LowCards.com Weekly Credit Card Update–September 22, 2017

September 22, 2017, Written By Lynn Oldshue

Why The United States Was Wide Open To A Disaster Like Equifax
More than sloppy cybersecurity measures, the massive data breach uncovered at Equifax revealed inherent flaws in the U.S.: the over-reliance on Social Security numbers credit reporting system in need of reform. The Social Security number is a “chief means” of identifying and gathering information about an individual, according to website of the Social Security Administration. Among others, it is used in the opening of a bank account, application for loans and filing of tax returns. The wide usage in both government and private sectors, and the ease of using it to access highly-sensitive accounts, has made hacking systems such as credit reporting agencies more appealing. Story by Yen Nee Lee for CNBC

Credit Card Delinquencies on the Rise
U.S. banks and card companies reported a rise in the credit card delinquency rates in August, the second consecutive monthly increase after four months of decreases. While rates are still below those found during the 2008 financial crisis, rising delinquencies mean higher loan losses for lenders. Financial institutions are reporting the following increase in delinquencies from July to August: JPMorgan Chase rose 1.16% from 1.15%; Capital One rose 3.97% from 3.81%; and Discover rose to 2.1% from 2%. The New York Fed has reported that seasonally adjusted credit card delinquency rates rose 2.47% in the second quarter, which is up from 2.20% during the same period last year. Story by Lynn Oldshue for LowCards.com

Equifax Suffered a Hack Almost Five Months Earlier Than the Date It Disclosed
Equifax learned about a major breach of its computer systems in March—almost five months before the date it has publicly disclosed, according to three people familiar with the situation. In a statement, the company said the March breach was not related to the hack that exposed the personal and financial data on 143 million U.S. consumers, but one of the people said the breaches involve the same intruders. Either way, the revelation that the 118-year-old credit-reporting agency suffered two major incidents in the span of a few months adds to a mounting crisis at the company, which is the subject of multiple investigations and announced the retirement of two of its top security executives on Friday. Story by Michael Riley, Anita Sharpe, and Jordan Robertson for Bloomberg

Appetite for Prepaid Cards Is Faltering
Over the five-year period between 2012 and 2016, U.S. consumers purchased more prepaid cards in each year than they did in the year before. That pattern was broken in 2017, when the percentage of U.S. adults who bought prepaid cards dropped from 63% in 2016 to 56%. The most popular type of card was retailer-specific, but even there the percentage of adult purchasers fell from 45% in 2016 to 38% in 2017. Sales of prepaid cards fell in all eight categories tracked for the annual survey: retailer-specific cards, general purpose reloadable (GPR) cards, general purpose non-reloadable cards, gift cards for online services, prepaid mobile phone (virtual) cards, long distance phone cards and transit cards. What growth there has been in prepaid has been from the young adults, particularly 25 to 34 year olds, mobile-enabled users, high-income earners and Hispanics. However, the report notes, these segments are also among the most likely to have shied away from prepaid this year. Story by Paul Ausick for 24/7 Wall St

CFPB Settled For Small Fine Over Wells Fargo Phony Accounts
A consumer watchdog agency could have levied $10 billion in penalties against Wells Fargo & Co last year for opening unauthorized customer accounts, but settled for a fraction of that to resolve the matter quickly, according to regulatory documents released on Tuesday. The documents, unveiled as part of a report written by congressional Republicans, look set to heighten a fierce partisan debate about the future of the U.S. Consumer Financial Protection Bureau (CFPB). The CFPB’s portion of that settlement was $100 million, making it the largest fine in the agency’s short history. But the regulator could have made a claim for over 100 times that amount, if it multiplied statutory penalties outlined in consumer law by the number of potential violations. Story by Pete Schroeder for Reuters

Capital One Stands Out Among U.S. Card Lenders With Highest Charge-Off Rate
Card charge-off rates have been elevated across the industry over the last two quarters, but Capital One is faring much worse than its peers with a figure in excess of 5% for Q2 2017. This compares with the average figure of 3.64% for the U.S. card industry for the same period. The charge-off rate is widely used as a parameter to gauge the quality of a lender’s loan portfolio, as it represents the proportion of loans which the lender is forced to write off for a given period. Historically, American Express has enjoyed the lowest card charge-off rates among all card lenders in the U.S. thanks to its policy of focusing on affluent clients. Discover also has lower-than-average charge-off rates, largely due to a selective card lending policy. At the other end of the spectrum is Capital One, with a charge-off rate above 5% for the first two quarters of the year. We believe that the elevated figure is indicative of lenient card lending criteria by the company, something that could lead to significant losses under weak economic conditions. Story in Trefis.com

How Bank of America Ditched 1,597 Branches Across the U.S.
Bank of America, the nation’s second largest lender, has gotten rid of around 1,600 branches since the financial crisis as it seeks to rekindle sagging profits and focus on major metropolitan areas. The reductions are roughly equivalent to shutting all the Citigroup Inc. and Capital One Financial Corp. outlets in the U.S. The strategy would represent a stark change for any big lender, but it is a particularly striking departure for a bank built over decades on the idea of offering a coast-to-coast network in areas urban and rural. But strains from the financial crisis led to a different approach. In 2009, the bank had branches in 725 U.S. counties, roughly one out of every four nationwide. In 2016, it was in 253 fewer counties. Story by Rachel Louise Ensign and Coulter Jones for The Wall Street Journal

Popularity of Crypto Debit Cards Will Encourage Mainstream Adoption
A class of product that is currently growing in popularity within the crypto world is debit cards that allow crypto holders to spend their digital currencies in mainstream commercial environments. Accepted in most countries where regular fiat-based debit cards are effective, crypto debit cards offer users the flexibility of managing multiple cryptocurrencies and fiat money at the same time. Since digital currencies are more or less borderless and not restricted to particular governments, crypto debit cards also serve as a convenient tool for travelers due to their easy conversion to different major currencies. Links between crypto and mainstream commerce have been identified as vital aspects of cryptocurrency development. This is because such links are expected to encourage crypto adoption by wider society. These links come in the form of user interfaces such as apps and debit cards. Story by Lyke Aru for Coin Telegraph

American Express Has Regained Ground In The U.S. Card Market
American Express is gradually recovering from the setback it experienced in mid-2016, when it lost out to Citi for the right to issue Costco cards. The card giant has done well to hold on to its market share of 10% over recent quarters despite facing stiff competition from JPMorgan and Citigroup. While JPMorgan has been targeting American Express’ core affluent customer base over recent years, Citigroup has focused considerably on co-branding partnerships to grow its card portfolio. While JPMorgan has a sizable lead over competitors in terms of card purchase volumes thanks to its position as the largest issuer of credit cards in the country, Citigroup displaced American Express from the second spot in Q3 2016, when the transfer of the Costco card portfolio was finalized. Notably, the six largest card issuers accounted for almost 61% of the total credit card purchases in Q2, with the top four issuers garnering a market share of nearly 50%. The largest card issuers have seen their purchase volumes grow 11% year-over-year, better than the 10% growth witnessed by the overall industry. Story by the Trefis Team for Forbes

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 15.41 percent, identical to last week. Six months ago, the average was 15.20 percent. One year ago, the average was 14.64 percent.



The information contained within this article was accurate as of September 22, 2017. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.


About Lynn Oldshue

Lynn Oldshue has written personal finance stories for LowCards.com for twelve years. She majored in public relations at Mississippi State University.
View all posts by Lynn Oldshue