Apple, Walmart Go Big Into Financial Services; Delinquencies, Charge-Offs Rise

Credit Card Delinquencies, Charge-Offs Rise on Path to Normalization

Credit card delinquencies and charge-offs rose for all six major U.S. card issuers in October. Bank executives said such a trend is expected as credit normalizes after stimulus aids wane and people come out of pandemic lockdowns. Delinquency and charge-off rates were still well below pre-pandemic levels as consumers continue to show resilience despite inflation, high interest rates and a looming economic recession. All six major card issuers tracked by S&P Global Market Intelligence posted higher charge-off rates in October, both sequentially and year over year. American Express, Bank of America, Capital One, Citigroup, Discover and JPMorgan Chase posted an average credit card annualized net loss rate of 1.15% in October, up from 1.04% in September and 0.90% in October 2021. However, the October figure was about half of the 2.32% recorded in February 2020, just before the pandemic was declared March 12, 2020. Capital One posted the biggest year-over-year increase, of 48 basis points, in charge-off rates in October, followed by Citigroup with 32 basis points. American Express had the slightest year-over-year increase of 11 basis points. [S&P Global]

Walmart Checking and Apple Savings: Different Motivations, Similar Outcomes?

Walmart and Apple have announced plans to offer traditional financial accounts. Walmart’s consumer checking account may advance financial inclusion by increasing account access to unbanked and underbanked consumers. Apple’s consumer savings account may change how credit card issuers offer rewards to their customers. Both offerings are likely to increase competition in the financial services industry, though whether they ultimately benefit consumers remains to be seen. [Federal Reserve Bank of Kansas City]

Credit Card Debt from Holiday Gift Shopping May Not Be as Explosive This Year

A larger-than-normal group of Americans who are trying to avoid going into credit card debt from making too many credit card purchases this holiday season. A survey by the National Retail Federation of over 7,000 shoppers found that 43% of shoppers plan to primarily use debit cards to make holiday purchases, the largest share since 2013. Meanwhile, 38% of respondents said they’ll primarily use credit cards, the smallest share since 2015. The remaining shoppers planned to make purchases using cash or by writing checks. A TD Bank survey of over 1,000 Americans’ holiday shopping habits suggested that the gap between people primarily making purchases with debit cards over credit cards could be even wider: 42% of respondents said they planned to use debit cards and 33% credit cards. [USA Today]

Credit Card Applications Remain Strong Despite Rising Interest Rates

Credit card applications rose this year as Americans confront higher everyday expenses for necessities like food, gasoline and rent, according to a New York Federal Reserve Bank survey. The application rate for credit cards hit 27.1% in October, above last year’s level of 26.5% and the pre-pandemic reading of 26.3%. In 2022, the typical application rate for credit cards was 26.7%, about 3.6 percentage points higher than last year. Application rates rose for Americans with credit scores over 760 and fell for those with a score under 680. The rise in credit card applications is somewhat concerning, because interest rates are astronomically high right now. [Fox Business]

Experts Urge Holiday Shoppers to Use Credit Instead of Debit Cards When Buying Online

The FBI, FTC, and countless experts all offer the same advice when it comes to online holiday shopping: choose credit over debit. If a criminal steals your credit card information, they are not able to wipe out your checking account, which can happen if your debit card is compromised. Credit cards also usually offer additional protections that debit cards do not. Credit cards are protected under the Fair Credit Billing Act, but debit cards are not. Only some debit card issuers may voluntarily offer protections because they are not required to do so. If you don’t receive what you paid for, the FCBA allows you to dispute the charge on your credit card as a billing error. [NBC 15]

Republican Business Group Launches Ad Blitz Against Credit Card Reform Bill

A new business group led by Republican heavyweights will launch an ad campaign this week in defense of a key source of revenue for Visa and Mastercard. The American Free Enterprise Chamber of Commerce, which has branded itself as an alternative to the US Chamber of Commerce, is hoping to gin up opposition to the Credit Card Competition Act, bipartisan legislation that targets the $77 billion banks and payment companies collect from merchants each year whenever consumers swipe their credit cards at checkout. [Bloomberg]

