Dozens of Retailers Jacked Up Interest Rates on Store Cards Ahead of Fed Cuts
Dozens of the largest U.S. retailers and their bank partners jacked up interest rates on their store-branded cards to record highs in the months before the Federal Reserve began cutting rates, as the companies looked to pad profits during a stretch of sluggish sales. At least 50 companies—including Big Lots, Gap, Petco, Burlington, Macy’s and TJX Companies—increased the APRs on their credit cards between September 2023 and September 2024, according to a review of data gathered by Bankrate.com that examined the nation’s 100 largest retailers. Now, the average interest rate on a store card is at an all-time high just ahead of the holiday shopping season, which is when most consumers sign up for store cards. [CNBC]
Consumers Ready To Max Out Plastic Soon
Half of U.S. credit card holders will open a new card or max out cards for holiday spending, a CreditCards.com study shows. Despite 53% of respondents carrying credit card debt, and 22% owing $5,000 or more, 96% plan to keep spending on holiday purchases. Nearly half of credit card holders will max out at least one card by the end of the holidays. To cover holiday costs, 16% of respondents plan to open new credit cards, while 1 in 5 will take on store credit cards. Holiday spending from 2023 is still haunting 25% of respondents, contributing to their current credit card balances. [CU Today]
Democrats Bash Capital One-Discover Merger Proposal
Congressional Democrats urged regulators to closely scrutinize Capital One Financial’s proposed acquisition of the credit card company Discover Financial Services, describing the acquirer’s history of regulatory missteps. In a Nov. 20 letter to the Federal Reserve’s board of governors and the Office of the Comptroller of the Currency, Sen. Elizabeth Warren of Massachusetts and Rep. Alexandria Ocasio-Cortez of New York, among others, cite Cap One’s broken promises and repeated regulatory action against the bank. “Capital One has a troubling history with acquisitions,” the letter said. The letter notes the McLean, Virginia-based company would gain 300 hundred million of new customers if the Discover deal is approved. [Payments Dive]
Retirees Are Facing Financial Strain as Credit Card Debt Spikes
More retirees are carrying credit card debt and facing stress in repaying those debts while looking ahead to a slender 2025 Social Security cost-of-living increase and consumer prices that are likely to remain stubbornly high. In 2024, 68% of retirees reported having outstanding credit card debt, compared with 40% in 2022 and 43% in 2020, according to the 2024 Spending in Retirement study by the Employee Benefit Research Institute. [MarketWatch]
Fed Cites Volatility, Uncertainty as Reasons to Go Slow on Rate Cuts
Federal Reserve officials appeared divided at their meeting earlier this month over how much farther they may need to cut interest rates, but as a group agreed to avoid giving much guidance from here on about how U.S. monetary policy is likely to evolve. There was uncertainty about the direction of the economy, Fed officials noted. Though the implication of the election outcome was not mentioned in the minutes, “many” participants noted the complications of making policy at a time when economic data was volatile due to storms, strikes and other factors, and geopolitical tensions were high. [Reuters]
Visa to Boost Credit Card Fees Next Year
Visa is expected to increase some fees it charges merchants and banks for credit card payments starting Jan. 1, according to a notice last month from the processor Global Payments. That Oct. 10 notice says Visa’s “misuse” fee paid by merchants will jump by two-thirds to 15 cents, from 9 cents per transaction, while a base transmission fee paid by financial institutions will rise to a quarter of a cent from 18% of a penny. The misuse fee would be imposed if a transaction is authorized, but not settled within a certain timeframe. [Payments Dive]
BNPL, Mobile Banking Embraced by Low-Income Consumers
The FDIC’s survey said that 3.9% of all households used Buy Now, Pay Later options through the past 12 months. A larger share of households with income between $30,000 and $50,000 (4.7%) or between $50,000 and $75,000 (4.8%) used BNPL. PYMNTS Intelligence found that paycheck-to-paycheck consumers are more than twice as likely as non-paycheck-to-paycheck consumers to use BNPL. Thirty-eight percent of consumers earning between $50,000 and $100,000 and 29.6% of those earning below $50,000 used BNPL through the preceding 12 months. [PYMNTS]
Cardless Swipes Up $30 Million to Build a New Generation of Co-Branded Credit Cards
More than a quarter of all U.S. residents use co-branded credit cards to get discounts and other extras from brands they use regularly. But not all is rosy in the world of loyalty commerce. Major brands like Uber, Starbucks, and Walmart have all pulled back from such projects over the years after failing to see the returns they were expecting. Now, tapping into the innovations of embedded finance, a startup called Cardless believes it has figured out how to make card schemes work better. Cardless’s unique selling point is not that it helps companies build co-branded cards. Instead, Cardless’s pitch is that it does this on a much more efficient platform. The brands in question can build more customized card experiences to sign up and onboard users within weeks between planning and execution. They can subsequently build rewards and observe how those products are performing. [Tech Crunch]
U.S. Responsible for Almost 50% of Breached Credit Cards Worldwide
New research from one of the best VPNs, Surfshark, has found over 5.7 million card details have been breached worldwide since 2004. 28% of the compromised information is CVV insecurity codes, which are vital for transaction verification. Their exposure poses a considerable risk, as they can be used to authorize fraudulent transactions. As well as this, 33% of the breached card details consisted of card expiration dates. These are not directly exploitable on their own, but when combined with other details, the risk of cybercrime is increased. Surfshark analyzed data from the top 10 largest global economies, where consumers may spend the most. The United States topped the list with 773 breaches per 100,000 residents. [Tom’s Guide]
Alabama Tech Executives Launch Occupi Mobile App to Help Renters and Landlords Make and Receive Payments
Co-founders Taylor Peake and Emily Hart created the Occupi mobile app to make rental payments easier for tenants and landlords. Occupi aggregates popular payment options, such as Cash App, Chime, Venmo and more, in one place for tenants to easily submit their rent payments. Using Occupi, tenants can pay with the financial service they prefer, and rental payments post directly to their landlord’s or property manager’s general ledger. For prospective tenants searching for a new home, Occupi provides a quick, mobile application process that also supports residents on visas with ITINs (Individual Taxpayer Identification Number). Occupi is working with landlords and property managers to tackle some of the biggest challenges facing tenants and landlords, sending and receiving rent payments, and quickly and efficiently processing screening applications. [Alabama News Center]