The Hidden Costs of Capping Credit Card Interest Rates
In September this year, during a campaign rally in New York, Donald Trump proposed capping credit card interest rates at 10%. Others from Josh Hawley to Bernie Sanders have also taken up the cause. Lost in this proposal are millions of Americans who may lose their credit card overnight, not because they mismanaged their finances, but because a new policy made it unprofitable for lenders to offer credit. Many borrowers, even those with good credit scores, could see their accounts terminated under an interest rate cap, leaving them scrambling for alternatives in a society that often requires a credit card to function. [Reason]
Nearly 1 in 3 Gift-Givers Expect to Go into Debt This Year
‘Tis the season of spending and according to a new survey nearly a third of holiday gift-givers expect to go into debt this year. A LendingTree survey of nearly 2,050 U.S. consumers found that 30% of those who plan to give gifts this year are prepared to break their budgets and go into debt. Meanwhile, nearly half (47%) said they’ve gone into debt due to holiday spending in the past. [News Nation]
Banks Hit Credit Card Users with Higher Rates in Response to Regulation that May Never Arrive
Banks that issue credit cards used by millions of consumers raised interest rates and introduced new fees over the past year in response to an impending regulation that most experts now believe will never take effect. Synchrony and Bread Financial, which specialize in issuing branded cards for companies including Verizon and JCPenney, have said that the moves were necessary after the Consumer Financial Protection Bureau announced a rule slashing what the industry can charge in late fees. [CNBC]
Mastercard Says the Checkout Revolution Will Be Optimized by AI
Digital commerce is growing at a staggering pace. Online transactions have more than doubled over the past four years, placing a new urgency on ensuring seamless checkouts. For businesses, checkout is where revenue is won or lost. For customers, it’s where experience defines loyalty. Yet checkout remains a hotspot for friction, abandoned carts and dissatisfied users. Artificial intelligence isn’t just refining the payment process; it is reimagining it, and turning one of eCommerce’s thorniest pain points into a streamlined, strategic advantage. “AI and real-time enriched data represent a leap forward for the payment industry,” said a Mastercard executive. With AI, vast datasets can be analyzed in seconds to recommend the most relevant payment options for each customer’s checkout journey, reducing errors and optimizing transaction routing. [PYMNTS]
CFPB Proposes Rule To ‘Rein In’ Data Brokers
The Consumer Financial Protection Bureau has proposed a rule to “rein in” data brokers that sell Americans’ sensitive personal and financial information. The proposed rule would limit the sale of personal identifiers like Social Security Numbers and phone numbers collected by certain companies and make sure that people’s financial data, such as income, is only shared for legitimate purposes, like facilitating a mortgage approval, and not sold to scammers targeting those in financial distress, the CFPB said. The proposal would make clear that when data brokers sell certain sensitive consumer information they are “consumer reporting agencies” under the Fair Credit Reporting Act, requiring them to comply with accuracy requirements, provide consumers access to their information, and maintain safeguards against misuse. [CU Today]
Bitcoin Hits $100,000 as Trump Picks Cryptocurrency Fan to Head Financial Watchdog
The world’s biggest cryptocurrency, Bitcoin, has been valued at more than $100,000 for the first time, spurred on by Donald Trump’s latest nomination for his presidential team. The cryptocurrency was valued at $103,280 as of 4.10am UK time, leaping in value by 7.9% in the previous 24 hours. The rally has also been stoked by a series of the president-elect’s appointments, with Paul Atkins being picked to chair the Securities and Exchange Commission on the same day that the cryptocurrency reached its benchmark number. A former SEC commissioner under George W. Bush, Atkins has frequently made the case against too much market regulation and has been a vocal cryptocurrency advocate. [Sky News]
Black Friday, Cyber Monday Shoppers Exceed Expectations Both in Stores and Online
Black Friday may not attract lines of customers wrapped around buildings as in years past, but overall, the number of holiday shoppers who went to stores and made purchases online this year nearly broke records. Before the five-day Thanksgiving weekend shopping period, from Thanksgiving Day through Cyber Monday, the National Retail Federation had forecast that 183.4 million consumers would shop in stores and online. The number who shopped exceeded the trade group’s expectations “fairly dramatically with 197 million consumers, who shopped throughout the five-day weekend,” Matthew Shay, CEO and president of the NRF. [USA Today]
American Airlines Chooses Citi as Sole Credit Card Partner, Drops Barclays
American Airlines has completed a long-awaited credit card deal with Citigroup, dropping its other partner, Barclays. The airline said it expects payments it receives from its co-branded credit card and other partners to grow 10% a year. In the 12 months through Sept. 30, American brought in $5.6 billion from these deals. American said it would start transitioning its Barclays cardholders to Citi in 2026 but didn’t provide details. Citi will take over credit card sign-up promotions such as those on flights and at airports. The airline’s current partnerships stem from its 2013 merger with US Airways. [CNBC]
Study Shows Overdraft Revenue Has ‘Crashed’
Overdraft revenue among all depositories has “crashed,” according to a new study that compares total overdraft dollars through Q2 2024 to the peak of OD income ten years ago. The report also shares reasons for the decline. During the Great Recession of 2007-2014, overdraft revenue hit its peak, short of $40 billion in gross revenue for all financial institutions in the nation, explained Michael Moebs, economist and chair of Moebs $ervices. Covid hit the U.S. in June 2019 and the pandemic ended in May 2023. For the first half of 2024, overdraft revenue was $13.3 billion annualized, reported Moebs. [CU Today]
Aven, the Credit Card Backed by Your Home Equity
There’s a unique credit card that you might not have heard of that could be an interesting way to leverage the equity in your home to reduce your interest rates and earn rewards. The Aven Credit Card is an innovative financial solution that rewards you with a lower cost of capital for having built equity in your home. The Aven Home Credit Card combines a credit card and a home equity line of credit, or HELOC. It uses the equity in your home to give you a flexible credit line for purchases. Not to mention, it comes with low variable interest rates starting at 7.49%. Plus, the card starts at a $0 fee to get the card. That includes no origination fee, no annual fee and no appraisal, notary or prepayment penalty fees, though a county recording fee may apply. It is a rewards card that earns you 2% unlimited cash back on every transaction you make with the card and 7% cash back on all hotel bookings through the Aven Travel Portal. [The Points Guy]