Credit Card Delinquencies Are on the Upswing
A growing number of Americans are falling behind on their monthly credit card payments, a trend that may be a harbinger of economic troubles ahead, according to a new report from Wells Fargo. Findings from the bank indicate that credit card delinquencies are surging among commercial banks, particularly at small lenders. In fact, late credit card payments at banks that are outside the top 100 in asset size recently surged to a record high. Those delinquencies raise the pressure on small- and medium-sized banks, which are already grappling with tightening credit conditions in the wake of three major bank failures earlier this year. [Fox Business]
Macy’s Big Warning on Credit Cards a Big Problem for Some Other Retailers
A warning on the health of U.S. consumers by America’s department store is likely sending quakes through the C-suites of similar retailers. On Tuesday, Macy’s said its second quarter credit card sales tanked 36% from the prior year to $150 million. The culprit: Bloated balances on Macy’s Citibank-powered credit card have been met with a rising interest rate environment. In turn, cash-strapped consumers, enduring an almost 32% annual percentage interest rate on the Macy’s card, haven’t been able to pay off their bills. Macy’s has opted to write off those balances. [Yahoo Finance]
Credit Card Balances Hit New Peak
Americans’ credit card balances rose briskly in the second quarter, hitting a sobering milestone of more than $1 trillion, the Federal Reserve Bank of New York reported this month. Credit cards are the most prevalent type of household debt, and saw the biggest increase of all debt types. More than two-thirds of Americans had a credit card in the second quarter, up from 59% roughly a decade earlier, the researchers found. And, they noted, card balances were more than 16% higher in the second three months of this year compared with a year earlier. Younger adults, in particular, are turning to credit to deal with tighter budgets, according to TransUnion. [The New York Times]
Nearly 71% Say Back-to-School Expenses Are a Challenge
An early July survey by U.S. News & World Report shows that almost three-quarters of Americans expect the costs of sending kids back to school this year to be a challenge. And 11.9% say they have no idea how they’ll pay for school expenses. When respondents were asked if school expenses seem higher this year, 53.8% say costs increased a lot, 33.4% thought they increased a little and 9.1% say costs have stayed the same. Only 3.7% say expenses have decreased. More than 69% plan to use a debit card or cash as part of their payment plan, but it’s concerning that many also say they plan to use a type of credit to manage expenses, including 17.3% who will carry a credit card balance. Almost 16% expect to pay $400 or more per child for back-to-school expenses, and additionally, 15.4% expect to spend more than $400 per child on extracurricular activities. [U.S. News & World Report]
Nearly 60% of Consumers View Mobile Phones and Laptops as Equally Secure for Payments
New research revealed that 57% of banking customers consider both smartphones and computers as offering the same level of security when sending and receiving money to and from family or friends. Similarly, nearly 56% of individuals expressed an equal level of trust in these devices when it comes to accessing their bank accounts, while almost 60% of consumers equally trust these devices when paying for goods and services. [PYMNTS]
Bank of America Offering Credit Card Rewards for Electric Vehicle Owners
The Bank of America Customized Cash Rewards credit card will now offer 3% cash back at electric vehicle charging stations, expanding the reward already offered for traditional gas station purchases. Bank of America is expanding this option because it noticed a 44% growth in electric vehicle charging transactions during the first half of 2023. In addition to offering Customized Cash Rewards cardholders rewards for EV charging station purchases, the 3% cash back for online shopping will now also include cable, streaming, internet and phone plans. [Investopedia]
India Uses AI to Bring Voice-Activated Mobile Payments
India is using artificial intelligence to expand digital payments to rural areas. While India’s Universal Payments Interface is now used by around 350 million, it has had trouble breaking into the country’s more rural regions due to spotty internet access and lower levels of literacy. It’s why the Reserve Bank of India has recently unveiled a plan for “conversational” payments, allowing UPI users to make verbal transfer instructions on their phones which will be processed using AI-based speech recognition. [PYMNTS]
Amazon is Continuing to Bet on BNPL
Amazon is expanding its financial services footprint by letting retailers integrate Amazon Pay, its buy now, pay later option, within their checkout to reach a new audience of buyers looking for flexible payment options. The equal monthly payments offering is now available at tens of thousands of other online stores. The BNPL model has witnessed exponential growth as shoppers seek more flexible alternatives to traditional credit. Amazon’s extension of this service beyond its platform to other retailers amplifies the trend’s momentum. It also demonstrates the e-commerce giant’s adaptability and determination to make a name for itself within the financial services landscape. Essentially, Apple is aiming to be at the forefront of the consumer payment experience and keep its users within its ecosystem of apps and technology. Amazon is engaging in a similar strategy, where the goal is to keep customers within its orbit, and its recent BNPL expansion highlights just that. [Payments Journal]
US Open Lands Partnership Renewal Agreement with American Express
The US Open has announced a partnership renewal with the international credit card provider, American Express. American Express and the US Tennis Association have formally extended their current agreement. The 2023 US Open will be the 30th event in which American Express has been a partner since the early 1990s. American Express will offer a variety of on-site fan experiences, such as games, relaxation services, and the chance to win digital collectibles, in addition to accessibility to the Centurion Lounge for platinum card members. For the very first time, the American Express Shop will be offering unique US Open items and card users can receive $10 back after utilizing $100 or more with their registered card at participating merchants on the grounds. [Sports Mint Media]
Debit Cards Offered to Homeless People Who Clean Up Their Own Mess
Homeless encampments entrenched along waterways in San Jose are polluting rivers, creeks, and streams with trash and biowaste. Between July 2022-June 2023, Valley Water’s cleanup crews removed more than 2.7 million pounds of trash, debris, and hazardous pollutants generated from unsheltered people along Santa Clara County’s waterways. To combat the mess, the region’s water utility will begin providing debit cards to homeless people who “maintain tidy camp areas free of trash,” Valley Water announced Wednesday. Unsheltered residents can also earn debit cards by collecting and bagging anyone’s trash found on land managed by Valley Water. [KRON]
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