Josh Hawley, Bernie Sanders Propose Capping Credit Card Interest Rates at 10%
A new bipartisan bill introduced by a pair of senators would cap credit card interest rates in an effort to help consumers and fulfill one of President Donald Trump’s campaign promises. Sens. Josh Hawley, R-Mo., and Bernie Sanders, I-Vt., introduced legislation that would cap credit interest rates at 10% immediately upon the bill’s enactment into law. The cap would then remain in effect for five years. Hawley said in a statement that capping credit card interest rates at 10% like Trump campaigned on “is a simple way to provide meaningful relief to working people.” [Fox Business]
Bessent to be Acting CFPB Head, Pauses Rules and Litigation
Treasury Secretary Scott Bessent is now the acting head of the U.S. Consumer Financial Protection Bureau, signaling a potential shift away from the aggressive enforcement and regulatory approach under Rohit Chopra. It comes after Chopra was fired by the Trump administration. The Biden-era appointee’s term was marked by billions of dollars in fines and consumer compensation collectively against lenders such as Wells Fargo, Goldman Sachs and Citigroup. [Bloomberg]
Mastercard Plans to Get Rid of Credit Card Numbers. We Could Be Heading Towards the End of Cards
Mastercard has announced plans to remove the 16-digit number from their credit and debit cards by 2030 in a move designed to stamp out identity theft and fraudulent use of cards. The numbers currently used to identify cards will be replaced with tokenization and biometric authentication. In 2022, Mastercard added biometric options enabling payments to be made with a smile or wave of the hand. Tokenization converts the 16-digit card number into a different number – or token – stored on your device, so card information is never shared when you tap your card or phone or make payments online. The first rollout of these numberless cards will be through a partnership with AMP Bank, but it is expected other banks will follow in the coming 12 months. [The Conversation]
Get Ready, the Discover-Capital One Merger Could Transform the Credit Card Market
While the companies’ shareholders are undoubtedly pleased, all the excitement is tempered by concerns about the credit card behemoth’s impact on consumers. Regulators and consumer advocates have warned about the downsides: reduced competition, higher fees, and more limited options for customers. If approved, the Capital One-Discover merger would create a whole new leader in the U.S. credit card market. Combined, the two companies hold 19% of outstanding credit card loans in the country, with an estimated market share of 22%. But the cards themselves are only half of the story. The consolidation would make Capital One not only the largest issuer by balances owed but also a major player in payment processing, thanks to ownership of Discover’s proprietary payments network. Capital One has announced plans to move its products away from Mastercard and Visa over to the Discover payment network. [Fortune]
Third of U.S. Small Businesses Add Credit Card Surcharges
A third of small businesses in the U.S. are now adding surcharges to credit card transactions, according to a recent J.D. Power survey. The data analytics firm surveyed 3,841 U.S. small businesses in August through October and found that 34% said they added a surcharge when a customer paid with a card. This was the first J.D. Power survey that included a question about surcharges and credit cards. [Payments Dive]
TransUnion Introduces TruVision Alternative Bank Risk Score to Help Lenders Better Assess Consumers with Limited Credit Histories
TransUnion has launched the TruVision Alternative Bank Risk Score, a new solution aimed at helping lenders better assess consumers with or no credit histories. The score, powered by TransUnion’s OneTru platform, evaluates banking activities to predict financial behavior and loan default likelihood. The solution comes at a critical time when only 35% of households earning less than $50,000 report having sufficient access to credit. According to FDIC data, one in six households lacks mainstream credit, with higher percentages among lower-income, less educated, and minority households. [Stock Titan]
Issuer Earnings Show Consumers Struggling With Timely Credit Card Payments
The general tone of earnings season has been cautiously optimistic, as banks and payment networks have pointed to the willingness of consumers to keep spending. But some trends bear watching, particularly the delinquency and charge-off trends of those same firms. Delinquencies are a useful harbinger of charge-offs, as issuers deem debt uncollectible after a set amount of time, write the debt off, and there’s a ripple effect: The collections efforts ding consumers’ credit reports, and banks tighten their lending practices, which winds up making credit less available to the economy at large. Research detailed late last year that fully three-quarters of consumers had card debt; the percentage skews higher for cardholders who state they live paycheck to paycheck. The share of consumers who paid all of the monthly balance due stood at about 55% at the end of last year, which is actually a bit better than the roughly 52% seen during the summer. But the share of consumers paying only the minimum amount due ticked up, to 12.9% into December. [PYMNTS]
While Sean O’Brien Attacks Credit Card Companies, Teamsters Make Millions from High-Interest Card
The Teamster Privilege Credit Card Program is a partnership with Capital One bank to offer a Mastercard credit card. It is advertised as having a “LOW interest rate” for people with “excellent” credit. Customers with only “good” credit will pay the 27.49% APR. Teamsters President Sean O’Brien is likely fine with this apparent hypocrisy because the Teamsters get paid handsomely by Capital One to promote the card. Disclosure forms filed with the Department of Labor show that the Teamsters received from Capital One $1.28 million in 2023, $1.52 million in 2022, and $1.5 million in 2021. [National Review]
Limited-Time Offer: Earn Southwest’s Companion Pass as a Credit Card Welcome Bonus
Southwest Airlines is bringing back one of its most covetable credit card offers, but only for a limited time. Now through March 31, 2025, you’ll have the chance to earn a Southwest Companion Pass and 30,000 Rapid Rewards bonus points when you spend $4,000 within the first three months of opening a new Southwest credit card. You can earn the limited-time welcome bonus when you open any of the three consumer co-branded credit cards from Southwest and Chase: the Southwest Rapid Rewards Plus, Priority or Premier Credit Card. [Yahoo Finance]