Retail Credit Card Interest Rates Reach Record High
A new study from Bankrate, which surveyed the interest rates of 108 store cards from leading retailers in early September, found they have reached a record high since Bankrate started tracking them in 2008. The average rate on a store card was 30.45%, up from 24.35% in 2021 and well above the current average for credit cards overall (roughly 21%). The highest APR the study found was 35.99% for cards offered at the Academy Sports + Outdoors, Petco, Burlington, Piercing Pagoda, Good Sam, Big Lots and Michaels. It also found you’ll be charged 34.99% when you carry a balance at 13 retailers, including Athleta, Banana Republic, Nordstrom, JCPenney, Old Navy, American Eagle, T.J. Maxx, HSN, Walgreens, QVC and Tire Rack. [CNN]
Goldman’s Credit Card Exit Hampered by Lax Lending Standards
Behind Goldman Sachs’s messy departure from credit card lending: lax underwriting standards. The bank is facing mounting losses, including a roughly $400 million pretax hit disclosed Monday, as it tries to offload the remaining pieces of its Main Street lending business. Goldman Chief Executive David Solomon said Monday the bank expects to incur the loss on the eventual sale of its General Motors credit card business and a smaller, unrelated business. Goldman has been in talks for months with GM and Barclays about transferring the carmaker’s credit card business to the British bank. Barclays has been unwilling to pay the price Goldman originally expected, in large part because of high charge-off rates in the program. [The Wall Street Journal]
Mastercard to Buy Cyber Defense Firm for $2.65 Billion
Mastercard agreed to buy cyber-defense firm Recorded Future for $2.65 billion to boost its ability to protect the card company’s massive global-payments system. The purchase from private equity firm Insight Partners will expand Mastercard’s ability to use artificial intelligence in protecting customers from cyber threats and fraud. Insight Partners took a controlling interest in Recorded Future in 2019 in an all-cash deal that valued the company at more than $780 million. [Bloomberg]
How Amex Became a Gen Z Status Symbol
An Amex card is a new Gen-Z status symbol. Just hop on TikTok, and you’ll see plenty of examples. College students flashing their Amex. People in their early 20s learning the powers (and dangers) of having no credit limit. Young Americans seem to love its metal weight and the image of success Amex cards project. And it’s not an accident: the credit card company has worked hard to make it happen, tailoring its offers to Gen-Z (ages 18-27) and millennials (ages 28 to 43). [Bankrate]
How Mobile Banking Can Expand Financial Literacy for the Unbanked and Underbanked
Banks can provide unbanked and underbanked households with mobile devices to expand access to banking apps and financial education. Mobile banking apps are powerful tools because they make financial services available 24/7, allowing customers to check their bank balances, pay bills, and even access their credit score in minutes. Mobile apps and devices are also invaluable resources for financial education. Banks can use these technologies for in-app learning and financial engagement. They can share educational content on topics such as budgeting, saving, and investing and offer interactive tools such as financial calculators that help customers calculate interest rates, savings growth, and their monthly budgets. Mobile tools can also promote good financial practices through reminders and alerts about account balances and bill due dates, which can help customers avoid overdraft and late fees. [Samsung Insights]
Most Gen Z and Millennials Are Comfortable Making Travel Purchases on Mobile
Gen Z (55%) and millennials (62%) have made more travel purchases on their smartphones, compared with their older Gen X (44%) and baby boomer (28%) counterparts, according to March 2024 data by Hopper. Laptops and desktop computers were the preferred device for older generations. Only 17% of US consumers feel confident checking out on mobile for purchases over $250. Many consumers cite errors or security concerns as their reason to distrust mobile purchases, the same report found. Travel websites, in particular, experience higher error rates on mobile than on desktop. [eMarketer]
TD Bank Ordered to Pay $28 Million by CFPB for Misreporting Consumer Credit Data
TD Bank was ordered by a U.S. regulator on Wednesday to pay nearly $28 million for repeatedly sharing inaccurate, negative information about its customers with credit reporting agencies, potentially tarnishing customers’ credit scores. The Consumer Financial Protection Bureau said that since 2015, TD provided wrong information about personal bankruptcies, credit card delinquencies, accounts that had been closed, and accounts that it knew or suspected had been fraudulently opened. It also said TD also took “far too long,” sometimes more than one year, to correct mistakes, and ignored some disputes because it diverted resources elsewhere and was distracted by its failed attempt to buy Tennessee bank First Horizon. [Reuters]
Visa and Bank of America See Contactless Payments Hit Their Post-Pandemic Stride
Turns out contactless payments were a lot more than a pandemic solution. They were in development as early as 2008, but what began as a public health measure in mid-2020 has evolved into a transformative force in the payments industry, impacting cards, digital wallets and other tap-to-pay technologies. One game-changer came with the adoption of contactless payments in public transit systems. Baker pointed out that cities have been driving early adoption, with more than 30 cities in the U.S. having contactless penetration over 60%. This trend is exemplified by New York City’s MTA system, where awareness created through contactless usage by millions of daily riders is contributing to 75% of face-to-face transactions being tapped in New York City. As both executives noted, as consumers become more comfortable with the technology in their daily commute, they’re more likely to use it in other contexts. [PYMNTS]
United CEO Pushes Back Against New Credit Card, Frequent Flyer Regulation
United Airlines CEO Scott Kirby warned Tuesday that legislative meddling is a threat to popular airline loyalty programs. “The one risk to [loyalty] programs are legislative initiatives that I’m sure are well intentioned but would just be bad policy, particularly the Credit Card Competition Act,” he said. The Credit Card Competition Act is a bipartisan bill that, if passed, would give merchants more choice in which credit card network processes their payments. Proponents argue that it would lower transaction costs for merchants, while opponents argue that those same beneficiaries would have little incentive to pass the savings on to consumers. Many worry that credit card companies could roll back rewards programs, like those that provide airline loyalty miles, if transaction revenue dropped. The bill was introduced in the Senate in June 2023 but remains in committee. [The Points Guy]
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