Bread, Discover and JPMorgan Chase Report Higher Credit Card Delinquencies
Three companies saw their higher credit card delinquency and charge-off rates rise in February. Bread Financial, Discover and JPMorgan Chase reported in recent press releases and SEC filings that these figures for February were higher than those for both the month before and a year earlier. Bread Financial said its delinquency rate was 6.0% in February, up from 5.8% in January and 4.4% in February 2022. Discover also saw higher rates. Its credit card delinquency rate reached 2.74% in February, up from 2.67% in January and 1.79% in February 2022. JPMorgan Chase said its credit card delinquency rate was 0.88% in February, higher than the 0.83% it saw in January and the 0.72% it recorded in February 2022. [PYMNTS]
Some warning signs that you may have a credit card problem
Here Are 7 Warning Signs of Problem Credit Card Usage
There are several warning signs that you might be spending too much on your credit cards, and they aren’t all obvious. You’re getting rejected for balance transfers. You are at or near your spending limit. The minimum payments are getting tough to keep up with. You have no idea how much you owe. You hide your credit card spending. You have more credit cards than you can keep track of. Your credit card debt affects your financial life in other ways. [The Motley Fool]
Over 48% Say Carrying a Credit Card Balance Increases Your Credit Score
A February survey from U.S. News & World Report shows that nearly half of survey respondents believe carrying a balance on a credit card improves your credit score. Fortunately, almost 52% know that it doesn’t raise your score. And when you carry a balance, you pay compound interest on your purchases. Just over 16% of respondents don’t know what their credit scores are. Over 35% say their credit reports contain a breakdown of their credit score, but over 56% were aware that their reports contained a list of their credit activities. Your credit score isn’t on your credit report. Right at 47% incorrectly say that an increase in income results in an increase in credit scores. A little over 40% correctly identify FICO as the score used most often by lenders. [U.S. News & World Report]
Visa, Mastercard $5.6 Billion Settlement with Retailers is Upheld
A federal appeals court on Wednesday upheld a $5.6 billion antitrust class-action settlement with more than 12 million retailers that accused Visa Inc and MasterCard Inc of improperly fixing credit and debit card fees. The 2nd U.S. Circuit Court of Appeals in Manhattan rejected claims that a class action should not have been certified because of confusion over who deserved compensation, and that the $523 million of legal fees awarded to the retailers’ lawyers was too high. [Reuters]
A New CFPB Report Reveals the Credit Habits of Buy Now, Pay Later Users
Between the first quarter of 2021 and the first quarter of 2022, 17% of Americans borrowed using buy now, pay later, a new report by the CFPB on consumer use of BNPL states. While the survey found many BNPL users had relatively healthy personal finances, it concluded that BNPL borrowers were, on average, much more likely to be highly indebted, revolve on their credit cards, have delinquencies in traditional credit products, and use high-interest financial services. [CNBC]
Amex Bets on Millennials, Gen Z for Growth
Emerging from the Great Recession, American Express was at a crossroads. Executives were debating whether to knock down connotations of exclusivity by serving a broader consumer base, or double down on the premium card space and remain more exclusive. Betting on its aspirational distinction, Amex opted for the latter. About 70% of Amex’s new cardholders last year acquired premium cards, which includes any of its cards that come with an annual fee. Millennial and Gen Z consumers made up three-quarters of that new group, a larger share than the company has seen in the last two decades. [Payments Dive]
USDA Piloting Contactless SNAP Payments
In an effort to modernize its systems, the U.S. Department of Agriculture Food and Nutrition Service (FNS) will begin a five-state pilot utilizing contactless mobile payments for recipients in the Supplemental Nutrition Assistance Program (SNAP). By allowing contactless and mobile-driven payments, the FNS is creating a more flexible program that accounts for the changing behaviors of consumers at all income levels. This move is a massive step forward in modernizing payment systems for government benefits and represents a positive shift to meet both customers and retailers at established and growing points of technology. Previous research from the North American PaymentsInsights study shows that 53% of Apple iOS users and 41% of Google Pay consumers used a digital wallet in a 12-month period to make an in-store purchase. [Payments Journal]
Long-Awaited Fed Digital Payment System to Launch in July
The Federal Reserve’s digital payments system, which it promises will help speed up the way money moves around the world, will debut in July. FedNow will allow bill payments, money transfers such as paychecks and disbursements from the government, as well as a host of other consumer activities to move more rapidly and at lower cost. Institutions that participate in the program will have seven-day, 24-hour access, as opposed to a system currently in place that closes on weekends. Program advocates say it will get money out to people much more quickly. For instance, they said, government payments like those issued in the early days of the Covid pandemic would have been credited to accounts immediately rather than the days it took to reach most people. [CNBC]
The Good, The Bad, And The Ugly Of Buying Crypto With Your Credit Card
As markets continue to fluctuate, and volatility remains at an all-time high, close to 47 million Americans who have never bought or traded crypto before said in a survey last year that they intend to do so this year. The growing interest in digital currencies and stablecoins has steadily been growing over the last few years, seeing close to 56% of the U.S. adult population saying they have either bought, owned, traded, or invested in some form of crypto in the past. A 2021 survey by GamblersPick of 1,000 American crypto investors found that 25% of respondents have bought crypto using a credit card instead of fiat currency. Some exchanges have made it easier for buyers to purchase crypto, accepting both debit and credit cards as a form of payment. Exchanges such as Pionex, Uphold, Bybit, Binance, CoinSmart, and Coinmama, among others currently allow users to purchase crypto, either with a Visa or Mastercard. [Coin Codex]
Cuban Banks Now Accepting Russia’s MIR ATM Cards
Several Cuban banks in Havana have now begun accepting Russia’s MIR payment cards, the equivalent of Visa or Mastercard in Russia or UnionPay in China. ATMs now display the logo of the Russian payment system and provide an option to withdraw funds from cards issued by Russian banks meaning Russian visitors to the island can access their money held in accounts in Russia. The money is provided in Cuban Pesos, with the Ruble / Peso exchange rate currently about 1 to 1.5. [Russia Briefing]
Mobile Payments as an Engine for Financial Inclusion
Financial inclusion is the ability for individuals and businesses to have access to financial products that are affordable, suitable, and delivered in a way that is sustainable. According to a report by The World Bank, close to a third of adults were still categorized as unbanked in 2017. Approximately half of the unbanked were women from poor households in rural areas or out of the workforce. It has been cited that exclusion from the financial system is one of the biggest hurdles to tackling the issue of poverty on a worldwide scale. In numerous developing countries, well over half of households don’t have an account with a financial institution. What’s more, small companies mentioned that easy access to affordable financing has also impeded their ability to grow. Mobile payments could revolutionize financial inclusion by providing affordable and efficient transactions, creating a platform for business growth, and enhancing security. [Payments Journal]
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