LowCards.com Weekly Credit Card Update–September 4, 2020

LowCards.com Weekly Credit Card Update–September 4, 2020

September 4, 2020         Written By Bill Hardekopf

Visa Says U.S. Spending on Cards Up Despite Drop in Jobless Aid
Visa said overall spending on its cards by U.S. consumers climbed in July and August even after elevated unemployment benefits expired. The spending on debit cards rose 26% in July and 24% in August compared with the same periods a year ago, the world’s largest payments network said Tuesday in a filing. Those increases offset an 8% decline in spending on credit cards during both months. Story by Jennifer Surane for Bloomberg

Walmart Announces Membership Service in Attempt to Compete With Amazon
Walmart is rolling out its newest and much-anticipated attempt to compete with Amazon Prime: a membership service that will give customers free shipping on tens of thousands of items, including produce and groceries. The service, Walmart+, will cost $98 a year, which is lower than the $119 charged for Amazon Prime. But Walmart+ will require an order of at least $35, while Prime does not have a minimum. Walmart said many of the 160,000 items that would qualify for the free shipping would be delivered directly from its stores to customers’ homes.  Walmart+ members will also receive a 5-cent-a-gallon discount at affiliated gas stations. Story by Michael Corkery for The New York Times

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Neediest Credit Card Users Are Seeing Their Limits Fall the Most
Subprime borrowers, who rely more on credit cards than any other group, are seeing their limits cut the most as banks reduce exposure during the coronavirus pandemic. The risk-management strategy shows a squeeze is coming for households with the most precarious finances as the U.S. government pares assistance for people who have lost their jobs amid the Covid-19 crisis. Not only are many losing income, they’re also losing access to credit. Banks cut overall borrowing limits for subprime borrowers by about 19% during the second quarter, according to TransUnion. That compares with an average reduction of just 1.2% across all card accounts during the same period. Story by Jennifer Surane for Bloomberg

Credit Card Providers Scramble to Update Customer Benefits as International Travel Ban Drags On
Credit card issuers’ revenue has been hit by declining consumer spending during the pandemic and its resulting economic disruption. But the card companies also are grappling with a longer term issue: keeping customers happy with rewards that suddenly look a lot less enticing, especially in the realm of travel. The customer satisfaction rate for the credit card industry fell 1% in May from prepandemic levels, according to J.D. Power’s 2020 U.S. Credit Card Satisfaction Study. The drop appears small, but in the years before 2020, the industry performance had been trending up by 0.5% annually for some time. Story by Katie Deighton for The Wall Street Journal

Why Visa and Mastercard Are Suddenly Keen on Installment Lending
Financial industry heavyweights are taking note of the rapid rise of new borrowing options that offer shoppers an alternative to the decades-old credit card. Visa announced a partnership that is meant to enable shoppers in India to make installment payments when they swipe Visa-branded cards. In July, Visa and Silicon Valley-based ChargeAfter unveiled a similar pilot in the U.S. And on Monday, Mastercard announced a partnership with QuadPay, another firm that offers 0% financing on small-dollar purchases that borrowers pay off in four installments. The new wave of installment loan products can help merchants by boosting their sales. Payment networks like Visa and Mastercard get a small cut of each transaction whether it happens on a traditional credit card or a digital-era installment loan. Card-issuing banks, which collect interest when shoppers revolve their debt, may have the most to lose. Story by Kevin Wack for American Banker

Mastercard is Pursuing Touchless Retail with Two New AI-Powered Solutions
Mastercard unveiled two solutions set to help retailers digitize and simplify operations during the coronavirus pandemic. Shop Anywhere allows customers to shop and pay without waits or checkout lines, creating an experience similar to autonomous checkout. It’ll partner with Circle K, Delaware North, and one Dunkin’ location to test the technology beginning in October. AI Powered Drive Through enables restaurants to offer customers personalized or dynamic menus on their mobile devices, based on store preferences, historical ordering trends, or other inputs. It can eliminate employee-led ordering and speed up wait times, and will be piloted at White Castle and other undisclosed quick-service chains this fall. Story by Jaime Toplin for Business Insider

