LowCards.com Weekly Credit Card Update–November 22, 2016
Wells Fargo Reports 44% Decline in New Accounts after Scandal
Wells Fargo recently released its customer activity data from October 2016, which monitors trends including spending, new accounts and closed accounts. The report indicated a 27% decline in new account openings from September to October of this year, and a dramatic 44% decrease compared to year ago levels. This was largely due to the fake account scandal that came to light last month. Applications for consumer credit cards were also down, 35% from September to October and 50% versus a year ago. Branch banker interactions were down 11% for the month and 22% for the year, but Wells Fargo contributes that to an increase in mobile banking activity. Story by Bill Hardekopf for LowCards.com.
Samsung Pay Adds Rewards, Offering Points for Every Transaction
Samsung is giving customers a new incentive to use Samsung Pay, its mobile payments product. The company released Samsung Rewards today, which is a program that provides points whenever a user uses their Samsung Pay for a transaction. The points gathered through the program can then be exchanged for rewards including gift cards, Samsung products, and more from various U.S. retailers. The new program tiers reward levels based on thresholds of transactions, giving users “Silver” status for five payments in a month, which earns double the points. 20 transactions results in a “Gold” status, which delivers triple points, and 30 monthly Pay uses puts a user in the “Platinum” rewards group, where each purchase is worth four times the usual amount in points earned. The rewards program also comes with a built-in chance to win instant prizes, which are updated monthly. All of this is clearly about incentivizing use. Story by Darrell Etherington for Tech Crunch.
NetSpend Cards Promised Instant Cash, Didn’t Deliver, FTC Says
The ads for NetSpend, one of the country’s largest providers of prepaid debit cards, promised “immediate access to your funds.” But that’s not always the case, the FTC charges. In its deceptive marketing lawsuit, the FTC alleges NetSpend denied or delayed activation of cards for thousands of reloadable card customers. This prevented them from accessing money they’d put on the cards or was directly deposited from their paychecks or government benefits. The FTC is asking the court to order NetSpend to return all the money it owes customers and guarantee that in the future it will provide cardholders with timely access to their funds. Story by Herb Weisbaum for NBC News.
CanPay Provides First Debit Card Payment App for Marijuana Retailers
Cannabis legalization is spreading across the country. Many states already allow recreational or medical marijuana purchases, and eight new states voted to do the same on November 8. A significant issue the cannabis industry has faced is the ability to accept debit and credit cards. Mastercard and Visa do not want to work with marijuana retailers until sales become legal on a federal level, so most distributors can only accept cash at their facilities. A new program called CanPay hopes to change this situation. This is the “world’s first debit payment app for cannabis.” It is similar to a mobile wallet, where users download an app, upload their debit card information, and then use the app to pay at the register. There are no fees associated with the transaction, unlike an ATM where users may pay $3-$5 per withdrawal to get cash for their purchases. Story by John Oldshue for LowCards.com.
In the US, Bankcard Use to Continue Steady Ascent Through 2020
Credit, debit, and prepaid cards issued in the United States initiated 104.41 billion purchase transactions in 2015, up 8 percent from the previous year, according to The Nilson Report. Spending for goods and services on these cards totaled $5.805 trillion, up 7.4 percent over 2014. By 2020, purchase volume is projected to reach $8.226 trillion. At the end of 2015, there were 6.26 billion credit, debit, and prepaid cards in circulation in the U.S. The number of cards in circulation is projected to reach 7.3 billion by 2020. In 2015, credit cards accounted for 53.47 percent of all spending and debit cards for 46.53 percent. Visa debit cards had the largest market share with 23.66 percent of spending volume. Visa credit cards were second with a 23.15 percent share, followed by American Express credit cards (12.36 percent), MasterCard credit cards (11.24 percent), and MasterCard debit cards (9.99 percent). Story in ATM Marketplace.
Supreme Court Drops Appeal by Credit Card Companies and Banks
The Supreme Court said it would no longer consider an appeal by Visa, MasterCard and several banks that sought to challenge lawsuits alleging they conspired to set anticompetitive ATM fees. In a brief written order, the court said it was removing the case from its docket because the companies were now focusing on issues in their main case briefs that weren’t part of their earlier petition that persuaded the court to take the case. The ATM litigation focused on rules for access fees that prevent independent ATM operators from setting lower charges for banking transactions processed on networks other than Visa and MasterCard. The plaintiffs in the case were consumers and operators of independent ATMs, such as those found in bars and convenience stories. They claimed banks including Bank of America, J.P. Morgan Chase and Wells Fargo agreed to the fee rules when Visa and MasterCard were owned as joint ventures by the banks. Even after the bank card associations went public in 2008 and 2006, the substance of the ATM rules remained the same, challengers alleged. A Washington, D.C., appeals court revived the lawsuits last year after a trial judge previously ruled the allegations weren’t strong enough to proceed. By dropping its review of the case, the Supreme Court let that appeals court ruling stand. Story by Brent Kendall for The Wall Street Journal.
Americans Typically Open 500,000 Credit Cards on Black Friday
The day after Thanksgiving, Black Friday, is typically portrayed as a chaotic mess of American consumerism. Based on data from Torsten Sløk, the chief international economist at Deutsche Bank, it is also a huge opportunity for credit card companies. According to Sløk, Americans have opened roughly 500,000 in-store credit cards over the past three years. This is more than triple the average rate of just 150,000 cards for the other days of November, according to Sløk. Additionally, these are just retail store-issued cards and do not include any bank-issued cards. The expanding number of credit cards is also running up the totals on American’s balance sheets. According to Sløk the average store credit card balance for a household in the US is $332. Story by Bob Bryan for Business Insider.
Apple Pay Will Change the Way Your Brain Thinks About Buying Things
Impulse buying online just got even easier. With Apple’s new MacBook Pro launched last month, all you have to do is tap your finger to the Touch ID scanner located on the Touch Bar to buy-no more searching through your wallet for the right card, no more typing in three-digit security codes and expiration dates. On the front end, the new method is faster and probably more secure than using stored credit card info online. On the back end, it gives merchants and banks a new framework to process your purchases. And if past research is any indication, Apple Pay, Samsung Pay, Venmo, and countless other reduced-friction digital payment technologies are probably going to change the way your brain processes purchases, too. Story by Andrew P. Han for Wired.
New Credit Card Accounts Rise to Near Pre-Recession Levels
The number of new credit cards Americans are opening hasn’t quite recovered to pre-recession levels. But after five years of climbing, it’s getting close. In its quarterly report on credit card market data, the American Bankers Association says new card accounts numbered 85 million in 2016’s second quarter, which is up 11 percent over the previous year. The latest reading also approaches ever closer to the recession-era high of 92 million, seen in 2008’s second quarter. Defined as cards opened within the last two years, new accounts bottomed out in 2011, after the financial crisis led card issuers to tighten credit offers. Since then, the number of new accounts has climbed every year, to the point that it has now almost doubled. Story by Sabrina Karl for Bankrate.
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, a slight increase from the 14.65 percent average last week. Six months ago, the average was 14.72 percent. One year ago, the average was 14.64 percent.