.S. households are doing well these days, with stable amounts of debt and low delinquencies in general. But when it comes to credit cards, rising interest rates have started to pinch some households. The percentage of credit card debt that’s in delinquency has risen by about a percentage point from Q1 2017 to Q1 2018, to about 6%, according to numbers from the Federal Reserve. According to analysts from Capital Economics, credit card delinquency rates have stood out sharply against the rates on other forms of lending, which are either declining or flat. Story by Ethan Wolff-Mann for Yahoo Finance

To Lure Millennials, Apple, Ikea and Uber are Pushing Branded Credit Cards
From the lenders’ standpoint, millennials are a massive group of potential consumers, now surpassing baby boomers as the nation’s largest living generation, according to the Census Bureau. Young people are spending more than other generations on everyday purchases such as groceries and gas, as well as on experiences such as dining out. To lure those spenders, card issuers have upped the ante with better rewards and sign-up bonuses. And it’s working. Story by Jessica Dickler for CNBC

Credit Card Delinquencies at Smaller Banks Just Surged Past Financial Crisis Peaks
In the first quarter, the delinquency rate on credit card loan balances at the 4,788 small commercial banks in the United States spiked in to 5.9%. This exceeds the peak during the Financial Crisis. The credit card charge-off rate at these banks spiked to 8%. This is approaching the peak during the Financial Crisis. These large banks have been offering appealing incentives to consumers for years, and they’ve been going after consumers with the higher credit ratings, and they’ve been following good underwriting practices – having not yet forgotten the lesson from the last debacle – and this conservative approach is now helping to keep losses down. But the thousands of smaller banks couldn’t compete with those offers, and so they got deeply into subprime cloaked in sloppy underwriting. Story by Wolf Richter for Business Insider

Visa, Mastercard Push for One-Click Ordering. Retailers Say ‘Not So Fast’
A new fight is brewing between merchants and card companies. Representatives of large retailers including Walmart and Home Depot met with federal regulators this week to raise concerns about a new online payment initiative that Visa and Mastercard are preparing to roll out. Story by AnnaMaria Andriotis for The Wall Street Journal

Counterfeit Fraud Down 76% Since America’s Switch to Chip Cards
Counterfeit fraud continues to decline, thanks to America’s transition to chip payment cards. According to the latest research from Visa, the number of fraudulently copied credit cards used in stores dropped 76% from December 2015 to December 2017. Nearly three million merchant locations now accept chip cards in the United States, up from 392,000 in 2015. Now, 63% of merchants accept chip cards, and 97% of March transactions were paid using EMV cards. That’s a total of $70.7 billion, compared to $59.4 billion in September 2017. There are now 483.6 million chip cards in circulation, with slightly more debit cards (281.6 million) than credit cards (202 million). Story by Bill Hardekopf for LowCards.com

Sears Gets $425M Boost from Citi Credit Card Deal That Also Boosts Shopper Benefits
If you’re using the Sears credit card to “shop your way,” you may find the discounts and deals are about to get better. But the best deal of all will be for Sears’ parent company, which is about to get a much-needed injection of $425 million due to the upgraded credit-card deal with Citi. Sears Holdings, which has both the Sears and Kmart chains, announced Monday that it is extending and enhancing its deal with the bank for a Mastercard branded with the retailer’s Shop Your Way loyalty program. The changes include improved card benefits, such as additional points for certain purchases, including eligible items at Sears and Kmart stores. Story by Nathan Bomey for USA Today

Chase Bank Sues Landry’s for $20 Million over Data Breach
JP Morgan Chase Bank is suing Landry’s for $20 million in costs related to a 2015 credit card data breach affecting several of the Houston-based hospitality company’s restaurants and entertainment venues. Chase and its credit card payment processor Paymentech filed a breach-of-contract lawsuit Thursday in federal court in Houston, claiming Landry’s failed to comply with credit card data security standards and is refusing to reimburse the Ohio-based financial institutions for assessments imposed by Visa and MasterCard in the wake of the data breach. Hackers in 2014 and 2015 compromised point-of-sale systems at more than than 40 Landry’s properties, including Bubba Gump, McCormick & Schmick’s, Rainforest Cafe and Saltgrass restaurants. Story by Paul Takahashi for the Houston Chronicle

Will Big Banks Make Or Break Bitcoin?
For years, big banks played an important role in global capitalism. They have been the gatekeepers of national currencies flowing between central banks and the general public. And they have been collecting hefty fees for this role – fees that pay the salaries and bonuses of their employees and the dividends of their stockholders. In recent years, big banks have played another role — the gatekeepers of money flowing between national currencies and Bitcoin. That’s why big banks have the power to make or break Bitcoin. Which action will they take? The answer depends on whether or not big banks develop their own blockchain, and whether Bitcoin will be used as a substitute or as a supplement to national currencies. Story by Panos Mourdoukoutas for Forbes


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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