Banks limit overdraft fees; Credit card debt has increased during the pandemic


Credit card debt has increased during the pandemic

According to a new investigation, more than half of Americans (62%) said their credit card debt had increased compared to before the global pandemic began. Additionally, 52% of respondents said they increased their credit limits to support their increased spending. But even as credit card debt increases, cardholder spending habits aren’t slowing down, and overall sales are growing across many industries. In June, the US Bureau of Labor Statistics consumer price index jumped 0.9%. [Fox Business]

Banks quietly limit overdraft fees, long a target for Democrats

Some banks are revamping their overdraft policies or eliminating fees altogether on their own, moves that could help lower-income Americans save money. In June, Ally announced it was getting rid of overdraft fees, while last month Synovus Financial said it was looking to rely less on these fees for its check accounts. They follow PNC, TD Bank, Fifth Third, Huntington Bancshares and Regions Financial, all of which earlier this year capped overdraft fees by introducing new accounts or services or limiting when fees are assessed. Their efforts come as Democrats push the Overdraft Protection Act, which would prevent institutions from rearranging transactions to raise fees and limit overdraft fees to one per month or six per year. [Yahoo Money]

Senate Democrats want to cap loan interest rates at 36%

In an effort to prevent consumers from falling into the payday loan debt trap where they keep rolling over small loans — paying more in fees over time than the original loan amount — Senate Democrats reintroduced legislation that would cap consumer loan interest rates at 36%. The bill, dubbed the Fair Credit for Veterans and Consumers Act, builds on the Military Loans Act enacted in 2006, expanding the 36% interest rate cap to all military loans. consumption, including payday loans and installment loans. [Fortune]

Credit card debt is rising again. Bank CEOs are betting on it

A new report from the Federal Reserve shows that household debt rose the most in 14 years in the second quarter, mainly due to the housing market and mortgages. Consumers managed to surprise their debts during the pandemic year, by paying off their credit cards and avoiding falling into delinquency, unlike previous periods of recession. Credit card debt is on the rise again, and bank and card company CEOs say the consumer is still very healthy, but there are signs the level of financial responsibility displayed during the pandemic won’t last . [CNBC]

Citi Australia launches Buy Now Pay Later tool: Spot

Citi Australia is jumping into the buy now, pay later market with its new product called Spot, which is issued by the company’s subsidiary Diners and will be officially launched in October. The card can be used online or in-store anywhere Mastercard is accepted worldwide and allows users to split merchandise payments into four interest-free installments. Retailers can pre-register for partnership opportunities. [PYMNTS]

Square to Acquire Buy-Now, Pay-Later Firm Afterpay in $29 Billion Stock Deal

Payment service provider Square has announced that it is acquiring Afterpay for approximately $29 billion in stock. Afterpay is a leader in the growing “buy now, pay later” space. Founded in 2014, Afterpay enables consumers to purchase and receive an item immediately with an upfront cost of just 25%. The remainder of the purchase price is paid, without interest, over the next six weeks in four equal installments. Customers with late payments are not allowed to use the app for another purchase until the debt is cleared, but Afterpay notes that this prevents customers from going into heavy debt like happens with cards. credit. [Yahoo Finance]

PayPal faces SEC probe over fees paid to bank behind debit cards

PayPal faces SEC and CFPB probes. The SEC is investigating whether swipe fees paid to banks that issue PayPal’s debit cards meet Federal Reserve guidelines. The agency is also investigating how PayPal reports marketing fees generated by its branded card program. PayPal said it received a civil investigation request from the CFPB regarding the marketing and use of PayPal Credit in connection with merchants who provide educational services. [Bloomberg]

Mastercard: In-store sales rebound in July, surpassing pre-pandemic levels

Retail sales in July were strongly boosted by the child tax credit and pent-up consumer demand, posting their 11th consecutive month of growth. U.S. retail sales (excluding autos and gasoline) rose 10.9% in July from a year earlier, and nearly quadrupled July’s average growth. Physical stores are rebounding, with in-store sales accounting for 81.9% of total retail sales for the month, according to Mastercard SpendingPulse. In-store sales rose 15.5% year-over-year in July as weekends saw positive spending spikes as shoppers returned to physical stores. [Chain Store Age]

Chase study highlights growing popularity of digital banking

The coronavirus has dramatically accelerated the adoption of digital banking technology among consumers, and those habits have taken root, according to a JPMorgan Chase survey. In Q2 2021, Chase reported nearly 57 million “digitally active customers,” a 10% year-over-year increase, and nearly 43 million customers used the company’s mobile offerings , which is also a 10% year-on-year increase. According to Chase’s Q2 2021 earnings call, total digital transactions per customer increased 12% over the past year. [Banking Dive]

Elizabeth Warren Urges Janet Yellen, Regulators To Address ‘Growing Threats’ To Crypto Market

Senator Elizabeth Warren urged Treasury Secretary Janet Yellen to identify and address the risks posed by cryptocurrencies and develop a “comprehensive and coordinated” framework through which federal agencies can continually regulate virtual coins. Warren cited five risks posed by an under-regulated crypto market: exposure to hedge funds and other investment vehicles that lack transparency; risks for banks; the unique threats posed by stablecoins; use in cyberattacks that may disrupt the financial system; and risks related to decentralized finance. [CNBC]

PayPal’s new super app to include “messaging” is ready to launch

PayPal’s plan to become a “super app” has been launched. According to PayPal CEO Dan Schulman, the initial release of PayPal’s new consumer digital wallet app is now “full code.” Over the next few months, PayPal expects to be fully rolled out in the US, with new payment services, financial services, commerce and shopping tools arriving quarterly. The company’s change in product direction would make PayPal an American version of something like WeChat in China or Alipay or Paytm in India. Like those apps, PayPal aims to offer a host of services to consumers under one roof, beyond just mobile payments. [Tech Crunch]

Chase adds a new transfer partner to its Ultimate Credit cards with rewards

A die best credit card programs have just improved considerably. Chase Ultimate Rewards points can now be transferred to Air Canada’s Aeroplan loyalty program. Aeroplan program points can be redeemed for flights not only on Air Canada, but on any of the carrier’s 40 airline partners, including United, Lufthansa, Scandinavian Airlines, Turkish Airways, Tap Air Portugal, Avianca, Copa Airlines, All Nippon Airways, EVA Air and many more. [CNN]

Prepaid cards fill gaps in Canadian banking market

Open circuit prepaid cards are gaining rapid adoption in Canadian niche markets, although almost all Canadians already have a banking relationship. The two most notable growth areas are the gig economy, where entrepreneurs can receive salaries on a prepaid card; and neobanks, where young consumers sign up for app-based prepaid accounts. Remote indigenous communities are also adopting prepaid cards to overcome the lack of access to traditional banking services. Banking penetration is very high in Canada, with approximately 99% of Canadians having a bank account. [American Banker]


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