A Record Number of Consumers Are Making Minimum Credit Card Payments as Delinquencies Also Rise
Consumer stress has intensified, with an escalating share of credit card holders making only minimum payments on their bills, according to a Philadelphia Federal Reserve report. In fact, the share of active holders just making baseline payments on their cards jumped to a 12-year high, data through the third quarter of 2024 shows. Along with the trend in minimum payments came a move higher in delinquency rates. The share of balances more than 30 days past due rose to 3.52%, an increase from 3.21%, for a year-over-year gain of more than 10%. It also is more than double the delinquency level of the pandemic-era low of 1.57% hit in the second quarter of 2021. [CNBC]
Paper Checks Are Dying
A 2024 study by GoBankingRates revealed that 46% of U.S. adults didn’t write a single check in the preceding year. This shift away from traditional paper checks has been accelerated by the COVID-19 pandemic, which pushed consumers towards contactless and digital payment options. As we move into 2025, it’s clear that digital payment methods are not just convenient, they’re essential. In 2021, 11.2 billion checks were written in the United States, a stark decline from 18.1 billion in 2015. This downward trend is likely to continue, with major retailers such as Target discontinuing acceptance of personal checks as of 2024. Other big names like Aldi, Whole Foods, Old Navy, and Lululemon have followed suit, moving towards what industry experts are calling a “check zero” policy. [Fortune]
American Express to Pay $230 Million Settlement over Claims of Deceptive Credit Card, Wire Service Sales Tactics
American Express said it will pay about $230 million to settle criminal and civil probes into alleged deceptive practices in selling credit card and wire transfer products to small business customers. The credit card and travel services company agreed to pay $138.4 million, including about $108 million in fines, and enter a non-prosecution agreement to end criminal and civil probes by the US Department of Justice. Between 2014 and 2017, some AmEx staffers used aggressive sales tactics to pressure small-business owners into signing up for credit cards, according to a DOJ press release. [New York Post]
Ally Sells $2.3 Billion Credit Card Business to CardWorks
Ally Financial has sold its credit card business to consumer finance company Cardworks. The deal will see CardWorks and its subsidiary Merrick Bank acquire Ally’s credit card portfolio of $2.3 billion in credit card receivables and 1.3 million active cardholders. The news comes two weeks after reports that Ally was laying off a little less than 5% of its staff, ending mortgage originations and re-examining its credit card business. [PYMNTS]
UK to Launch Independent Firm to Boost Variable Recurring Payments
British regulators are setting up an independent company that will advance variable recurring payments, allowing third-party financial service providers to access banking information and initiate payments on behalf of consumers or businesses. This move is part of a broader plan for 2025, which includes the launch of live services for consumers to make recurring payments to utility companies, government entities and financial services firms. The new company, Open Banking Limited, will play a key role in establishing an independent central operator to coordinate how variable recurring payments are made. Variable recurring payments will allow consumers to minimize unexpected expenses and potentially lower processing fees for businesses. [Reuters]
Costco Credit Card Hikes Rewards for Gas at Its Pumps
Starting Jan. 19, 2025, the Costco Anywhere Visa Card by Citi, along with its small-business counterpart, the Costco Anywhere Visa Business by Citi, will earn 5% cash back on gas purchases made at Costco. Previously, cardholders earned 4% cash back at Costco pumps. Note that all other non-Costco gas purchases and EV charging purchases will continue to earn 4% cash back (with a combined yearly spending cap of $7,000 in the 5% and 4% gas categories), then 1% back. [Nerd Wallet]
Dutch Government Aims to Prevent Buy Now, Pay Later Purchases in Stores
The Dutch government is seeking to prevent the rollout of “buy now, pay later” services in physical retail outlets due to the financial risks they pose for consumers, according to a letter sent by Finance Minister Eelco Heinen to parliament on Tuesday. These loans are often provided by digital lenders such as Sweden’s Klarna. Although an outright ban would be “unfeasible” because of EU regulations, the Dutch government believes that BNPL services can trigger earlier and larger debts, particularly among younger consumers. [Reuters]
Chase Launches Impressive New Welcome Offers for IHG Rewards Cards
Chase has announced new welcome bonuses for its IHG One Rewards consumer credit cards. New cardholders can earn up to 170,000 bonus points, depending on which card they choose. New cardholders who apply for the IHG One Rewards Premier Credit Card can earn an elevated welcome bonus when they meet a minimum spending threshold: 170,000 bonus points after spending $4,000 on purchases on the card in the first three months from account opening. If you are committed to paying no annual fee, the IHG One Rewards Traveler Credit Card has an elevated offer of 100,000 bonus points after spending $2,000 on purchases on the card in the first three months from account opening. [Fortune]
Airline Credit Cards Can Be the Ticket to a Better Flying Experience
Airline credit cards are often underrated compared to flexible travel rewards cards, but they can be just as valuable for loyalists of a specific airline. Like more generic travel cards, airline credit cards let you earn rewards on your everyday spending that you can redeem for free flights. The main difference is that you’ll typically earn rewards directly in the currency of an airline’s own loyalty program, meaning you can’t transfer your points elsewhere or cash them out. In exchange for less flexibility, airline cards typically reward cardholders with airline-specific perks like free checked bags, rewards program status, and discounts on flights or incidentals. [CNet]
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