LowCards.com Weekly Credit Card Update–October 11, 2019

LowCards.com Weekly Credit Card Update–October 11, 2019

October 11, 2019         Written By Bill Hardekopf

Average Retail Credit Card’s Interest Rate Surges to 26% Despite Fed Cuts
While the Federal Reserve recently cut interest rates again in a bid to boost U.S. economic activity by lowering borrowing costs, that easy money mindset is not being shared by issuers of retail credit cards. The average store card’s annual percentage rate, or APR, is now 26.01%, up 0.37 percentage points from a year ago and almost five whole percentage points higher than the average overall credit card APR of 21.1%, according to a report. Story by Kate Gibson for CBS News

Credit Card Delinquencies in U.S. on Rise for Smaller Issuers
The U.S. prime lending rate has fallen thanks to easier Fed monetary policy. But the spread between the prime rate and the average annualized rate on credit cards widened to a record at the end of August. Many issuers have been competing for new customers with richer rewards rather than lower rates. They may also be maintaining this record spread because risks are brewing, underscored by a pickup in delinquency rates at smaller issuers of cards. Fed data show a growing gap between delinquency rates for the 100 largest banks compared with all others. Delinquent accounts for the largest banks were at 2.44% in the second quarter, while other banks saw the rate spike to 6.34% from 5.73% the prior quarter. At 3.9 percentage points, the spread between the two measures is also at an all-time high. Story by Alexandre Tanzi for Bloomberg

Gift Cards: The Gift That Keeps Giving to Lawyers
Gift cards are consistently rated as one of the most sought after presents during the holiday season, and reports predict the global prepaid card market will reach $3.6 billion by 2022. As the popularity of gift cards continues to grow, so have new questions on policies and regulations surrounding them. In fact, prepaid and gift cards have increasingly become subject to scrutiny by federal and state regulators, and are currently regulated by various disclosure requirements at the federal and state level, including money transmitter licensing laws, abandoned property laws, and anti-money laundering laws. As a result, retailers are now often seeking legal counsel on what types of disclosures need to be made in connection with gift cards. Story by Mark S. Solomon and Vic Zanetti for Bloomberg Law

Mastercard Teams With Startup To Get Hourly Workers Paid Quicker
More than half of U.S. employees are hourly workers. Yet the 81.9 million of them are often ignored by the big banks and financial service providers. Many hourly workers enter the workforce unbanked thanks to costly fees and minimum deposit requirements. Some are forced to use check-cashing services or payday lenders that eat away at their earnings. Mastercard is trying to change that. It’s teaming up with fintech startup Branch to provide a free, digital checking account and debit card for hourly workers. Employees who use the debit card get instant advances against their paychecks for free. Story by Donna Fuscaldo for Forbes

Nearly Half of Americans Have Let Their Airline or Hotel Rewards Expire
According to a recent Bankrate Credit Cards survey, 46 percent of U.S. adults participating in airline and hotel rewards programs have, at some point, let their points or miles expire. Among those who collect credit card rewards, 29 percent allowed their rewards to expire intentionally. Of all generations, millennials are most likely to lose their rewards from expiration. Perhaps the number of individuals not participating in rewards redemption can be traced back to an overall lack of awareness concerning the worth of their loyalty program’s rewards. Fifty-three percent of U.S. adults admit they have no idea how much 10,000 points or miles are worth. Story by Claire Dickey for Bankrate

Sallie Mae is Expanding from Student Loans to Credit Cards
Sallie Mae, the student loan provider once sponsored by the government, is expanding into credit cards. The company this month unveiled a suite of three credit cards aimed at college students, recent graduates and young professionals. Its new cards offer rewards for responsible financial behavior. They come 18 months after the company introduced personal loans. The cards have no annual fees and 0% APR for six to 12 months, depending on which of the three you get. After that, the interest rate rises to between 15.24% and 25.24%, roughly in line with the average rate for new credit cards. Story by Rebekah Tuchscherer for USA Today

Facebook CEO Mark Zuckerberg Agrees to Testify Before Congress on Libra
Facebook chief executive Mark Zuckerberg has agreed to testify before Congress on the social media giant’s plans to launch the Libra cryptocurrency, following pressure from lawmakers. The House Financial Services Committee is expected to grill Zuckerberg with questions on Facebook’s impact on both financial services and housing sectors at the Oct. 23 hearing. Lawmakers have previously expressed concerns about Libra and its potential to mask fraud, abuse and money laundering. Facebook announced Libra in June, positioning the cryptocurrency as a tool that will empower the company’s billions of users, particularly those without access to a bank. Story by Marie C. Baca for The Washington Post

Robots to Cut 200,000 U.S. Bank Jobs in Next Decade
Technological efficiencies will result in the biggest reduction in headcount across the U.S. banking industry in its history, with an estimated 200,000 job cuts over the next decade, Wells Fargo said in a report. The $150 billion annually that the country’s finance firms are spending on tech, more than any other industry, will lead to lower costs, with employee compensation accounting for half of all bank expenses. Back office, bank branch, call center and corporate employees are being cut by about a fifth to a third, with jobs related to tech, sales, advising and consulting less affected, according to the study. Story by Alfred Liu for Bloomberg

There’s An Easy Way to Help Boost Your Credit Score But It Could End Up Hurting You
Credit limit increases are often touted as one way to help boost your credit score. Because a major part of your score is determined by how much of your credit limit you are using at any one time, the thinking is that by having a higher limit, your credit utilization rate will be lower. The problem is, a higher credit limit isn’t always a good thing. When a person’s credit limit increases, the amount of credit they use and the amount of credit card debt they carry typically increases in tandem. That means you’re potentially digging yourself deeper into debt and paying more in interest to the credit card company each month. Story by Alicia Adamcyzk for CNBC

Minor League Baseball Stadium To Offer Cashless Transactions
Standard Cognition has revealed that it will enable cashierless transactions at a minor league baseball stadium. A store with snacks, drinks, and souvenirs at Polar Park in Worcester, Massachusetts will enable customers to shop without scanning or stopping to check out. Instead, they can pay for their purchases via Standard Cognition’s mobile app, the Worcester Red Sox app, or in-store cash and credit card kiosks that automatically recognize their purchases. Story in PYMNTS

Robinhood Revives Checking with New Debit Card and 2% Interest
Zero-fee stock-trading app Robinhood is launching Cash Management, a new feature that earns users 2.05% APY interest on uninvested money in their account with the ability to spend it through a special Mastercard debit card. It will offer a network of 75,000 ATMs. Each user’s funds will be covered by the Federal Deposit Insurance Corporation up to $1.25 million. Robinhood earns money by taking a chunk of the interchange fees from transactions on its debit card run in partnership with Sutton Bank, and from a fee paid by the six banks cash gets swept into. Story by Josh Constine for Tech Crunch

A UK Bank is Testing Credit Cards Which Use Fingerprints to Verify Transactions
Major U.K. bank NatWest has started a three-month trial of a biometric credit card. The pilot, launched Monday, is in partnership with MasterCard and digital security firm Gemalto, and involves 150 customers. If a contactless transaction is greater than £30 ($36.66), the customer’s finger print can be used to verify the transaction. If the purchase exceeds £100 the card is inserted into a card terminal, with verification again coming from a fingerprint. At ATMs, cardholders will still need to enter a PIN. The card can also be used for buying goods online and works with current contactless and Chip and PIN devices. Story by Anmar Frangoul for CNBC


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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