Credit Card Reward Trends Reveal that Millennials Are Saving While Gen Z is Donating to Charity

Imprint, a credit card issuer, analyzes the data collected from its co-branded cards to personalize its reward programs with customer-trusted brands. In doing so, Imprint noticed striking differences in how millennials and Gen Z are using their rewards. Imprint’s data shows that while millennials are holding onto their credit card rewards for longer periods of time, Gen Zers are using their rewards in smaller increments and even often donate them to charity. In general, Gen Z is showing overall smarter credit card behavior compared to how millennials were spending at that age. [Business Insider]

Digital and Mobile Wallet Payments Brighten a Gloomy Black Friday

The most significant growth seen during this Black Friday was in digital wallet usage, both online and in store. The increase in brick-and-mortar usage may be attributed to a boost in physical traffic compared to last year, when pandemic-related lockdowns were still easing. This surge of Americans using alternate payment methods for Black Friday purchases coincides with a 9% rise in digital wallet use for in-store purchases globally. [PYMNTS]

Buy Now Pay Later Use is Surging. Is It a Useful Tool or Predatory?

Buy now, pay later usage surged 85% during Cyber Week, according to data from Adobe Analytics. The services face growing scrutiny since they’re unregulated and don’t require credit checks for approval. One financial advisor called it “predatory lending,” but others have tips they said help shoppers make the most of BNPL. [Business Insider]

In the Digital Era, Gift Cards Are More Critical than Ever for Restaurants

Nearly half of all gift card sales occur in the last two months of the year and most of those redemptions happen in Q1, a historically slow time for restaurants. The promotional push has become a bit more aggressive in the past three years as restaurants diversify their revenue streams amid crises. Further, that promotional push has largely come via ecommerce channels as consumers have become more digitally dependent. Paytronix data found that gift card sales on Cyber Monday jumped nearly 14% and 18% in overall dollar sales. Digital cards experienced a 31% increase over 2021. According to Givex, 51% of Americans plan to spend at least $100 on gift cards this holiday season, and 44% of consumers say they would prefer restaurant gift cards. [Nation’s Restaurant News]

Dick Durbin Is Coming for Your Credit Card Rewards

The large big-box retailers in the country are rallying dozens of big-box behemoths, global fast-food chains and convenience store juggernauts to ram through new government mandates for credit cards. These retail giants formed an alliance with a few lawmakers to upend the payments system as we know it, with disastrous consequences for Main Street financial institutions and consumers alike. The worst part about it is, we’ve seen this story before. Following enactment of the so-called Durbin Amendment in 2010, legislation passed as part of the Dodd-Frank Act that created new government price controls and regulations on debit card transactions, big-box retailers pocketed a multibillion-dollar wealth transfer on the backs of consumers, small businesses and community and regional banks. Meanwhile, the cost of banking services went up for millions of average consumers: the availability of free checking accounts decreased by 40%, debit card rewards programs evaporated and a million Americans lost access to the mainstream banking system altogether. [Fox Business]

History Of Women and Credit Cards: 1970s To Present

Although we may not think of credit cards as a gender equality issue today, it wasn’t until 1974 that women were allowed to apply for and own a credit card in their name. In this article, we’ll take a deep dive into history of women and credit and how legislative advancements and shifting societal perceptions have led to significant advancements in women’s equality and in turn, greater access to financial independence for women. [Forbes]

Mastercard Teams With Marqeta on Instant Vendor Payments

Marqeta has integrated with Mastercard Track Instant Pay to enable instant payment of supplier invoices. With the integration of this virtual card solution that uses machine learning and straight-through processing, the card issuing platform will enable its customers to streamline their authorization of supplier payments and management of cash flow. [PYMNTS]