LowCards.com Weekly Credit Card Update–May 6, 2016
Consumers are Using Credit Cards More Often; 42% Carry a Balance
Spending on credit cards in the fourth quarter jumped 3 percent for consumers with good credit ratings, and jumped 6 percent for consumers with less-than-stellar credit ratings, according to a report released Tuesday by the American Bankers Association of Washington, D.C. Further, consumers opened 80 million new credit card accounts–an increase of 16 percent compared with the fourth quarter of 2015. The increases occurred among all three types of accounts–subprime accounts for poor credit, prime accounts for good credit and super-prime accounts for A-plus credit. The number of new subprime accounts soared by 26 percent, but still remain significantly below the number of subprime accounts before the financial crisis. Overall, however, the number of total open credit card accounts hit a post-recession high of 323 million, an increase of nearly 6 percent, after taking in account both newly opened and closed accounts. Story by Teresa Dixon Murray for The Plain Dealer.
The Future of Banking: No Shoes, No Shirt, No Tellers
A dramatic shift is underway in the banking industry. Banks are rethinking how they provide services to their everyday customers, which could result in the eventual demise of traditional branches and tellers, and find us banking from home, on the road or at the beach. Banks are closing branches, shrinking branch footprints, “digitizing” branches, and trying new branch formats to match changing customer behaviors. The bank branch model in the US, which peaked at roughly 95,000 branches, is down to 86,000 branches and falling. In Asia, online and mobile banking have leapfrogged the creation of brick-and-mortar branches in many countries. And in a number of European countries, more than half of the traditional bank branches have already disappeared. Even the long-held belief in the importance of branches to a bank’s brand is changing. Story by Deb Miller for CMS Wire.
Nearly All Data Breaches Happen in Minutes
Most data breaches happen fast–in a matter of minutes, according to a new Verizon report–but the impact on you and your credit report could make for a very long lasting financial headache. These thieves still find success with phishing emails. Per the report, 30% of phishing messages were opened. This compares to the previous year figure of only 23%. Meanwhile, 13% of those clicked to open the malicious attachment or nefarious link. Regardless of what method was used to compromise sensitive data, in 93% of cases, attackers were able to compromise systems in just a matter of minutes. Story by James LaDue for Credit.com.
Get Ready for Mobile Payments Via Wearables
Mobile payments is a concept that consumers–especially younger shoppers–are starting to embrace. In the typical use case, the customer takes out their smartphone at checkout, pulls up the mobile payment app, waves or taps the phone against the retailer’s payment terminal, and the charge is applied to the debit or credit card that the shopper has on file. Now, manufacturers and financial institutions want to simplify this process even further by allowing shoppers to pay with a smartwatch instead of a smartphone. But what does the introduction of wearable payments mean for retailers? Story by Jeanine Sterling for Samsung Insights.
MasterCard Grocery App Puts Ordering Right in the Kitchen
The Groceries by MasterCard shopping app, integrated in the Samsung Family Hub refrigerator, lets consumers buy food from online FreshDirect and Shop Right right in the kitchen. The app signifies MasterCard’s move into the smart home market and expands on its Commerce for Every Device strategy regarding development of internet-connected payment devices. The app provides insight on nutritional value, allergen information and freshness rating of products. Once the order is final the list is approved with a four-digit pin, providing control over household purchases. Story in Mobile Payments Today.
Blue Cross to Stop Accepting Credit Cards for Insurance Payments
In the face of losses in the Affordable Care Act marketplace, Blue Cross and Blue Shield of Illinois is looking for new ways to cut spending. Starting June 1, the Chicago-based health insurer will no longer accept credit cards as a form of payment for members who buy their own health insurance on or off the Illinois marketplace. The company began notifying customers of the change last month. Blue Cross will still accept other forms of payment, including debit cards. The new payment policy will not affect customers in the group or Medicare markets. In an email announcing the new payment policy, Blue Cross said, “Credit card fees are a significant expense that impact all members, not just those who use credit as a payment option.” Story by Ameet Sachdev for the Chicago Tribune.
Google Challenges Apple in India with Credit Card Alternative
With China’s technology wall getting higher, the two most valuable U.S. companies-Apple and Alphabet-are counting on speedier growth in the world’s second-most populated country. Apple said last week that iPhone sales in India surged 56 percent from a year earlier, even as those in Greater China dropped and global revenue fell for the first time in 13 years. Now Google, whose core business is blocked in China, has signed its first carrier billing deal in India, allowing smartphone users to buy apps, digital books and games and have the items charged to their phone bill. Android users who are customers of India’s Idea Cellular can purchase apps without a credit card or bank account. It’s a big deal for Google, because India’s smartphone population is expanding by 20 percent a year, while only about 2 percent of residents have payment cards, according to MasterCard. Story by Ari Levy for CNBC.
Americans Saving More But Still Carrying Costly Credit Card Debt
Americans are saving more from their paycheck, but a greater number of people are carrying costly credit card balances, according to a 2016 Financial Literacy Survey. The survey, which was conducted by Harris Poll online between March and April 2016, found 26% of Americans are saving every year, an increase from 24% the previous year. 69% of those individuals are contributing to a non-retirement savings account. While this is good news, many Americans are still at-risk financially due to credit card balances. 14% of the adults in the United States carry a balance of at least $2,500 in credit card debt each month, up from 11% last year. Since the average interest rate on a credit card is 14.76%, this is a costly practice. Story by Lynn Oldshue for LowCards.com.
DC Struggling To Pay Credit Card Bills After Record Spending On Blizzard Cleanup
Washington, D.C., is buried in debt after going nearly nine times over budget on snowfall removal and charging half of the payments on city credit cards. Despite allocating just $6.2 million for annual snow cleanup the District spent $55 million in the wake of January’s record setting blizzard. The city hired outside contractors from Boston to Florida and paid for nearly half of the expenses on credit cards to expedite the process. The spending prompted JP Morgan to cut off the city’s access to credit until payments were made. D.C. shattered the record for largest payments on city credit cards with 67 charges over $100,000 each. The city’s credit balance rose to 20 times it’s usual levels, according to The Washington Post. Story by Steve Birr for The Daily Caller.
Scammers Now Ask You to Pay Taxes with an iTunes Card
The federal government warned consumers in late April that scammers are singing a new tune when they’re pretending to be from the Internal Revenue Service or U.S. Treasury. Now, some are demanding that you pay your back taxes via an iTunes Gift Card. Yes, an iTunes card. The fraudsters sound like the real deal because they rattle off your Social Security number, or at least the last four digits, so it might appear like they know what they’re talking about here. Fraudsters can use an iTunes card to buy a product or they can re-sell those cards online. Scammers also have asked victims of the so-called Grandparents Scam to load money onto multiple iTunes gift cards. Story by Susan Tompor for the Detroit Free Press.
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 14.75 percent, slightly lower than last week’s average of 14.76 percent. Six months ago, the average was 14.58 percent. One year ago, the average was 14.48 percent.