LowCards.com Weekly Credit Card Update–October 21, 2016
AmEx Takes Aim at Visa and Mastercard in Battle for Mom-and-Pops
With rivals such as Chase and its Sapphire Reserve card angling for a piece of its luxurious patch, American Express has found itself on the defensive. Now, the granddaddy of charge cards is fighting back. The first order of business has been persuading more of America’s 27.9 million small businesses to accept it as payment, eventually achieving parity with Visa and Mastercard, a goal the company says it will reach by 2019. Many of those mom-and-pop businesses-florists, drycleaners, liquor stores-have been reluctant to pay for the privilege of having that sticker on the front door saying “American Express Cards Welcome.” But in the past two years, AmEx has worked to add 1.6 million of them to its network, a strategy it says is now bearing fruit: Almost 75 percent of AmEx cardholders say they have used their card at a small business. Story by Jennifer Surane for Bloomberg.
Keep Swiping: Credit Cards Still Growing in Popularity
The plain old credit card may be winning the payments war, at least for now, a new survey finds. Credit cards were the only form of consumer payments used to pay in person becoming more commonly used, versus cash, debit cards, and-surprisingly-mobile phones. The percentage of people using cards weekly jumped from 50% in a survey last year to 53% this year. That contrasts to a flat 19% usage rate for mobile devices, and slight drop from 59% to 58% for debit cards. Cash was the big loser, dropping from 67% to 60%. The consultants say the trend reflects the stickiness of the credit card and the lack of enticing new features for contactless payments, using taps or scannable codes, with smartphone apps such as Apple Pay or Android Pay. Story by Telis Demos for The Wall Street Journal.
Hacked Republican Website Skimmed Donor Credit Cards for 6 Months
A website used to fund the campaigns of Republican senators was infected with malware that for more than six months collected donors’ personal information, including full names, addresses, and credit card data. The storefront for the National Republican Senatorial Committee was one of about 5,900 e-commerce platforms recently found to be compromised by malicious skimming software, according to researcher and developer Willem de Groot. He said the NSRC site was infected from March 16 to October 5 by malware that sent donors’ credit card data to attacker-controlled domains. Story by Dan Goodin for Ars Technica.
Banks are Giving Away Credit Cards Like it’s 2008
Bank of America Merrill Lynch just reported strong third-quarter earnings, and buried in the earnings release was this factoid: New US consumer credit card issuance hit the highest level since 2008. The bank issued 1.3 million credit cards during the three-month period, with total credit card loans for the period averaging $88.2 billion in the US and a further $9.7 billion outside the US. There was a similar story at Citigroup, where credit card loans hit $147.8 billion, up 13% from a year ago. And at JPMorgan, a whopping 2.7 million new accounts were opened during the third quarter, sending JPMorgan’s credit card balance to $133.4 billion, up 5% from a year ago. The increase has been driven by those with lower credit scores, though these people were getting historically lower credit limits. Story by Matt Turner for Business Insider.
Store-Branded Credit Cards Charge All-Time High Interest Rates
At some point, many consumers have likely been tempted to sign up for a store credit card at their favorite retailer. But before you open that Best Buy or Zales credit card, first read the fine print: Many store-branded credit cards are charging record-high interest rates. A report released Thursday finds that store cards charge an average of 23.84% interest, exceeding the national average credit card interest rate of 15.22%. Big Lots led the list of major retailers named in the report, with interest rates at a whopping 29.99%, followed by Zales (29.24%) and Staples (28.24%). What’s more, the incentives that stores offer to get customers to sign up might not be as generous as they appear: While half of cards offered by 100 top retailers give new cardholders a sign-up bonuses, just 13 come in at more than $25 for a $200 purchase. Story by Kerry Close for Money.
Credit Card Rewards War Crimps Bank Profits
A rewards war that’s helped U.S. credit card customers amass points for perks or cash proved costly in the latest quarter for some of the nation’s biggest banks. That may signal fresh pain at American Express. Issuers have sweetened rewards, cut fees and sought to improve services to lure customers, making it tougher to grow profits. In the past week, three of the biggest lenders–Citigroup, JPMorgan Chase and Bank of America—said combined income from card operations dropped 15 percent to $3.1 billion in the third quarter from a year earlier. At the same time, expenses in their consumer-bank units rose 1 percent to $15.3 billion. AmEx, the largest U.S. credit card issuer by purchases, is set to report third-quarter results after the close of New York trading Wednesday. Story by Jennifer Surane for Bloomberg.
Number of Unbanked Households Still Falling
The number of unbanked households fell to 7% in 2015, down from 7.7% in 2013 and 8.2% in 2011. According to a survey from the FDIC, improving economic conditions are not solely responsible for the drop, as the rate of unbanked households fell further than expected based on economic factors alone. The decrease affected a broad range of demographic groups. Unbanked rates for African American households dropped from 20.6% to 18.2%, and the rate for Hispanic households fell from 17.9% to 16.2%. Households with low incomes, defined as less than $15,000 per year, and households headed by people without a college education also saw a substantial decrease. Story by Bill Hardekopf for LowCards.com.
How Credit Cards Can Guard You Against ‘Samsung Galaxy’-Like Fiascoes
Samsung recently halted the production and sales of their Galaxy Note 7 phones due to safety concerns. Over the course of the last two months, news has spread of defective phones exploding – sometimes while in the pocket of a customer or on a plane. Luckily, Samsung has been fairly responsive to this whole situation. They have issued recalls and provided replacement phones to anyone experiencing problems. However, historically not all merchants or vendors have been as forthcoming with refunds for defective devices. In situations like these, consumers can guard themselves through a seldom talked-about perk on credit cards: purchase protection. Story by Robert Harrow for Huffington Post.
Marriott, Starwood Extend Rewards Flexibility to Loyalty Credit Cards
In the latest move since their merger, Marriott International and Starwood Hotels & Resorts Worldwide are further connecting their loyalty programs. From Oct. 18, those who pay with a Starwood Preferred Guest by American Express card will be able to accrue points at Marriott Rewards hotels, while Chase Marriott Rewards and Ritz-Carlton Rewards Chase cardholders will be able to do likewise at SPG participating properties. This initiative allows guests greater flexibility in where they stay, opening up offers for more than 5,700 properties across the combined collection of hotels. Story in Luxury Daily.
Why Apple Pay Is Way More Secure Than a Credit Card
The simple advice you learned when you first began online shopping–don’t enter your credit card information on a site that doesn’t begin with “https”–isn’t enough anymore. Turns out, “https” only sends your payment info securely across the Internet. It doesn’t mean the party you’re sending it to is trustworthy, or secure. Luckily, it’s getting a lot safer to buy something over the web, thanks to new online payment systems that are more secure than using a credit card. Unlike regular online transactions, payments made through Apple Pay, Samsung Pay, or Android Pay don’t use your real credit card number, so vendors never get access to it. These services make use of a technology called payment tokenization, which converts your credit card number into a cryptogram that’s worthless to hackers. Ordinarily, hackers just need your credit card number, CCV, and expiration date to commit fraud, and those are a lot easier to come by. Story by Emily Bary for Barron’s.
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, slightly lower than last week’s average of 14.61 percent. Six months ago, the average was 14.76 percent. One year ago, the average was 14.56 percent.