Ex-Bank of America Employees Allege ‘Extreme Pressure’ to Sell Credit Cards
Even as Bank of America’s nationwide sales practices were facing governmental scrutiny, company executives in one state were putting increased pressure on branch-based employees to sell more credit cards, according to interviews with former BofA employees, a wrongful termination lawsuit filed by one of those ex-employees and documents reviewed by American  Banker. The interviews, documents and lawsuit raise questions about how much the sales culture at the nation’s second-largest bank has really changed, notwithstanding broad pronouncements by regulators about industrywide improvements. They open a window into BofA’s sales practices in the wake of the Wells Fargo scandal, and suggest that the company has found ways to continue its focus on aggressive sales even within the confines of new regulatory expectations. Story by Kevin Wack for American Banker

How The Banking Experience Is Adapting To The Covid-19 ‘New Normal’
When coronavirus cases started to accumulate in the United States, banks and credit unions had to adapt quickly with safety of both staff and customers in mind. But just as state and local reopening plans have varied greatly, so too have the ways financial institutions have entered into this next phase. We may still be far from what is eventually recognized as the “new normal” for consumer banking. But you can anticipate that some adjustments—beyond the usual hand-sanitizing, mask-wearing and surface-disinfecting—will be sticking around for a while. Story by Lisa Rowan for Forbes

Credit Card Issuer Market Share: Top 25 Issuers of 2020
Credit cards are a ginormous business. In the U.S. alone, consumers and businesses used credit cards to purchase almost $4 trillion in goods and services in 2019. That $4 trillion was generated by more than 44 billion card transactions. Customers owed credit card companies more than $1 trillion by the end of 2019. 2019 was a good year for the credit card industry and credit card companies. Spending on goods and services, or purchase volume, rose 7.8%; the number of purchase transactions increased by 8.7%; and total credit card debt at year end saw an increase of 4.6% from the total credit card debt for the same period in 2018. Story by Marcie Geffner for CardRates

PayPal Taps Into Installments With New Feature That Splits Purchases In Four
PayPal joined in on a hot e-commerce trend Monday as it announced that it would be offering an interest-free payment option that lets U.S. users make purchases in four installments. Though PayPal has offered a number of other consumer credit programs over the years that will continue to exist, the company’s new Pay in 4 option in the U.S. lets it offer interest-free installments, which have become increasingly popular through companies like Klarna and Afterpay that also let online shoppers split purchases into four pieces. Story by Emily Bary for MarketWatch

Americans Fear Their Credit Won’t Recover, Even If the Economy Does
The effects of COVID-19 were originally projected to last a couple of months, but the pandemic has now impacted half of 2020. With no official “end” in sight, many Americans are starting to fear for their financial futures. According to the Credit Impact Report from Finicity, 55% of Americans have experienced job or income loss because of COVID-19. A staggering 95% of those affect worry that their credit won’t recover after the pandemic, even if the economy does. If the current health crisis has left you with credit anxiety, there are steps you can take to protect your credit during the outbreak. Story by Heaven Speirs for LowCards.com

Chase Announces New Freedom Flex Credit Card
Chase’s already popular lineup of credit cards got a little bit bigger, as the issuer announced the launch of its new Chase Freedom Flex card, which will be available for applications starting September 15. The new no-annual-fee cash back Mastercard combines a set of rotating bonus categories with an additional trio of fixed bonus categories: 5% cash back on travel purchased through Chase Ultimate Rewards, 3% cash back on dining (including takeout and delivery) and 3% cash back at drug stores. Card holders will also earn 5% cash back on up to $1,500 in purchases in bonus categories that rotate each quarter. The Chase Freedom Flex will also earn 5% cash back on Lyft rides through March 2022. In addition, card holders can get a complimentary three-month DashPass membership. Cell phone protection is an additional feature of the new Chase Freedom Flex, as part of the card’s suite of World Elite Mastercard benefits. Story by Julian Kheel for CNN

The information contained within this article was accurate as of September 4, 2020. For up-to-date information on any of the terms, cards or offers mentioned above, visit the issuer's website. Many of the offers on this article are from our affiliate partners, and LowCards.com may be compensated if you take action with any of our affiliate partners.

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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.