This Week In Credit Card News: Rising Rates And Fees On Cards; Will Your Credit Card Rewards Go Away?

This Week In Credit Card News: Rising Rates And Fees On Cards; Will Your Credit Card Rewards Go Away?

Is Congress Going to Kill Credit Card Rewards?

Credit card rewards are so common these days—so expected, even—that they can seem untouchable. But that could change. Legislation that’s winding its way through Congress is intended by its sponsors to encourage “competition in electronic credit transactions.” But if lawmakers end up passing the measure, known as the Credit Card Competition Act of 2022, opponents say it could also torpedo the rich rewards and perks that cardholders have enjoyed for years. “Will consumers lose? Probably,” wrote Brian Riley of the Mercator Advisory Group. “Their reward programs will dry up, just as they did with debit cards.” [NerdWallet]

More Debt, Higher Fees: Credit Card Borrowers Face Mounting Burdens

After a coronavirus-era reprieve, Americans are borrowing heavily again to keep up with decades-high inflation on essentials such as food, gas and housing. Credit card debt is rising at its fastest clip in more than 20 years, according to the Federal Reserve Bank of New York. Overall, Americans owe $887 billion on their credit cards, a 13% increase from a year ago. Now, with the Fed rapidly raising interest rates to contain inflation, families are feeling the pinch of higher borrowing costs, too. Average credit card rates, at 18.7%, are at their highest level in 30 years and will probably continue rising, according to Bankrate. [The Washington Post]

What’s in Your Wallet? A Lot Less if Dick Durbin Gets His Way

Aside from earning a spot on the Mt. Rushmore of Senate tax raisers over his career, Durbin has gone above and beyond, raiding Americans’ wallets—specifically their debit cards—with vigor in 2010 through an amendment to the Dodd-Frank law that bears his name. The Durbin Amendment was purportedly aimed at lowering debit card fee transactions for consumers. What we’ve learned in that time is startling: Capping debit card fees resulted in higher costs for consumers, but larger profits for retailers. Banks responded to the loss in exchange fee revenue by raising other rates and fees, eliminating free checking and wiping away nearly all of the benefits and rewards they offered with their branded debit cards. Durbin’s “pro-consumer” legislation wound up costing consumers billions, the loss of perks and benefits and priced millions out of owning a bank account. [The Hill]

More Brands Will Offer Secured Credit Cards for Customers During Uncertain Economic Times

Over 150 million individuals in the U.S. are considered financially at risk today, according to Experian and U.S. Census data. These consumers continue to face pressure when managing their finances, from high inflation to economic uncertainty. Nearly one-third of U.S. consumers have a subprime credit score, defined as between 580 to 669, including 40% of millennials, who make up “the highest ratio of subprime consumers of any generation.” Additionally, an estimated 49 million U.S. consumers are classified as either “credit invisible” or “unscorable.” Businesses and consumers face a tumultuous macroeconomic environment, skyrocketing inflation, and a looming recession. As a result, there is an opportunity for the credit landscape to shift, and the offering and use of secured credit cards are the solutions that will help brands and consumers alike. [PYMNTS]

Visa, Mastercard Draw New Government Scrutiny Over Debit Card Routing

The Federal Trade Commission is investigating whether Visa and Mastercard’s security tokens restrict debit card routing competition on online payments, according to people familiar with the matter. The FTC for the past few years has already been probing whether Visa and Mastercard block merchants from routing payments over other debit card networks. The networks acknowledged an FTC probe in regulatory filings in recent years. [The Wall Street Journal]

Here’s What Warren Buffett Says About Credit Card Debt

Millions of Americans use credit cards to pay for purchases, with an average cardholder owing nearly $5,800 as of the first quarter of 2022 and nearly $900 billion in total credit card debt in the United States. But despite their popularity, credit cards can be dangerous if used improperly. Billionaire investor Warren Buffett has expressed his disdain for credit cards several times, even saying that he pays for 98% of his own purchases with cash. Here’s what Buffett has said about credit cards, and why he feels the way he does. [The Motley Fool]

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Today is National Get Smart About Credit Day

National Get Smart About Credit Day on the third Thursday in October annually promotes learning about good credit. It is a national campaign where volunteer bankers help counsel young people on responsible credit habits. The importance of sound financial management is something that can and should be taught at a young age. Learning healthy credit habits can be one of the most valuable lessons a young person can learn. [National Day Calendar]

Big Banks’ Profits Drop, but Consumers Cushion the Blow

Big banks are bracing for an economic slowdown but haven’t yet seen any major signs of trouble, as consumer spending remained strong despite the dent that market turbulence left in their latest quarterly profits. Citigroup, JPMorgan Chase and Wells Fargo all said that they had bolstered their reserves to guard against future loan losses, a sign of potential trouble with rising interest rates putting borrowers under strain and high inflation curtailing spending. [The New York Times]

Samsung Wallet Is Expanding Support for Mobile Payments to These 13 Countries

Earlier this year, Samsung made good on its plans to make Samsung Pay and Samsung Pass more versatile by having them move in together. Using the Samsung Wallet app, the company hopes to make it easier to access all your virtual IDs, passes, and cards in one place. The app is available in eight countries already, but a new wave featuring 13 more countries is set to kick off by the end of this year. Through the next couple of months, Samsung will launch the Wallet app in Bahrain, Denmark, Finland, Kazakhstan, Kuwait, Norway, Oman, Qatar, South Africa, Sweden, Switzerland, Vietnam, and the UAE. These are beside the markets where the app is already available: China, France, Germany, Italy, Korea, Spain, the UK, and the US. [Android Police]

Mastercard Will Help Banks Offer Cryptocurrency Trading

Mastercard is looking to bring crypto to the masses by making it easier for banks to get involved. The payments giant plans to announce a program that will help financial institutions offer cryptocurrency trading. Mastercard will act as a “bridge” between Paxos, a crypto trading platform already used by PayPal to offer a similar service, and banks. Mastercard and Paxos will handle regulatory compliance and security, two core reasons banks cite for avoiding the asset class. Mastercard’s chief digital officer said polling still shows demand for the asset, but roughly 60% of respondents said they would rather test the waters through their existing banks. [CNBC]

Banks Turn Mobile Banking into Consumer’s Financial Tool of Choice

With the pandemic now endemic, are contactless digital tools and behaviors that got us through that episode sunsetting so we can return to how it was before? In a word, no. There are numerous examples, but the use of online banking and mobile banking apps that rose dramatically in the first two years of the crisis have now become a permanent part of how we bank. [PYMNTS]

Green Dot, Bank Behind Walmart and Apple Debit Cards, Fires CEO

Green Dot, which operates the bank behind debit cards offered by Walmart and Apple, terminated its chief executive officer. CEO Dan Henry will be replaced by George Gresham, the company’s chief financial and operating officer, according to a statement Monday. Henry also resigned from the company’s board. The company, based in Austin, Texas, operates the bank behind the Apple Cash card and Walmart’s MoneyCard. Founded in 1999, the firm has more than 30 million accounts and its products are distributed at 90,000 retail locations across the US. [Bloomberg]

Chase Points Are Worth Up to 50% More Towards Apple Purchases Thanks to This Limited-Time Promotion

Calling all Apple enthusiasts: Now through Nov. 30, Chase cardholders can save a little extra this fall when redeeming points for Apple products through Chase Ultimate Rewards. Depending on which card you have, your points will be worth 10%, 25% or 50% more than usual thanks to this promotion. In other words, if you’ve been waiting for the right time to upgrade your iPhone, iPad, Apple watch or laptop, or get a head start on all your holiday shopping, this is it. [CNBC]

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