Trump Proposes Credit Card Interest Caps
Donald Trump made headlines Wednesday night, promising a crowd in New York he would, if restored to the White House, put a “temporary cap on credit card interest rates … at around 10%,” if he were elected. Doing so would require Congress to pass legislation, a move lawmakers on both sides of the aisle have proposed in recent years. Consumer banks like JPMorgan Chase and Citigroup earn a tidy share of the roughly $120 billion in credit-card interest and fees Americans pay each year, and industry groups have fought past efforts to cap fees by arguing that it would make it difficult for Americans to get approved for credit cards. [MarketWatch]
The Fed’s Interest Rate Cut Reflects an Increasingly Troubled Economy
On Wednesday, the Federal Reserve lowered its benchmark interest rate by half a percentage point. The action will take the rate to between 4.75% and 5% immediately. The Fed also announced more cuts are likely before the end of the year. The combination suggests the Fed is taking the threat of a slowdown to the American economy seriously. It’s about time; in fact, it’s long past time. The signs of trouble in the economy are increasing. Credit card debt has been rising over the past year. So, too, have credit card delinquencies, which are now at their highest rate since the 2008 financial crisis. Auto loan delinquencies are up as well. Unemployment, though still a relatively low 4.2%, is nearly half a percentage point higher than a year ago. Payroll growth is slowing, and the job market is stagnating, particularly for white-collar workers. [MSNBC]
JPMorgan in Talks with Apple over Goldman Credit Card Partnership
JPMorgan Chase is in talks with Apple about replacing Goldman Sachs as the tech giant’s credit-card partner. The discussions started earlier this year and have advanced in recent weeks, but any potential deal could still be months away. Goldman and Apple reportedly pulled the plug last year on their partnership, which included credit cards and savings accounts. Goldman is facing a costly exit from the partnership that is seen by other lenders as too risky and unprofitable. After its foray into consumer banking flopped, Goldman has refocused on its traditional mainstays: investment banking and trading. [Reuters]
CFPB Takes Aim at ATM, Debit Card Fees
Banks must maintain evidence that customers have opted in to overdraft coverage, the CFPB said. The agency is fighting what it calls “phantom opt-in” agreements, in which banks claim they obtained customers’ consent to charge fees on overdrawn accounts but have no proof of that accord. A signed form, an unalterable electronic signature or a recorded phone call can serve as proof that consumers opted in to overdraft coverage. The bureau also emphasized that under the Electronic Fund Transfer Act’s Regulation E, overdraft coverage is an opt-in process rather than a default from which consumers opt out. [Payments Dive]
Cardless Enters Small Business Space with Alibaba Credit Card Partnership
Co-branded credit card FinTech Cardless is entering the small business space. The move is designed to offer small- to medium-sized businesses financial products and rewards designed to improve their financial stability. The company is launching this effort with Chinese eCommerce giant Alibaba as it prepares to roll out its first U.S. co-branded credit card. [PYMNTS]
U.S. Holiday Sales to Grow 3% Again with Promotions in Focus, Mastercard Forecasts
U.S. retail sales are expected to rise 3.2% in the holiday season as companies look to deals to attract thrifty shoppers during a shorter-than-usual shopping window this year, a Mastercard forecast showed on Thursday. In comparison, retail sales rose 3.1% between Nov. 1 and Dec. 24 of 2023, according to the report from Mastercard Economics Institute. A smaller shopping window this year, with only 27 days between Thanksgiving and Christmas, could also push retailers into launching higher promotions earlier in the season. A Deloitte forecast showed U.S. holiday sales are expected to grow at their slowest pace in six years. [Reuters]
Affirm CEO Says More Retailers Offering Interest-Free Buy Now, Pay Later Loans
Affirm is seeing increased interest from retailers to subsidize U.S. consumer borrowing ahead of the holiday season, as more shoppers turn to buy now, pay later providers to finance their spending. Chief Executive Officer Max Levchin said more retailers have an appetite for eating interest-linked costs as a way of offering zero-interest loans to entice shoppers. The use of buy now, pay later options increased 16% to $67 billion through last year’s Cyber Monday spending spree, according to Adobe Analytics. [Bloomberg]
60% of Millennials Primarily Use Mobile Banking Apps
Digital banking’s popularity has soared, driven by the convenience of online transactions and the decline in physical branches during the pandemic. According to the report, 60% of millennials, 57% of Generation Z and 52% of Generation X primarily use mobile banking apps. This shift is not just about preferences but also about trust and satisfaction. The report showed that 97% of customers rated their digital banking experiences positively. Additionally, 94% approved of their overall access to financial services, and 79% said new technologies have enhanced their banking access. [PYMNTS]
Two Southwest Credit Cards Have Amazing New Limited Time Offers with 85,000 Points
Southwest Airlines is known for its unique benefits such as free checked bags for all passengers and the ability to earn an annual companion pass, but for loyal Southwest Airlines flyers, having one of their credit cards in your wallet is a must. If you haven’t snagged one of their cards before, now might just be the perfect time. There’s a new limited time offer on the market and when you apply at just the right time, you might just lock in a free companion pass for the next two years. Two of Southwest’s credit cards will be offering a limited time offer: the Southwest Rapid Rewards Plus Credit Card and the Southwest Rapid Rewards Priority Credit Card. [Fortune]
This No-Fee Debit Card Lets Parents Supervise Spending
Chase’s First Banking debit card for kids and teens is designed to soothe all parent fears when it comes to giving children easy access to money. While under-18-year-olds get their own physical debit card, guardians can tap in to a range of parental controls to monitor their child’s spending to ensure they won’t get into trouble with their newfound financial freedom. Chase’s offering does all that without charging any monthly service, subscription or overdraft fees or requiring a minimum balance. [The Wall Street Journal]
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