LowCards.com Weekly Credit Card Update–November 4, 2016
Subprime Credit Card Surge Pushing Up Missed Payments
Credit card lending to subprime borrowers is starting to backfire. Missed payments on credit cards that lenders issued recently are higher than on older cards, according to new data from credit bureau TransUnion. Nearly 3% of outstanding balances on credit cards issued in 2015 were at least 90 days behind on payments six months after they were originated. That compares with 2.2% for cards that were given out in 2014 and 1.5% for cards in 2013. The poorer performance on newer cards pushed up the 90-day or more delinquency rate for all credit cards to 1.53% on average nationwide in the third quarter. That’s the highest level since 2012. The recent increase in subprime lending is one of the big contributors. Lenders ramped up subprime card lending in 2014 and have been doling out more of these cards recently. They issued just over 20 million credit cards to subprime borrowers in 2015, up some 20% from 2014 and up 56% from 2013. Story by AnnaMaria Andriotis for The Wall Street Journal.
Credit Card Usage on Rise, Mobile Shopping Plays Role
Consumers continue to reach for the familiarity and convenience of credit cards. In fact, U.S. credit card accounts and usage are nearing prerecession numbers once again. Habit and ease of use likely aren’t the only factors playing a role in this increase. A jump in consumers shopping on their phones is one potential driver of credit card usage. Data from the 2017 Mobile 500 report shows mobile commerce is expected to grow 53 percent this year. Additionally, SmartInsights’ latest ecommerce growth statistics predict online sales via smartphone to surpass desktop sales by 2017. The more consumers are given easy access to shopping (ecommerce, apps, etc.), the easier it is to spend money, and today, the credit card is one mechanism making this possible in a way that’s convenient and trusted. Story by Jennifer Davis for TMG.
7 in 10 Rejected for a Credit Card Hold a Grudge
Rejection hurts, and a rejection on a credit card application is no different. According to a new survey, most Americans (70%) say they would turn their back on a bank that rejected their credit card application and would not apply for another credit product from that bank. This survey asked more than 2,000 American adults how they would feel if they had a credit card application rejected, and what actions they would take as a result. It found that there are common misconceptions about why applications are rejected and that rejection can elicit emotions ranging from sadness to anger, confusion to offense. Responses also indicated a strong desire to put in the work to get approved next time. Story by Erin El Issa for USA Today.
Debit Cards are Growing Faster than Credit Cards
The amount of debit cards is growing at a faster rate than that of credit cards, according to a new study. Debit cards now represent 70% of payment cards globally, a 2% increase from 2014, and that’s expected to hit 72% by 2021. Debit card growth will drive up the total amount of payment cards worldwide even as credit cards decline. Emerging markets will lead the debit card charge. There are 2 billion people who are unbanked, according to the World Bank, indicating that a massive portion of the global population lacks access to banking services. As a result, financial institutions are already starting to move into regions with large un- or underbanked population in an attempt to capitalize those markets. One such method for doing this is building up payment card infrastructure and issuing debit- or debit-like products to consumers in order to connect them to mainstream financial institutions, like prepaid cards that are offered by both Visa and Mastercard. Story in Business Insider.
Here’s an Alternative to Your Credit or Debit Card for Online Shopping
It’s really hard to maintain your privacy when spending money online. As we’ve previously reported, the government insists on attaching money to identity in order to protect Americans from terrorism. Anonyme Labs announced a new product yesterday, SudoPay for iOS, that could help keep your debit card or credit card number private as you buy things on the web or on mobile. Now that people have become ever so slightly more careful, the app lets users buy digital debit cards that they can load with money in order to make online purchases. That way, consumers won’t expose their real credit card number to merchants. The virtual cards get funded using Apple Pay. Further, users can even create fake names, addresses and phone numbers to associate with the card, for when vendors request the billing address. Story by Brady Dale for Observer.
One-Third of All Credit Card Fraud Loss Occurs in U.S.
The United States accounts for more than one third of credit card fraud loss around the world. The worldwide losses for 2015 reached $21.84 billion, with the U.S. losing $8.45 billion (38.7%). Card issuers took the biggest hit from fraud losses, paying out $15.72 billion. Merchants and card acquirers lost $6.12 billion. Most of the fraud came from counterfeit cards used at ATMs and payment terminals. Global fraud loss increased by 20.6% compared to the previous year. America’s conversion to chip cards has helped reduce the country’s fraud risk. Only 2% of card fraud in 2015 came from chipped cards. Story by Bill Hardekopf for LowCards.com.
Wal-Mart to Offer Chase Pay Service
Wal-Mart is enlisting J.P. Morgan Chase as a new ally in its longstanding effort to reduce electronic-payment costs. Starting next year, the retailer will offer the bank’s Chase Pay service as a way for shoppers to pay for things on Walmart.com and in the Walmart app, including the Walmart Pay mobile service in stores. The move is the latest iteration of a long-simmering strategy by Wal-Mart to find ways to minimize fees it pays to take debit and credit card payments. Chase has said that merchants who use its suite of payments services could pay lower fees to process many card transactions than they would otherwise. Story by Sarah Nassauer and Telis Demos for The Wall Street Journal.
MasterCard Pushes Ahead into Blockchain Tech
MasterCard is diving deeper into distributed-ledger technology, adding three blockchain-based APIs to MasterCard Developers, its platform for app programmers. Focused on core blockchain, smart contracts, and faster payments, the APIs will be available to developers from banks and retailers, as well as other clients, and the firm will encourage them to test them for a variety of offerings, including P2P and B2B payments. For context, MasterCard has been historically cautious about its blockchain-based initiatives, so this marks some departure. The move comes as interest in blockchain begins to deepen. Ninety percent of banking professionals have said their company is currently exploring the use of blockchain, best known for powering cryptocurrencies like bitcoin, according to new data from Accenture. That’s indicative of massive interest, likely because the technology can increase efficiency and reduce cost. Santander estimates that blockchain technology could cut industry costs by up to $20 billion annually
through 2022. Story by Business Insider.
Visa’s Manitoba Customers Offered Grocery Credit as Wal-Mart Feud Escalates
Visa Canada is offering its Manitoba cardholders a reward if they buy their groceries somewhere other than Wal-Mart. The credit card giant has launched an advertising campaign in which it offers a $10 credit to Manitoba cardholders who spend $50 or more at grocery stores in the province. Visa is in the midst of a fee dispute with Wal-Mart, which stopped accepting the card at its 16 Manitoba stores on Oct. 24. The retail giant vowed in June to stop accepting Visa at all of its more than 400 Canadian outlets if Visa doesn’t lower its credit card fee, which it charges to all of its retail customers. A month later, Wal-Mart started banning Visa cards at its stores in Thunder Bay. Story in The Globe and Mail.
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 14.60 percent, identical to last week. Six months ago, the average was 14.75 percent. One year ago, the average was 14.58 percent.