Consumer Stress Is On The Rise
Rising auto repossessions and a growing rate of minimum credit card payments offer signs consumers may be getting stretched. Those figures complicate the notion that the consumer is relatively healthy, a warning sign for the broader economy. Two new reports out this past week show some cracks in the consumer’s finances. The number of credit card holders making only minimum payments on their bills has jumped to a 12-year high, a study by the Philadelphia Federal Reserve found. The level of cardholders only making minimum payments rose to 10.75% in the third quarter of 2024, the study found, continuing an upward trend from 2021. The number of 30-plus day delinquencies also rose during this period, up to 3.52%. That’s double the delinquency rate of 1.57% from the pandemic low in the second quarter of 2021. [Axios]
The Economy Is Strong. Why Are More Americans Barely Making Credit Card Payments?
Americans are not OK financially, according to the Philadelphia Federal Reserve. The share of active credit card accounts making just the minimum payment hit a 12-year high of 10.75% from July through September 2024, based on data from the largest banks in the country, the Philadelphia Fed said Wednesday. As credit card balances swell, the share of delinquent balances is also worsening, it said. Despite broader economic data showing that consumers remain resilient and spending is strong, this data paints a different picture. [USA Today]
Fed Holds Rates Steady, Takes Less Confident View On Inflation
The Federal Reserve left unchanged its overnight borrowing rate in a range between 4.25% and 4.5%. The decision followed three straight cuts since September 2024. The post-meeting statement offered a somewhat more optimistic view on the labor market while dropping a key reference from the December statement that inflation “has made progress toward” the Fed’s 2% inflation goal. [CNBC]
The Federal Reserve’s New Debit Card Rule Threatens Consumers And Banks
While some lawmakers and regulators are targeting credit cards, the Federal Reserve has plans for your debit card. The likely result will be to make your pocketbook lighter, with less cash and fewer cards. The threat from the Federal Reserve is an update to something called Regulation II (Reg II), which governs the amount that card issuers are allowed to charge vendors in exchange for the convenience of accepting their cards. Currently, the central bank is still considering its proposed changes to the rule, including a reduction in the maximum interchange fee that debit card issuers can charge merchants. The proposed rule would lower the government-imposed cap from 21 cents (plus an ad valorem component that is 0.05% of the transaction value) to 14.4 cents, plus 0.04% of the transaction value. For comparison, a typical credit card interchange fee for businesses is 1.5% to 3.5% of each transaction, normally significantly higher than 21 cents. [National Review]
Your Next Credit Card Might Not Have Any Numbers. Here’s Why.
First, cards went contactless. Now they’re going numberless. Mastercard has revealed plans to entirely remove digits from physical credit and debit cards in Australia, a move the payments giant said would help reduce fraud and minimize consumers’ exposure to mass data breaches. Global Mastercard executives last week flew to Melbourne to meet the company’s bank and merchant partners and detail its product road map for the next five years. Key to those plans is an elimination of the traditional 16-digit number from physical credit and debit cards by 2030, which Mastercard Chief Consumer Product Officer Bunita Sawhney said would be replaced by tokenization and biometric authentication. [The Sydney Morning Herald]
Gift Card Sales Indicate In-Person Dining is Back
Restaurant gift card sales peaked earlier in the 2024 Thanksgiving weekend with shoppers buying 13.2% more in dollars per card on Black Friday and 17.7% more spent over the weekend, while Cyber Monday sales remained flat vs. those same days in 2023, according to data from Paytronix, the digital guest engagement platform. The company also said 2024 saw “renewed confidence in in-person dining experiences with consumers spending $7.8 million for in-store cards vs. $7.3 million on digital card sales, which reversed last year’s trend.” [Nation’s Restaurant News]
Citi’s ‘Buy Now, Pay Later’ Program Is Coming to Apple Pay
Using fixed payment plans through “buy now, pay later” programs is growing in popularity, and Citi has noticed. Those enrolled in its Citi Flex Pay program will soon have the option to set up payment plans when making purchases of $75 or more through Apple Pay. This feature will start rolling out in February. These payment plans are available with no fees and no interest, assuming you select a 3-month plan. Choosing a plan for additional months does have a monthly fee. These Citi Flex Pay plans will allow you to make fixed monthly payments, and you’ll still earn rewards on your Citi credit card the way you normally would. [Upgraded Points]
5 Surprising Companies Now Accepting Cryptocurrency As Payment
Today, you can use it to buy everything from movie tickets to plane seats. Crypto advocates like Tesla and AMC have embraced crypto payments, and many others have also jumped on the bandwagon. Here are some surprising companies that accept cryptocurrency as payment: Home Depot, AT&T, Microsoft, Starbucks and Whole Foods. [Quartz]
Japanese Nintendo Store Will No Longer Accept Credit Cards Issued Abroad and Overseas PayPal Accounts
Nintendo announced some big changes today regarding payment methods on their Japanese Nintendo eShop/My Nintendo Store. From March 25 onward, they plan to stop accepting payments via credit cards issued outside Japan and PayPal accounts opened abroad. According to the official announcement, this measure is to prevent fraud. Nintendo apologizes for any inconvenience caused by this change and requests that affected customers use other payment methods from now on, such as credit cards issued in Japan. [Automation Media]
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