This Week In Credit Card News: How The Pandemic Changed Credit Cards; The Dangers Of Buy Now, Pay Later

How Credit Cards Changed During the Pandemic and What to Expect in 2023

The last few years have been a roller coaster for both the travel industry and the market for rewards credit cards. In looking back over the last few years, some notable trends jump out as card issuers tried to react to customer sentiment and stay relevant in a highly dynamic environment. From shifting bonus categories to hefty welcome offers and an array of new product launches, here’s a look back at where we’ve been, and a possible glimpse at where the market is heading 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 checks of consumers’ credit, meaning people wind up getting into debt they can’t pay. If someone screws up, they can be hit with late fees and see their credit scores dinged. And screwing up is easy to do if people are taking out multiple loans or just aren’t accustomed to paying on a bimonthly basis, unlike other bills. If a consumer buys something on BNPL and the product isn’t what it’s cracked up to be, there’s a mistake, or they need to return it, getting their money back can be more complicated than with other forms of payment. The opportunity to pay in installments encourages consumers to buy more than they would otherwise. There’s a push among consumer advocates and in states such as California and Massachusetts to increase scrutiny on BNPL companies and get them in line, and the CFPB is looking into them, too. [Vox]

Americans Loaded Up on $40 Billion More in Debt in June, Fed Says

Americans piled on $40.1 billion worth of debt in June. The figure was considerably higher than economists’ forecasts, after May’s revised total of $23.8 billion. Americans’ borrowing grew by 10.5% in June, compared to 6.3% in May, according to the Fed’s G.19 consumer credit report. Revolving debt, roughly a proxy for outstanding credit card balances, rose by 16% after an 7.8% increase 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 help offset the costs of everyday purchases amid concerns about rising inflation. The study found that 92% of respondents were concerned about rising inflation (59% very concerned, 33% somewhat concerned). In addition, nearly half of rewards cardholders (49%) said they were using their rewards to help pay for items such as groceries and gas. [MyChesCo]

How Race Affects Your Credit Score

Credit scores differ vastly when broken down by race. The credit card processing company Shift found these average FICO scores in 2021: Asian, 745; White, 734; Hispanic, 701; Black, 677. Then there’s the issue of credit invisibles, or people with no credit history or report at any of the three bureaus. A thin credit file appears riskier to lenders, resulting in credit denials or higher interest rates for the borrower. Roughly 15% of Black and Hispanic consumers are considered credit invisible, compared with 9% among white and Asian consumers, according to the most recent CFPB data. An additional 13% of Black and 12% of Hispanic consumers have unscored records, compared with 7% of white. [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 distribute unemployment benefits during the pandemic. Although unemployment benefits are paid through tax dollars collected by employers, some states hired the bank to administer payments as the pandemic raged. Unemployment benefits were paid in one of two ways: through direct deposit into a recipient’s account or with a prepaid card. In theory, a person should have received a card with unemployment benefits preloaded. Once received, they could use the card like a debit card, making necessary purchases. However, things did not work out like that 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 Needed, Despite Slowing Inflation

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

Apple Card’s Rapid Growth, Outside Vendors Blamed for Mishaps Within Goldman’s Credit Card Business

When it unveiled its new credit card in 2019, Apple touted it as a gamechanger, with unheard-of levels of simplicity and transparency. Behind the scenes, however, the card’s rapid growth and the new platform built by Goldman Sachs to service it created difficulties. Goldman struggled to handle a bigger-than-expected influx of disputed transactions, known in the industry as chargebacks, according to the people. Chargebacks happen when a customer seeks a refund for a product or service billed on their card for any of a number of reasons. The disputes, which put banks in the middle of disagreements between customers and merchants, have surged during the pandemic, according to payments consultants. [CNBC]

Taking over REI Credit Card, Capital One Drops Mobile Payment Incentive

Capital One has added REI Co-op, the outdoor equipment retailer, to its expanding clutch of co-branded retail credit card partners that includes Walmart, Saks Fifth Avenue and Williams-Sonoma. Capital One will maintain some core features of the existing REI card, a Mastercard which was previously issued by U.S. Bank, including 5% back on purchases at REI’s 177 stores. It’s bumping up rewards on all other purchases to 1.5% from 1%. But Capital One will no longer give REI credit card users 2% back for paying with a mobile wallet, a feature U.S. Bank introduced in 2019. [American Banker]

Some Social Media Influencers Are Being Paid Thousands to Endorse Cryptocurrency Projects

Some influencers on social media platforms are making thousands of dollars for each promotional video they make for various cryptocurrency projects. State regulators have found instances in which influencers have promoted fraudulent enterprises. In some cases, influencers failed to disclose the projects they promoted were part of a paid sponsorship, potentially leading their viewers to make risky investments. [CNBC]

More Couples Are Asking for Travel Funds on Their Wedding Registry

A recent report from online wedding marketplace The Knot found experiences and virtual gifts like gift cards to Airbnb and Delta were some of the most popular registry gifts in 2021. About 80% of the gift cards that couples registered for on The Knot’s registry last year 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 Purchasing Southwest Gift Cards at Costco

Right now through Costco’s website, members can buy a $500 Southwest Airlines eGift card for just $449.99. That’s essentially getting $50 in free travel to use with Southwest. This eGift card is valid on any Southwest Airline flight and can be redeemed via their website, the Southwest Airlines mobile app, by phone, or even in-person by visiting the ticket counter at your local airport. This eGift card can only be used on Southwest Airlines flights, not just anything to do with Southwest. There is a limit of five of these per customer, so in theory you could save $250 in travel on Southwest 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 volume of information can be overwhelming, to say the least. If you’re looking for a little help with the 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]