How the Pandemic Changed Credit Cards; The dangers of buying now, paying later

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

The past few years have been a roller coaster ride for both the travel industry and the rewards credit card market. Looking back over the past few years, some notable trends stand out as card issuers tried to respond to customer sentiment and stay relevant in a highly dynamic environment. From shifting bonus categories to hefty welcome offers and a range of new product launches, here’s a look back at where we’ve been 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 in-depth consumer credit checks, ultimately leaving people in debt they can’t pay. If someone messes up, they can be hit with late fees and see their credit scores plummet. And screwing up is easy to do when people take out multiple loans or just aren’t used to paying bimonthly unlike other bills. If a consumer buys something on BNPL and the product is not what it should be, a mistake has been made or they have to return it, it can be more complicated to get their money back than with other forms of payment. The option to pay in installments encourages consumers to buy more than they would otherwise. There is pressure among consumer advocates and in states such as California and Massachusetts to increase control and align BNPL companies, and the CFPB is investigating them as well. [Vox]

Americans loaded up $40 billion more in debt in June, Fed says

Americans piled on $40.1 billion in debt in June. The figure was significantly higher than economists’ forecasts, after the revised $23.8 billion total in May. American loans rose 10.5% in June, compared to 6.3% in May, according to the Fed’s G.19 consumer credit report. Revolving debt, about a proxy for outstanding credit card balancesrose 16% after rising 7.8% in May. [CNN]

Wells Fargo Study: Credit Card Rewards Used to Offset Inflation Worries

A new Wells Fargo study has found that a large number of Americans are using their credit card rewards to offset the cost of everyday purchases, amid concerns about rising inflation. The survey found that 92% of respondents were concerned about rising inflation (59% very concerned, 33% somewhat concerned). In addition, nearly half of rewards card holders (49%) said they used their rewards to help pay for things like groceries and gas. [MyChesCo]

How Race Affects Your Credit Score

Credit scores vary wildly when broken down by race. Credit card processing company Shift found these average FICO scores in 2021: Asian, 745; white, 734; Spanish, 701; Black, 677. Then there’s the issue of invisible credit, or people with no credit history or report at one of the three bureaus. A thin credit record seems riskier to lenders, resulting in denial of credit 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 invisible credit, compared to 9% among white and Asian consumers. Another 13% of black and 12% of Hispanic consumers have unscored 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 pay unemployment benefits during the pandemic. While unemployment benefits are paid through tax dollars collected by employers, some states hired the bank to manage payments as the pandemic raged. Unemployment benefits were paid in two ways: by direct deposit into a recipient’s account or by prepaid card. In theory, a person should have received a card with unemployment benefits preloaded. Once received, they could use the card as a debit card and make the necessary purchases. But it 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 are needed despite slowing inflation

Slowing US inflation may have opened the door for the Federal Reserve to moderate the pace of impending rate hikes, but policymakers have left no doubt that they will continue to tighten monetary policy until price pressures are fully breached. A report from the U.S. Department of Labor showing on Wednesday that consumer prices didn’t rise at all in July compared to June was just one step in what policymakers say would be a long process, with a red-hot job market and sudden rebounding stock prices suggesting that the economy needs more of the cooling that would come from higher borrowing costs. [Reuters]

Apple Card’s Rapid Growth, Third-Party Vendors Accused of Accidents Within Goldman’s Credit Card Business

When it unveiled its new credit card in 2019, Apple touted it as a game changer, with an unprecedented level of simplicity and transparency. Behind the scenes, the rapid growth of the card and the new platform Goldman Sachs was building caused problems. Goldman struggled to handle a larger-than-expected influx of disputed transactions, known in the industry as chargebacks, according to the folks. Chargebacks happen when a customer seeks a refund for any product or service billed to their card for any reason. The disputes, which place banks at the center of disagreements between customers and merchants, have soared during the pandemic, according to payment advisers. [CNBC]

Capital One Takes Over REI Credit Card And Drops Mobile Payment Incentive

Capital One has added outdoor gear retailer REI Co-op to its growing group of co-branded retail credit card partners, including Walmart, Saks Fifth Avenue and Williams-Sonoma. Capital One retains some core features of the existing REI card, a Mastercard previously issued by US Bank, including a 5% refund on purchases at REI’s 177 stores. It increases the rewards for all other purchases from 1% to 1.5%. But Capital One will no longer refund REI credit card users 2% for paying with a mobile wallet, a feature US Bank introduced 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 each promotional video they create for various cryptocurrency projects. State regulators have found cases where influencers have promoted fraudulent ventures. In some cases, influencers did not disclose that the projects they were promoting were part of a paid sponsorship, potentially causing their viewers to make risky investments. [CNBC]

More people ask for travel money in their marriage register

A recent report from the online wedding marketplace The Knot found that experiences and virtual gifts such as gift cards to Airbnb and Delta were some of the most popular gift cards in 2021. About 80% of gift cards couples registered for last year with The Knot’s registry are for travel or home related retailers. Airbnb accounted for 17% of gift cards on registries, 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 buying Southwest gift cards at Costco

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

The 20 Best Credit Card Companies in the World in 2022

What are the best credit card companies out there, as of this year? The sheer amount of information can be overwhelming to say the least. If you’re looking for a little help with this matter, 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]