Credit Card Debt Surges to Another Record High
Americans’ credit card debt continues to climb, hitting a fresh record at the end of September, according to a new report from the New York Federal Reserve. Total credit card debt rose to $1.17 trillion during the third quarter, an increase of $24 billion from the previous quarter, according to the report. It marks the highest level on record in Fed data dating back to 2003. While still above pre-pandemic highs, credit card delinquencies did ease some last quarter to 8.8%, down from 9.1% from the previous quarter. [Fox Business]
28% of Credit Card Users Are Still Paying Off Last Year’s Holiday Debt
Americans tend to overspend during the holiday season. In fact, some borrowers are still paying off debt from last year’s purchases. To that point, 28% of shoppers who used credit cards have not paid off the presents they bought for their loved ones last year, according to a NerdWallet report. However, this is a slight improvement from 2023, when 31% of credit card users had still not paid off their balances from the year before. [CNBC]
Credit Card Debt Among Retirees Jumps. ‘It’s Alarming.’
The share of Americans with credit card debt in retirement has jumped considerably, a worrisome financial trend, especially for those with little wiggle room in their budgets. About 68% of retirees had outstanding credit card debt in 2024, up “substantially” from 40% in 2022 and 43% in 2020, according to a new poll by the Employee Benefit Research Institute. Inflation is the “true driver” of retirees’ increased use of credit cards. [CNBC]
Mastercard Sets 2030 Goal for Number-Free Cards and Passwordless Payments
Mastercard today outlined a future for online payments that departs from traditional card numbers and passwords, emphasizing seamless transactions secured by biometrics and tokenization. By 2030, Mastercard plans to eliminate the need for manual card number entry and static passwords for online purchases. This strategy integrates tokenization, which has been safeguarding personal and payment data for a decade, with advanced biometric authentication technologies to streamline and secure the online checkout process. The ongoing issues with online shopping, such as significantly higher fraud rates compared to in-store transactions and the inconvenience of manual data entry, are key drivers for this innovation. According to recent research by Mastercard, the cumbersome checkout process leads to a 25% cart abandonment rate. The company’s vision aims not only to enhance security but also to simplify user experiences, potentially increasing merchant revenues by improving transaction approval rates and reducing cart abandonments. [FinTech Global]
Durbin Gives Credit Card Bill Another Senate Push
Sen. Dick Durbin, a Democrat who chairs the Judiciary Committee, is giving another push to the Credit Card Competition Act bill that has been stymied in Congress since he brought it to life two years ago. Durbin, an Illinois Democrat who is about to lose his majority role leading the committee, appears to be making a last-ditch effort to showcase an argument for injecting more competition into the credit card network market, before his party gives up control of the Senate in January. [Payments Dive]
PayPal Once Again Lets You Pool Money from Others to Pay for Things Together
PayPal is launching a few features that let users in groups pool money with friends or family, to collectively pay for trips, travels, gifts, and anything else. The company is launching this feature in the United States, Germany, the U.K., Italy, and Spain ahead of the holiday season. “Re-launching” might be the more appropriate verb here: PayPal actually had a pooling feature in place before, imaginatively called “Money Pools.” This made its debut way back in 2017, quite possibly as a response to faster-moving startups coming up with the idea first and gaining some significant traction on the idea. However, PayPal shuttered the service globally in November 2021. [Tech Crunch]
Americans Spend $300 Billion a Year on Gift Cards. Why Some Experts Say They Should Stop
Some consumer advocates are starting to voice concern that gift cards equate to a lump of coal in a holiday stocking. It’s a subject that’s receiving attention in light of the recent news that TGI Friday’s, the restaurant chain that recently filed for Chapter 11 bankruptcy protection, is sitting on nearly $50 million in outstanding gift cards. In a study this year, Bankrate estimated that Americans are in possession of $244 in unused gift cards per person, on average. And that can add up big time: Bankrate puts the total value of unused cards at $27 billion. And that’s to say nothing of other problems with gift cards, including widespread instances of card-related fraud that totaled $217 million in 2023, according to the Federal Trade Commission. [MarketWatch]
New York City Ends Food Debit Card Program for Migrants
According to city officials, a controversial voucher program for migrants in New York City to get food using debit cards is ending. New York City announced that it will discontinue a program that gave vouchers to migrants to pay for food, putting an end to an initiative that had been long assailed by conservatives and associated pundits. The vouchers came in the form of prepaid debit cards. The program, which began in late March, provided debit cards for food and baby supplies to 2,600 migrants who arrived in the city and were staying in hotels funded by the city. The debit cards could only be used at convenience stores, bodegas, and supermarkets. They would be unusable at other businesses. Mobility Capital Finance, or MoCaFi, was the private company that won a no-bid, emergency contract for $400,000 to run the program for one year. [Newsbreak]
Buy-Now-Pay-Later Firm Klarna Files for U.S. IPO
Swedish fintech company Klarna said it has filed for a long-anticipated initial public offering in the United States. Klarna said it had “confidentially submitted” a draft registration statement to the Securities and Exchange Commission, noting that the number of shares it is planning to offer and the price range of an IPO have yet to be determined. Klarna’s market value has tumbled since the pandemic as interest rates rose and the frenzy for online shopping waned. [Investopedia]
New Mesa Homeowners Card Will Reward Mortgage Payments
A new credit card from financial technology company Mesa is promising a long-sought-after feature: the ability to earn credit card rewards on your mortgage payments, without incurring processing fees. The $0-annual-fee Mesa Homeowners Card, issued by Celtic Bank, will add another layer of incentives to Mesa’s homeownership platform, which currently rewards you for getting a mortgage or refinancing through a lender or broker in their marketplace. Typically, it’s not advisable, and often impossible, to use a credit card to pay a home loan installment. Many mortgage lenders, credit cards issuers and/or card payment networks don’t allow such debt-for-debt payments, and while some third-party platforms like Plastiq can facilitate it, you’ll get hit with processing fees that would likely cancel out the value of any ongoing rewards. [NerdWallet]
Consumers Want More and More from Mobile Banking. If You Don’t Keep Up, They Could Walk
Research by MX reports that consumer expectations for your banking app just keep getting higher. And dissatisfied users will likely jump to another app (and another bank) that ticks more boxes. Mobile banking apps have become table stakes for banks and credit unions, especially among Millennials and Generation Z. Research from MX earlier this year indicated that a decent mobile banking app is a must-have for nearly one in four consumers starting a relationship with a financial institution. MX research also shows that 80% of consumers have a payment app, such as Venmo, PayPal or Cash App on their phone. In addition, 77% have a bank or credit union mobile banking app, 48% have a credit card app, 25% an investment or retirement savings app, and 17% an independent app to help manage their finances. Nearly half maintain three or more financial apps on their devices. [The Financial Brand]
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