LowCards.com Weekly Credit Card Update–September 30, 2016
Green Dot to Begin Offering Secured Credit Cards
Green Dot Corp., one of the nation’s largest providers of prepaid debit cards, is moving into the credit-card business. The company said it would start offering a secured credit card aimed at building credit profiles for consumers who either have no credit history or poor credit scores. A secured credit card, which is backed by a customer deposit that is used as collateral, is often a first step toward being eligible for a traditional credit card. The move comes as all types of card issuers are increasingly targeting less creditworthy customers. Discover Financial Services also recently began offering a secured credit card. Story by Robin Sidel for The Wall Street Journal.
Why This is the Year of the Credit Card Sign-Up Bonus
If you’ve been hearing a lot of buzz about credit cards with tempting sign-up bonuses, there’s a good reason why. The value of initial rewards bonuses hit a record high in the third quarter of 2016, at an average of $101.48 in cash or more than 15,000 points or miles available to new applicants, according to a recent study. That’s more than a 300% increase in sign-up bonus cash and about a 120% increase in points and miles since 2010. Credit-card growth has slowed in recent years as debit cards and mobile payments have risen in popularity (worldwide, debit card use grew 8% last year, whereas credit card use grew 5%), which may be part of the reason for the large bonuses. The rise also may be due to banks figuring out that large sign-up bonuses are effective, and directing funds to those instead of other forms of marketing. Story by Maria Lamagna for MarketWatch.
Political Fight Over CFPB Heats Up After Wells Fargo Scandal
Is the Consumer Financial Protection Bureau a hero or a laggard in the probe into Wells Fargo’s sales practices? It depends whom you ask—and the answer digs into the heart of the controversy over government regulators’ role in the post-financial-crisis era. Democrats say the CFPB’s enforcement action against Wells Fargo shows the five-year-old agency needs to be strengthened to protect consumers from what they see as harmful industry conduct. Republicans, meanwhile, are using the scandal to build their case for overhauling the CFPB’s operations, saying the agency’s slow action on Wells Fargo showed its incompetence. They are pressing federal regulators to explain why it took several years for them to uncover the widespread problems at Wells Fargo, while praising Los Angeles officials for initiating the investigations. Story by Yuka Hayashi for The Wall Street Journal.
California Hits Wells Fargo Where it Hurts
California Treasurer John Chiang said Wednesday the state will suspend several key banking relationships with Wells Fargo to sanction the firm following allegations of “fleecing its customers.” Serving up the first direct blow to Wells Fargo’s business following this month’s allegations of fraud at the bank, the treasurer will halt investments in Wells Fargo securities for 12 months. During that time, the state’s treasurer will also stop using Wells Fargo as a broker-dealer for buying investments and not use Wells Fargo as an underwriter for California state bonds where the treasurer assigns the role. California’s treasurer is one of the largest bond issuers in the nation. The California State Treasurer’s office oversees $2 trillion in banking transactions and handles an investment fund valued at $75 billion. Story by Matt Krantz for USA Today.
Worldwide Card Payments Overtake Cash Transactions for First Time
For the first time ever, global consumer card payments have surpassed cash payments. According to new research from Euromonitor International, card transactions have reached $23.1 trillion globally compared to the $22.6 trillion in cash purchases. Both consumer card transactions and mobile payments are growing at a much faster rate than cash payments. Consumer cards are expected to grow 6.6% from 2016 through 2021, and mobile commerce will increase by 23%. Cash payments are projected to increase only 1.3%. Debit cards are seeing an exceptional level of growth, increasing 8.1% from 2015 to 2016, compared to a 5.3% increase among credit cards. Story by Bill Hardekopf for LowCards.com.
American Express Can Stop Merchants From Steering Clients to Other Cards
American Express will be able to prevent businesses from pushing customers toward competing credit cards after all. On Monday, a federal appeals court ruled that American Express could stop merchants that accept its cards from encouraging customers to use rival payment cards that charge the stores lower transaction fees. The decision reversed a lower court’s 2015 ruling that such restrictions violated federal antitrust law. The decision is a major victory for American Express, which wants to ensure that its customers, who pay higher-than-average membership fees, do not encounter any barriers to use. The ruling means that American Express can continue to enforce provisions in its contracts with merchants that prohibit them from steering customers toward other forms of payment. Story by Rachel Abrams for The New York Times.
Citi Joins clearXchange P2P Network
Citi announced that it will join Early Warning’s clearXchange network, enabling Citi’s online and mobile banking customers to send or receive real-time person-to-person payments to or from customers of participating network banks by simply using the recipient’s mobile number or email address. Citi will enable the functionality in early 2017. Story in Mobile Payments Today.
Sixty Percent of Millennials Prefer Mobile Banking
More than 60% of millennial use a mobile device as their preferred banking method, according to a new report. 61.2% of millennials prefer to bank with mobile apps, and 69.1% had done so during the previous week. Almost 83% used a mobile banking app during the past month. Mobile was the most preferred banking method across all racial and ethnic demarcations, age groupings, and income brackets. The groups most likely to make mobile banking their first choice were Hispanics (71.1%), and millennials with incomes of $75,000 or more (65.5%). Story by Roy Urrico for Credit Union Times.
U.S. Supreme Court agrees to hear credit card surcharge fee fight
The U.S. Supreme Court on Thursday agreed to hear a challenge to a New York state law barring retailers from imposing surcharges on customers who make purchases with a credit card rather than cash. The court will hear an appeal filed by a group of merchants to a September 2015 ruling by the New York-based 2nd U.S. Circuit Court of Appeals that upheld the law. Nine other states have similar laws. The justices took no action on two cases involving similar challenges to related laws in Florida and Texas. Merchants have argued that the laws violated retailers’ rights to free speech and due process under the U.S. Constitution. Story by Lawrence Hurley for Reuters.
Iran Issues Local Credit Cards for the First Time in Decades
Iranian banks have begun issuing credit cards for the first time in decades. The report by several newspapers said the cards will be for domestic use only and don’t involve any sort of partnership with a major international credit card company. The cards are usable for purchasing products and services from Iranian online shops as well. The move is aimed at helping to boost Iran’s sanctions-damaged economy. The credit limits and fee percentages will be fixed by Iran’s Central Bank, although individual banks will be responsible for determining if a customer qualifies to receive a card. Cards will come in three set credit limit amounts, with a top tier of 50 million rials, or about $14,000. Bills that aren’t paid within a month will be subject to 18% APR fees. Story by the Associated Press.
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 14.64 percent, slightly higher than last week’s average of 14.62 percent. Six months ago, the average was 14.72 percent. One year ago, the average was 14.64 percent.