Inflation, interest rate hikes leading to rising card debt, recession fears


Consumers go down to build credit card debt

Credit card executives see US consumers shift spending to cheaper products as they grapple with inflation at its highest level in 40 years. Total credit card volume rose 20% to $1.1 trillion in the second quarter among the nation’s largest lenders, with many of them reporting record spending for the period. Executives said the recent rise in prices has done little to dampen consumers’ appetites for travel or goods and services. [Bloomberg]

Nearly 20% of Americans are afraid to check their credit card statements as interest rates approach record highs

As credit card debt swells and interest rates rise, many lenders fear high balances. Nearly 1 in 5 Americans are afraid to check their credit card statements, according to a recent report from travel website Upgraded Points, which surveyed 3,500 people in April 2022. staples like gasoline, groceries, and housing. Credit card balances are up $71 billion year over year, reaching $841 billion in the first quarter of 2022. [CNBC]

Credit card spending soars as US consumers battle rising inflation

Mastercard said spending on its network is up 18% as American consumers struggle with inflation levels that only happen once in a generation. Payment volume rose to $1.65 trillion in the second quarter, ahead of the $1.64 trillion average in analyst estimates in a Bloomberg survey. The company raised its forecast for revenue growth for the year after it reported a 58% rise in overseas payments as consumers flocked to take trips and get back on the road after two years of pandemic-induced lockdowns. [Bloomberg]

US pushes huge interest rate hike to curb rising prices

The US central bank has announced another unusually large rate hike in its battle to contain rising prices in the world’s largest economy. The Federal Reserve said it would raise its key rate by 0.75 percentage point. The bank has been raising borrowing costs since March to cool the economy and reduce price inflation. But fears are mounting that the measures will plunge the US into recession. Recent reports show declining consumer confidence, a slowing housing market, rising unemployment claims and the first contraction in activity since 2020. [BBC]

US economy shrinks for second quarter, fueling recession fears

The thump of the recession grew louder after the US economy shrank for the second quarter in a row, when decades of high inflation undermined consumer spending and Federal Reserve rate hikes hampered businesses and housing. Gross domestic product fell 0.9% year-on-year after falling 1.6% in the first three months of the year, the Commerce Department’s preliminary estimate showed on Thursday. Personal consumption, the bulk of the economy, rose at a rate of 1%, a slowdown from the previous period. [Bloomberg]

Senate Bill Targets Visa, Mastercard Credit Card Charges

Two US senators are preparing legislation that would give merchants the power to process many Visa and Mastercard credit cards across various networks. The bill, which could be introduced this week, aims to create more competition between U.S. credit card networks, an industry where Visa and Mastercard have long dominated. sen. Dick Durbin, an Illinois Democrat, and Sen. Roger Marshall, a Republican from Kansas, is expected to introduce the bill. [The Wall Street Journal]

Apple’s move to BNPL space triggers alarm at CFPB

Apple’s move to the buy now, pay later space has caught the eye of Rohit Chopra, director of the CFPB, who is now exploring the larger implications of big tech companies becoming lenders. The CFPB is examining the “implications of Big Tech entering this space” and considering a number of issues, including whether Apple Pay Later “could reduce competition and innovation in the marketplace,” Chopra said as reported by the Financial Times. . Apple Pay Later is one of about 80 BNPL products on the app shelf, including PayPal, Affirm, Afterpay, and Klarna. The CFPB chief said that while his agency is concerned about technology entering the BNPL space, there are also concerns about how Apple uses information collected from its subsequent purchases and whether it is combined with browsing, geolocation and health data. . [PYMNTS]

33% of small businesses have been hit hard by credit card fraud

All businesses, large and small, have at least one thing in common: payment processors. Cash-only businesses can get away without paying a processor to complete credit card, debit and digital payments, but those types of businesses are rare. Accepting card payments is convenient – for you and customers – but it means there is a risk of credit card fraud. And while point-of-sale platforms can help you better facilitate payments, they can come with their own hurdles. In a Advisor poll, 33% of small business owners said credit card fraud is a major problem. Is the risk worth the reward? [Forbes]

Buy now, pay later Industry is about to pass its first major test

Consumers can now buy for almost anything and pay later. Hailed as a much-needed alternative (and threat) to credit cards and predatory lenders, buy now, pay later has also been criticized as a means of access to debt for the young and inexperienced. Regardless, BNPL represents one of the largest and fastest changes in consumer credit in decades. [Bloomberg Law]

Credit Card FinTech Cardless Launches Amex Partnership

Credit card FinTech Cardless has signed an agreement with American Express that will allow some of America’s best-known brands to launch digital-first cards on the Cardless platform. The company noted that the partnership comes at the same time as a “significant” investment from Amex Ventures, the strategic investment arm of American Express. Cardless cards offer several features designed for digital consumers, both in terms of security and ease of access. New users can apply for a Cardless card with their smartphone. Once approved, the virtual card will arrive in their mobile wallet within seconds, and a physical card will appear a few days later. Customers can manage their accounts through the Cardless app, with instant access to things like rewards, purchase tracking and bill payment. [PYMNTS]

Introducing Upgrade OneCard, a combined credit and debit card

Upgrade has been offering consumers personal loans, car loan refinancing and other personal finance products since 2016. Now, the San Francisco-based fintech company is introducing its latest product, Upgrade OneCard, which offers a unique combination between a debit card and a credit card, with a hint of “Buy now, pay later” thrown into the mix. The Upgrade OneCard allows consumers to choose between “Pay Now” and “Pay Later” when it comes to paying for purchases. With the former option, the amount is debited directly from the cardholder’s checking account, similar to how a debit card works. With the latter, the purchase amount is repaid in fixed installments with interest, spread over time, as with a credit card. [CNBC]


Please enter your comment!
Please enter your name here