Banks plan payment wallet to compete with PayPal, Apple Pay
Major banks are teaming up to launch a digital wallet that allows people to shop online. Wells Fargo, Bank of America, JPMorgan Chase and four other banks are working on a new product that will allow customers to pay at online checkouts using a wallet that links to their debit and credit cards. The digital wallet is operated by Early Warning Services, the banking company that operates Zelle money transfer service. It will operate separately from Zelle. EWS, whose owners also include Capital One, PNC, US Bancrop and Truist, plans to roll out the new offering in the second half of the year. One goal of the new service is to compete with third-party wallet operators like PayPal and Apple Pay, according to people familiar with the matter. Banks are afraid of losing control over their customer relationships. [The Wall Street Journal]
There is a one-year waiting period for unpaid medical debt to show up on your credit report
This credit score change can work to your advantage
As of July 1, 2022, there is a mandatory one-year waiting period before unpaid medical debts are allowed to appear on your credit report. This change was introduced largely to give consumers more time to appeal rejected claims from insurance companies before their debt is declared past due. Also, starting July 2022, credit bureaus must remove all paid medical debt from consumer credit reports. That’s a big deal because it can normally take seven years for debts in collections to show up on your credit report, even if they’re paid in full. [The Motley Fool]
Generation X has the most credit card debt
When it comes to credit card debt, Generation X may be struggling the most. The average amount people in that cohort owe is $7,004, according to a new report from New York Life. That compares to $6,785 for baby boomers, $5,928 for millennials, and $2,876 for Gen Zers. Research from CreditCards.com also shows that more members of Gen X (77%) have some form of personal debt compared to other age groups. Baby boomers are defined as people aged 59 to 77; Gen Xers, ages 43 to 58; millennials ages 27 to 42; and Gen Z as ages 11 to 26. [CNBC]
New to credit consumers are ‘good risks’
Qualifying for a loan or credit card for the first time can be challenging, as lenders are wary of extending credit to people with no credit history. But once approved, new-to-credit (NTC) customers outperform borrowers with established credit, according to a new study from TransUnion. In the United States, NTC consumers with credit scores close to the highest rank had lower default rates than consumers with a credit service of the same age and risk profile on the first credit cards they opened – an indication that many are cautious about making timely payments on their very first credit cards to maintain ongoing access to this new source of credit. [GOBanking Rates]
Credit card payment disputes are on the rise as consumers defraud businesses
Consumers are defrauding businesses at ever increasing rates by fraudulently disputing credit card charges they actually incurred. Incidents of “friendly fraud” are up 20% to 30% by 2022, depending on the market. Friendly fraud encompasses a range of situations where a customer falsely disputes a charge to their credit card account, including when they forgot to make a purchase or do not recognize the merchant’s name on their account; not realizing that a friend or family member used their card to buy something; or willfully spend money with the intent to dispute the charge afterwards. [Axios]
Credit Karma tricked customers into thinking they were pre-approved for credit cards
The Federal Trade Commission ordered the personal finance firm Credit Karma to pay $3 million to customers the agency alleges were tricked into applying for products they didn’t qualify for. Credit Karma used “dark patterns” to trick consumers into thinking they were “pre-approved” for credit card offers they wouldn’t normally qualify for. Dark patterns refer to website and app interface designs that can be used to manipulate or mislead consumers. [CBS News]
Walmart-backed fintech startup plans to launch its own ‘Buy now, pay later’ loans
A Walmart-backed startup wants to compete with companies that buy now, pay later. The company, called One, is gearing up to launch its own version of the payment service as early as this year. One, which Walmart owns a majority stake, wants to launch a service that customers can use at Walmart’s website and stores, as well as at other retailers, the source said. The effort was driven in part by a more challenging economic environment and consumers feeling pinched by inflation. [CNBC]
PayPal accounts breached in large-scale credential stuffing attack
PayPal is sending data breach notifications to thousands of users who accessed their accounts through credential stuffing attacks that exposed certain personal information. Credential stuffing are attacks where hackers try to gain access to an account by trying username and password pairs that come from data breaches on different websites. This type of attack relies on an automated approach where bots run lists of credentials to “cram” login portals for various services. Credential stuffing targets users who use the same password for multiple online accounts, which is known as “password recycling.” [Bleeping Computer]
Credit card debt prevents nearly 20% of Americans from becoming homeowners
As Americans deal with high inflation and a heated housing market, growing credit card debt is a major drag on homeownership. According to Clever research, one in five or about 18% of those with credit card debt will be able to purchase a home through credit card debt by 2022. Credit card debt posed a greater threat to homeownership than student loans and medical debt, a Rocket Homes study also noted. [Fox Business]
How long do collections stay on your credit report?
A collections bill, also known as a write-off, can occur if you fail to make payments or ignore a debt you owe. If you fail to pay a bill, be it your credit card, medical bill, or utility bill, it could go to a collection agency. With a credit card balance, the lender usually waits until your payment is at least six months past due. When the creditor decides there is little chance of collecting the money you owe, your account may be sold to a collection agency. The bureau will then likely report your delinquent account to the credit bureaus. A receivable can be sold to a collection agency if you miss multiple payments on an account. A collections bill remains on your credit report for about seven years. Collection accounts lower your score, but the impact decreases after two years. [U.S. News and World Report]
FTX owes money to Netflix, Binance, Wall Street Journal
It’s the list everyone’s been waiting for, minus 9.7 million redacted customer names. But the 116-page FTX creditor list, which lists companies like Netflix and Apple, still paints a comprehensive picture of the now-bankrupt crypto company’s reach and the impact of its collapse. Among those mentioned are media companies such as the Wall Street Journal, Fortune, Fox Broadcasting, and CoinDesk, as well as major crypto companies such as exchanges Coinbase and Binance. American Airlines, Spirit Airlines and Southwest Airlines, as well as Stanford University were also listed in the document. The listing also names Gisele Bundchen Charitable Giving as a creditor. Brazilian supermodel and then-husband Tom Brady famously became invested in the business and even appeared in the Super Bowl ad. [CoinDesk]
CFPB wants information on consumer credit cards
Among other things, the CFPB asks consumers about their experiences with credit cards. The information must be used in an industry assessment that the CFPB conducts every two years. The report that must include this feedback is mandated by the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) and is intended to help determine whether regulatory changes are needed. Examples of things the CFPB would like to hear about are terms of credit card agreements, credit card issuer practices, effectiveness of disclosures, and the adequacy of consumer protections. Other examples include the cost, availability, and product innovation of credit cards. [PYMNTS]
Janice has been with businesskinda for 5 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider businesskinda team, Janice seeks to understand an audience before creating memorable, persuasive copy.