Personal Finance

This Week In Credit Card News: Most Americans Skeptical Of Crypto; Walmart Sues Capital One To End Partnership

Majority of Americans Aren’t Confident in the Safety and Reliability of Cryptocurrency

Among the vast majority of Americans who say they have heard at least a little about cryptocurrency (88%), three-quarters say they are not confident that current ways to invest in, trade or use cryptocurrencies are reliable and safe, according to a Pew Research Center survey. This comes out to about two-thirds of all U.S. adults. While concern about cryptocurrency is broad, some groups of Americans are more concerned than others. For instance, adults ages 50 and older who have heard about cryptocurrency are more likely than their younger counterparts to say they are not confident in its reliability and safety (85% vs. 66%). Women are also slightly more skeptical of investing in, trading or using cryptocurrencies. [Pew Research Center]

Walmart Sues Capital One to End Credit Card Partnership Early

Walmart is suing Capital One to end their credit card partnership agreement, alleging the bank fell short of its customer service standards as the exclusive issuer of Walmart’s private label and co-branded credit card program in the U.S. According to the lawsuit, Walmart seeks to terminate a deal it inked with Capital One in 2018 “worth in excess of a billion dollars.” Capital One struggled to honor its contractual obligations to Walmart, the lawsuit alleges, failing to measure up to its retail partner’s customer care standards in “at least five critical service areas” during a 12-month rolling period. [CBS News]

Credit Card Debt Surpasses Excess Savings for the First Time Since 2020

Households are facing a shrinking reserve of savings and a growing mountain of high-interest consumer debt. While inflation may be in retreat, the increases in the cost of living over the past two years have eaten away more than half the stockpile of savings that households amassed during the pandemic at the same time credit card debt has soared to record levels, according to the latest government data. The total amount of revolving debt (mainly credit card debt) held by Americans in February surpassed the total amount of extra savings households built up during the pandemic. [Investopedia]

U.S. Credit and Debit Card Spending Slows to Weakest Pace in Two Years

Spending on credit and debit cards rose at the smallest pace in more than two years, dragged down by slower wages, fewer tax refunds and the end of pandemic-era benefits, according to a report by Bank of America Institute. After a strong start of the year, spending per household rose 0.1% from a year ago, the slowest pace since February 2021. The weakness was broad-based across goods and services. [Bloomberg]

Merchants Reap Economic Benefit of Co-Branded Store Card Momentum

In 2023, store credit cards could significantly surge based on last year’s trends. A report by LendingTree revealed that 35% of Americans were likely to apply for a store credit card during the 2022 holiday season, the second-highest percentage in five years of tracking and up from 29% the year before. Additionally, TransUnion reported that store credit card originations reached 12.1 million in Q3 2022, up 8.4% compared to the previous year. Store credit card balances grew by 7.3%, indicating a growing interest in and usage of store credit cards. There are barriers to wider adoption, however, including low customer satisfaction—37% of Americans who signed up for a store card later regretting it—and higher annual percentage rates than general-purpose cards. [PYMNTS]

A Federal Tool Could Soon Make It Easier to Compare Credit Cards

Consumers may soon have an online tool from the federal government that is aimed at making it easier to comparison shop for credit cards. The CFPB said it had started asking big banks for more details about typical interest rates for people with certain credit scores so shoppers could get a better idea of whether they would qualify for a card and what interest rate they would pay. Under the bureau’s new approach, banks are asked more questions about a card’s terms, like its interest rate, known as the annual percentage rate, or APR. If a card’s rate depends on the applicant’s credit score, as most do, banks must report the lowest and highest rates charged, as well as the median APR for scores of 619 or under, for 620 to 719 and for 720 and above. [The New York Times]

Plaid Launches New Feature to Speed Up Bank Payments

Plaid is expanding to provide real-time bank transfers. The updated service allows businesses to disburse loan payments, insurance payouts or wages instantly. Plaid’s Transfer service helps businesses, mostly other fintechs, move funds between bank accounts. The product now utilizes the Real Time Payments (RTP) network, a five-year-old money movement platform owned by a consortium of large U.S. banks, allowing for instant bank transfers. Before adding support for RTP, all transactions occurred using the dominant, decades-old system for bank-to-bank fund transfers in America, the Automated Clearing House. ACH transfers typically take one to three business days, unless users pay a fee for a same or next day transaction. In addition to disbursements, Transfer can be used to fund new accounts. [Forbes]

Mastercard Unveils International Payments Tool

Mastercard has launched a tool that helps financial institutions set up international payments for their customers, including consumers and SMEs, in more than 60 currencies to over 100 markets. Mastercard Cross-Border Services Express promises a simple integration that helps deliver cross-border payments to places covering 90% of the world’s population. Mastercard is working with Fable FinTech and Payall Payment Systems on the service, offering users flexibility in how they pay by delivering funds to bank accounts, mobile wallets, cards, and cash payout locations. [Finextra]

How Using a Debit Card Instead of a Credit Card Could Help You Spend Less

With a credit card, the actual payment for the purchase is delayed, and that payment can be postponed, again and again. That “decoupling” of the purchase from the payment can make it psychologically easier to spend more money and lead to overspending and growing household debt. While credit cards can decrease the “pain of payment,” they might also reward the willingness to spend. A brain study from researchers at MIT seems to support the idea that credit cards can “push the gas pedal” on spending. Scientists found that credit card spending activates a part of the brain called the striatum that’s linked to reward perception and drug addiction. Similar purchases made with debit cards or cash did not have the same impact. [CNet]

Consumers and Merchants Can Benefit From Store Cards

Store cards can come with a variety of benefits. For example, consumers with lower credit scores are often more likely to be approved for store cards than general-purpose cards. If these consumers are careful with their spending and diligent in paying off their balances, store cards can help them build better credit scores. One of the biggest appeals of store cards is that they typically provide shoppers with exclusive rewards, discounts and other perks. PYMNTS found that 42% of consumers who used store cards reported doing so because it earned them more rewards than other methods. Interestingly, the draw of rewards may be getting stronger. According to a PwC survey, 30% of co-branded credit card holders said the benefits or rewards were more valuable now than before the pandemic. It is no surprise, then, that consumers with store cards use the cards 87% of the time when they can. [PYMNTS]

How Virtual Assistants Take Mobile Banking Apps to the Next Level

Though very few banks offer true virtual assistants, more are on the way. This automated help feature—which incorporates natural language processing, artificial intelligence and predictive analytics—takes mobile banking to the next level. It helps improve the customer experience while also allowing for increasingly sophisticated functionality in the mobile banking app. Research from Wells Fargo suggests younger consumers in particular are receptive to bypassing human help for a virtual assistant instead. [The Financial Brand]

The Ghost Of FTX: Bankrupt Exchange Haunts Customers With Phantom Debit Card Deliveries

Like that ex who just won’t go away, FTX is finding ways to pop up in people’s lives, most recently, through the delivery of its branded debit cards. It’s like the cryptocurrency exchange, which declared bankruptcy in November, is saying, “You thought it was over between us? It’s not over till I say it’s over.” A delay in processing at card issuer Evolve Bank & Trust is likely to blame for this harmless but ghostly snafu. The website to activate the cards is no longer operational, and the cards themselves don’t work. This isn’t the first time Evolve Bank & Trust has been involved with a cryptocurrency company that went belly up. The bank also issued cards for BlockFi, an exchange that filed for bankruptcy in November, too. [Forbes]

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