How the pandemic has changed credit cards; The dangers of buying now, paying later


How credit cards have changed during the pandemic and what to expect in 2023

The past few years have been a roller coaster for the travel industry and the rewards credit card market. Looking back over the past few years, some notable trends stand out as card issuers have attempted to respond to customer sentiment and stay relevant in a very dynamic environment. From changing bonus categories to generous welcome offers and a range of new product launches, here’s a look back at where we’ve come and a possible look at where the market is headed in 2023. [The Points Guy]

Buy now, pay later sounds too good to be true, because it is.

Buy Now Pay Later companies often don’t do thorough consumer credit checks, which means people end up in debt that they can’t pay. If someone gets it wrong, they can be hit with late fees and see their credit score plummet. And screwing it up is easy to do if people take out multiple loans or just aren’t used to paying on a semi-monthly basis like other bills. If a consumer buys something on BNPL and the product isn’t what it’s supposed to be, there’s a mistake, or they need to return it, getting their money back can be more complicated than with d other payment methods. The ability to pay in instalments encourages consumers to buy more than they otherwise would. There is pressure among consumer advocates and in states like California and Massachusetts to increase surveillance of BNPL companies and bring them online, and the CFPB is looking into them as well. [Vox]

Americans racked up $40 billion in additional debt in June, Fed says

Americans racked up $40.1 billion in debt in June. The figure was considerably higher than economists had expected, after May’s revised total of $23.8 billion. American borrowing rose 10.5% in June, from 6.3% in May, according to the Fed’s G.19 consumer credit report. Revolving debt, roughly an indicator of outstanding credit card balancesrose 16% after rising 7.8% in May. [CNN]

Wells Fargo Study: Credit Card Rewards Are Being Used To Offset Inflation Worries

A new study from Wells Fargo has found that large numbers of Americans are using their credit card rewards to help offset the costs of everyday shopping amid concerns about rising inflation. The survey found that 92% of respondents were concerned about rising inflation (59% very concerned, 33% somewhat concerned). Additionally, nearly half of rewards cardholders (49%) said they use their rewards to help pay for things like groceries and gas. [MyChesCo]

How Race Affects Your Credit Score

Credit scores differ significantly when broken down by race. Credit card processing company Shift found these average FICO scores in 2021: Asian, 745; White, 734; Hispanic, 701; Black, 677. Then there is the issue of credit invisibles, or people with no credit history or report to one of the three bureaus. A thin credit file seems more risky to lenders, leading to loan denials or higher interest rates for the borrower. According to the most recent data from the CFPB, about 15% of black and Hispanic consumers are considered credit invisible, compared to 9% among white and Asian consumers. An additional 13% of black consumers and 12% of Hispanic consumers have unrated records, compared to 7% of whites. [U.S. News and World Report]

Bank of America must pay users in these 12 states after failing to distribute pandemic benefits

In July, Bank of America was fined $225 million for failing to distribute unemployment benefits during the pandemic. Although unemployment benefits are paid through taxes collected by employers, some states hired the bank to administer the payments as the pandemic raged. Unemployment benefits were paid in two ways: by direct deposit to the beneficiary’s account or with a prepaid card. In theory, a person should have received a card with preloaded unemployment benefits. Once received, they could use the card like a debit card, making necessary purchases. However, things didn’t work out that way for recipients in the following 12 states: Arizona, California, Iowa, Kansas, Kentucky, Massachusetts, Maryland, Michigan, New Jersey, Nevada, North Carolina, and South Carolina. [The Motley Fool]

Fed officials say more rate hikes needed, despite slowing inflation

Slowing US inflation may have opened the door for the Federal Reserve to temper the pace of future interest rate hikes, but policymakers have left no doubt that they will continue to tighten monetary policy until price pressures are completely broken. A report from the US Department of Labor on Wednesday showing consumer prices did not rise at all in July compared to June was just one step in what policymakers said was a long process, with a a boiling labor market and suddenly buoyant equity prices suggesting the economy needs more of the cooling that would come from higher borrowing costs. [Reuters]

Rapid growth of Apple Card, outside suppliers blamed for incidents within Goldman’s credit card business

When it unveiled its new credit card in 2019, Apple touted it as a game changer, with unheard of levels of simplicity and transparency. Behind the scenes, however, the rapid growth of the card and the new platform built by Goldman Sachs to serve it have created difficulties. Goldman has struggled to handle a larger-than-expected influx of disputed transactions, known in the industry as chargebacks, people say. Chargebacks occur when a customer requests a refund for a product or service charged to their card for one of several reasons. Litigation, which puts banks in the middle of disagreements between customers and merchants, has skyrocketed during the pandemic, according to payments consultants. [CNBC]

Taking over REI credit card, Capital One drops mobile payment incentive

Capital One has added REI Co-op, the outdoor equipment retailer, to its growing group of co-branded retail credit card partners that includes Walmart, Saks Fifth Avenue and Williams-Sonoma. Capital One will retain some core functionality of the existing REI card, a Mastercard that was previously issued by US Bank, including 5% cash back on purchases at the 177 REI stores. It increases rewards on all other purchases to 1.5% instead of 1%. But Capital One will no longer refund REI credit card users 2% for paying with a mobile wallet, a feature introduced by US Bank in 2019. [American Banker]

Some Social Media Influencers Are Paid Thousands To Endorse Cryptocurrency Projects

Some influencers on social media platforms earn thousands of dollars for every promotional video they make for various cryptocurrency projects. State regulators have found instances in which influencers have promoted fraudulent companies. In some cases, influencers failed to disclose that the projects they promoted were part of a paid sponsorship, which potentially led their viewers to make risky investments. [CNBC]

More couples are asking for travel funds on their wedding registry

A recent report from online wedding marketplace The Knot found that virtual experiences and gifts like gift cards for Airbnb and Delta were among the most popular registry gifts in 2021. About 80% of gift cards for which the couples signed up for The Knot registry last year are for travel or home related retailers. Airbnb accounted for 17% of gift cards on the registers, while 20.4% were Home Depot gift cards and 7.6% were Delta Air Lines gift cards. [USA Today]

Save money on your next flight by purchasing Southwest Gift Cards at Costco

Right now, on the Costco website, members can purchase a $500 Southwest Airlines e-gift card for just $449.99. It basically amounts to getting $50 worth of free travel to use with Southwest. This e-gift card is valid on any Southwest Airlines flight and can be redeemed through their website, the Southwest Airlines mobile app, over the phone, or even in person by visiting your local airport ticket counter. This e-gift card can only be used on Southwest Airlines flights, not anything to do with Southwest. There’s a limit of five cards per customer, so in theory you could save $250 traveling on Southwest by using as many e-gift cards as possible. [SF Gate]

The 20 best credit card companies in the world in 2022

What are the best credit card companies, as of this year? The sheer volume of information can be overwhelming, to say the least. If you’re looking for a little help, here are 20 of the best credit card companies in the world. As usual, they start at number 20 and go all the way to number one, where you can find what is arguably the best credit card company in the world. [Money Inc]


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