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Post-pandemic stats show card spending and balance both on the rise

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New Pandemic credit card holders carry balances

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According to JD Power Banking and Payments Insight in June 2021, nearly a quarter (23%) of respondents said the pandemic was a factor in their decision to shop for a new credit card, with 4% citing it as the main reason. JD Power notes that this segment of new credit card holders are handguns, or customers who hold monthly balances and pay them over time. They reported doing worse financially in 2021, with credit scores of 659 and below. [CNBC]

Americans are seeking their credit cards again and are taking out more car loans

Americans hit their credit cards in May and borrowed the most money in five years, reflecting growing optimism about the economic recovery and consumers’ greater willingness to spend. Total consumer credit rose 10%, or $35 billion, in May, according to the Federal Consumer Credit Report. This is the largest increase since March 2016. [MarketWatch]

Americans Spend Again, American Express Profits Rises

Spending in restaurants, shops and entertainment venues returned to strength as vaccinations became more common and increased revenue in American Express during the second quarter. This momentum rebounded as the quarter progressed, especially spending from younger customers. Fee-based platinum cards are in high demand, and American Express recorded 2.4 million new cards in the quarter. American Express has been dealt a major blow in the pandemic, with fewer Americans traveling, eating out or shopping. Spending on credit cards, businesses and individuals has fallen, and those who hold a revolving balance have paid off their debts. [Associated Press]

FICO’s credit market record is slipping

For decades, nearly every consumer credit decision revolved around a three-digit number – the FICO credit score. This is changing. Big lenders are staying away from FICO. Capital One and Synchrony Financial do not use their scores in most consumer lending decisions. They have become a smaller factor in some of the underwriting decisions of JPMorgan Chase and Bank of America. Housing finance giants Fannie Mae and Freddie Mac are considering allowing lenders to use other scores when evaluating mortgage applicants. [The Wall Street Journal]

Apple is developing a new service “Apple Pay Later” to allow customers to make any Apple Pay purchases in monthly instalments

Apple is preparing a new service that will allow Apple Pay users to purchase and pay products in monthly installments, rivaling existing monthly payment plan options from the likes of Affirm and PayPal. This feature is in development and internally called “Apple Pay Later”. Apple is said to be partnering with Goldman Sachs on the new scheme. Goldman Sachs actually acts as the backing bank behind the Apple Card. The new Apple Pay Later system will not require ownership of the Apple Card. Basically, Apple will soon allow users to easily buy anything with Apple Pay and get it with a monthly financing plan. [9 to 5 Mac]

Jack Dorsey says Bitcoin will be a big part of Twitter’s future

Twitter CEO Jack Dorsey assured investors that bitcoin will be a “big part” of the company’s future as he sees opportunities to integrate cryptocurrency into existing Twitter products and services, including commerce, subscriptions, and other new additions like Twitter Tip Jar and Super Follow. Recently, Dorsey launched a $23.6 million Bitcoin fund with Jay Z and announced plans to lead his other company, Square, into the decentralized financial services market via Bitcoin. Square also this year acquired a majority stake in Jay-Z’s TIDAL music service with a focus on how blockchain and crypto technologies are changing the music space. [Tech Crunch]

PayPal’s dominance of mobile payments is coming to an end

In the mobile payments world, PayPal is the Big Kahuna with more than 377 million users generating nearly $1 trillion in payment volume on 15.4 billion transactions in 2020. Its dominance over competitors like Apple Pay, Google Pay and Square Cash is under attack , However. PayPal is barely in danger of becoming obsolete, but it will see its dominance of mobile payments erode as follows: Google transforms Google Pay; Buy now and pay later in the US; The adoption and use of in-network payment is growing. [Forbes]

Consumers are driving the next wave of payments technology

The events of the past year not only accelerated the transition to the Internet, but also increased the appetite for the adoption of new payment methods. People all over the world shop differently and pay differently. Our international research in March of this year among 8,000 consumers found that 86% said their payment habits had changed in the past 12 months, and 59% had tried a new payment method. Early signs indicate that our new habits will continue. [Tech Radar]

California announces debit cards with chip technology to deter unemployment benefit theft

California will beef up the security of the debit cards it uses to issue unemployment insurance and other benefits after a wave of fraud. The state agency plans to work with Bank of America to begin rolling out chip-equipped debit cards to new claimants, as well as those who need alternatives. The news comes about a week after a CNBC investigation highlighted chip shortages on many government cards, contributing to unemployment insurance theft of more than 100,000 beneficiaries during the pandemic. [CNBC]

Greece offers prepaid card benefits to vaccinated youth

Greece’s government will give the country’s youth a prepaid gift card to encourage them to get their first Covid-19 vaccination. A prepaid $179 card, known as a “Freedom Pass,” will be given to Greeks ages 18 to 25 after receiving their first dose. Young Greeks who have completed their vaccinations with one of the four available vaccines will be able to spend their gift on travel, entertainment, accommodation, cinemas, theaters and museums. The move will direct public funds to sectors affected by the pandemic, such as tourism and culture. [Bloomberg]


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