Personal Finance

This Week In Credit Card News: Walmart’s Membership Service Challenges Amazon; Issuers Altering Rewards On Cards

Walmart Announces Membership Service in Attempt to Compete With Amazon

Walmart is rolling out its newest and much-anticipated attempt to compete with Amazon Prime: a membership service that will give customers free shipping on tens of thousands of items, including produce and groceries. The service, Walmart+, will cost $98 a year, which is lower than the $119 charged for Amazon Prime. But Walmart+ will require an order of at least $35, while Prime does not have a minimum. Walmart said many of the 160,000 items that would qualify for the free shipping would be delivered directly from its stores to customers’ homes.  [The New York Times]

Credit Card Providers Scramble to Update Customer Benefits as International Travel Ban Drags On

Credit card issuers’ revenue has been hit by declining consumer spending during the pandemic and its resulting economic disruption. But the credit card companies also are grappling with a longer term issue: keeping customers happy with rewards that suddenly look a lot less enticing, especially in the realm of travel. The customer satisfaction rate for the credit card industry fell 1% in May from pre-pandemic levels, according to J.D. Power’s 2020 U.S. Credit Card Satisfaction Study. The drop appears small, but in the years before 2020, the industry performance had been trending up by 0.5% annually for some time. [The Wall Street Journal]

Neediest Credit Card Users Are Seeing Their Limits Fall the Most

Subprime borrowers, who rely more on credit cards than any other group, are seeing their limits cut the most as banks reduce exposure during the coronavirus pandemic. Banks cut overall borrowing limits for subprime borrowers by about 19% during the second quarter, according to TransUnion
TRU
. That compares with an average reduction of just 1.2% across all card accounts during the same period. [Bloomberg]

Why Visa and Mastercard Are Suddenly Keen on Installment Lending

Financial industry heavyweights are taking note of the rapid rise of new borrowing options that offer shoppers an alternative to the decades-old credit card. Visa announced a partnership that is meant to enable shoppers in India to make installment payments when they swipe Visa-branded cards. In July, Visa and ChargeAfter unveiled a similar pilot in the U.S. And on Monday, Mastercard announced a partnership with QuadPay, another firm that offers 0% financing on small-dollar purchases that borrowers pay off in four installments. The new wave of installment loan products can help merchants by boosting their sales. Payment networks like Visa and Mastercard get a small cut of each transaction whether it happens on a traditional credit card or a digital-era installment loan. [American Banker]

Visa Says U.S. Spending on Cards Up Despite Drop in Jobless Aid

Visa said overall spending on its cards by U.S. consumers climbed in July and August even after elevated unemployment benefits expired. The spending on debit cards rose 26% in July and 24% in August compared with the same periods a year ago. Those increases offset an 8% decline in spending on credit cards during both months. [Bloomberg]

Mastercard is Pursuing Touchless Retail with Two New AI-Powered Solutions

Mastercard unveiled two solutions set to help retailers digitize and simplify operations during the coronavirus pandemic. Shop Anywhere allows customers to shop and pay without waits or checkout lines, creating an experience similar to autonomous checkout. AI Powered Drive Through enables restaurants to offer customers personalized or dynamic menus on their mobile devices, based on store preferences, historical ordering trends, or other inputs. It can eliminate employee-led ordering and speed up wait times. [Business Insider]

Ex-Bank of America Employees Allege ‘Extreme Pressure’ to Sell Credit Cards

Even as Bank of America’s nationwide sales practices were facing governmental scrutiny, company executives in one state were putting increased pressure on branch-based employees to sell more credit cards, according to interviews with former BofA
BAC
employees, a wrongful termination lawsuit filed by one of those ex-employees and documents reviewed by American  Banker. These raise questions about how much the sales culture at the bank has really changed. They open a window into BofA’s sales practices in the wake of the Wells Fargo
WFC
scandal, and suggest that the company has found ways to continue its focus on aggressive sales even within the confines of new regulatory expectations. [American Banker]

How The Banking Experience Is Adapting To The Covid-19 ‘New Normal’

When coronavirus cases started to accumulate in the United States, banks and credit unions had to adapt quickly with safety of both staff and customers in mind. But just as state and local reopening plans have varied greatly, so too have the ways financial institutions have entered into this next phase. We may still be far from what is eventually recognized as the “new normal” for consumer banking. But you can anticipate that some adjustments will be sticking around for a while. [Forbes]

Credit Card Issuer Market Share: Top 25 Issuers of 2020

In the U.S. alone, consumers and businesses used credit cards to purchase almost $4 trillion in goods and services in 2019. That $4 trillion was generated by more than 44 billion card transactions. Customers owed credit card companies more than $1 trillion by the end of 2019. Spending on goods and services, or purchase volume, rose 7.8%; the number of purchase transactions increased by 8.7%; and total credit card debt at year end saw an increase of 4.6% from the total credit card debt for the same period in 2018. [CardRates]

PayPal Taps Into Installments With New Feature That Splits Purchases In Four

PayPal joined in on a hot e-commerce trend when it announced that it would be offering an interest-free payment option that lets U.S. users make purchases in four installments. The company’s new Pay in 4 option in the U.S. lets it offer interest-free installments, which have become increasingly popular through companies like Klarna and Afterpay that also let online shoppers split purchases into four pieces. [MarketWatch]

Chase Announces New Freedom Flex Credit Card

The new Chase Freedom Flex card, which will be available for applications starting September 15, is a no-annual-fee cash back Mastercard that combines a set of rotating bonus categories with an additional trio of fixed bonus categories: 5% cash back on travel purchased through Chase Ultimate Rewards, 3% cash back on dining (including takeout and delivery) and 3% cash back at drug stores. Card holders will also earn 5% cash back on up to $1,500 in purchases in bonus categories that rotate each quarter. The Chase Freedom Flex will also earn 5% cash back on Lyft
LYFT
rides through March 2022. [CNN]

Americans Fear Their Credit Won’t Recover, Even If the Economy Does

The effects of Covid-19 were originally projected to last a couple of months, but the pandemic has now impacted half of 2020. With no official “end” in sight, many Americans are starting to fear for their financial futures. According to the Credit Impact Report from Finicity, a staggering 95% of those affected worry that their credit won’t recover after the pandemic, even if the economy does. If the current health crisis has left you with credit anxiety, there are steps you can take to protect your credit during the outbreak. [LowCards.com]

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