More Than 40% of American Households Rely on Credit Cards to Pay the Bills, Leading to a Vicious Debt Cycle
Today’s economy has many Americans relying on credit cards to foot the bills for everyday expenses. A total of 41% of U.S. adults say they rely on credit cards to cover purchases throughout the month after paying for monthly expenses such as rent/mortgage, car payments, and childcare, according to CivicScience consumer polling this month. And many are going into debt as a result, adding to the growing amount of national credit card debt, which reached $1.14 trillion this year. New data show that 25% of U.S. adults reported they took on credit card debt in the past month to afford gas, groceries, and other essentials. An additional 16% said this is a common occurrence, as in something they do every month. All in all, that adds up to 41% of Americans who are living in a state of debt just to get by. [Civic Science]
Over 40% of American households now have to rely on credit cards to pay their bills
Visa Class Action Alleges Company Monopolizes Debit Card Networks
A new Visa class action lawsuit claims the company monopolizes debit card networks and charges merchants artificially inflated prices for its debit products. “Visa has engaged in a systemic, multi-pronged campaign of exclusionary conduct–deployed at each pressure point where its dominance might be threatened–that has continued to this day,” plaintiff Yabla Inc. alleges. Yabla points to a variety of methods Visa allegedly uses to stifle competition, including preventing competitors from building innovative products and threatening businesses with punishment if they try to use cheaper and superior methods of processing debit transactions. [Top Class Actions]
Contactless Payments Now 70% of Face-to-Face Transactions
Mastercard’s acceptance footprint has effectively doubled over the past five years, and Tap on Phone is now live in over 110 markets. Since the beginning of the year, the number of Tap on Phone locations has almost doubled. In the United States, payment volumes were up 7%, with credit gaining 6% and debit growing by 8%. Card-present growth was aided by an increase in contactless payments, which now represent 70% of all in-person transactions. [PYMNTS]
Payment Platform Zelle to Shift Users Away from Standalone Mobile App
Peer-to-peer payments platform Zelle is shifting users away from its stand-alone mobile app in favor of using the platform via banking apps. Zelle, a payments network owned by seven banks including JPMorgan Chase and Bank of America, initially promoted its mobile app when it launched in 2017 to users whose financial institutions had not yet joined the network. But now, with more than 2,200 banks and credit unions on the Zelle network, only 2% of Zelle transactions take place through the mobile app. As a result, Zelle will focus on improving its functionality on banking apps, where the majority of users choose to send and receive payments. [Reuters]
Buy Now, Pay Later Often a Debt Trap
The financial technology companies offering Buy Now, Pay Later loans (and they are loans) have a marketing message that appeals to cash-strapped families who don’t have credit or have maxed out their cards. They promote BNPL as “a smarter way” to pay than with credit cards, one that offers “flexibility” and “no surprises.” Approval is instant, and there’s no hard credit check. When used wisely, these loans can help consumers deal with cash flow problems without turning to more expensive credit, such as payday loans or high-interest credit cards. When they aren’t used wisely, they can turn into high-cost loans with serious consequences. Borrowers who don’t make payments on time can get hit with costly penalties, and sometimes, a ding on their credit reports. [Consumers’ Checkbook]
No Cash, No Problem: Mobile Payments Surge as Businesses Ditch Hardware
Traditional point of sale systems have long been a cornerstone for accepting payments at brick-and-mortar stores. However, they come with limitations. A traditional POS is stationary and takes up a lot of space. This restricts how and where payments can be made. By contrast, tap on mobile payment solutions untether merchants from a single checkout spot. This leading-edge technology extends across industries, from restaurants to delivery services, providing merchants with greater flexibility to meet their customers where they are, and it is especially useful for small businesses that may not have the resources to invest into and maintain high-tech hardware infrastructure. “Food trucks, mom-and-pop shops and individual vendors can simply download an app and start accepting payments,” Malikayil said. “The barrier to entry is super low.” [PYMNTS]
These 10 Credit Cards Offer Cell Phone Insurance for Free
Every credit card’s cell phone insurance has its own terms and features, but there are some shared conditions: In order to activate the protections, you must pay your cell phone bill with the card offering the benefit. The coverage is secondary or supplemental to any other coverage you may have. Certain types of loss or damage are not eligible for coverage. You have a limited time from the covered event to file a claim and provide documentation. Here’s how the cell phone insurance policies from some of the most popular no-annual-fee cards with this perk stack up. [CNet]
Coinbase Introduces Instant Crypto Deposits with Visa Debit Cards
Coinbase and Visa introduced real-time crypto deposits via Visa debit cards to offer instant access to digital currencies for US and EU customers. This new feature seeks to eliminate delays in transfers by enabling users to buy, sell, or trade crypto in real-time. The new feature enables crypto traders to buy, sell, or trade crypto in real-time, significantly lowering the barriers to entry and making it easier for newcomers to navigate the market. [Finance Magnates]
The Equal Credit Opportunity Act Became Law 50 Years Ago. Here Are 6 Ways It Makes America Better Today
The Equal Credit Opportunity Act of 1974 (ECOA), signed by President Gerald Ford 50 years ago on Oct. 28, 1974, changed that. It prevented creditors from discriminating against an applicant because of race, color, religion, national origin, sex, marital status, age or participation in public assistance programs. In 2023, the CFPB’s Regulation B added protection for sexual orientation and gender identity discrimination. That has leveled the playing field for everyone with full access to the U.S. credit industry. In 1970, only 16 percent of U.S. households had at least one credit card; the rate is now 77 percent as of 2024. The act paved the way for credit-scoring models that gave lenders a fast, easy and, most importantly, an equitable way to determine an applicant’s risk level for a loan. Before the passage of ECOA, lenders didn’t have to reveal interest rates and could selectively force some customers into higher-interest loans. It was almost impossible to fight credit report errors and privacy protections were non-existent. ECOA changed that by offering credit protections and rights for consumers. [Bankrate]
Costco Is Offering $45 Gift Cards for New Members Upon Sign Up
Costco is offering a special promotional deal for new members, but only for a limited-time. New members who sign up for Costco’s $65 Gold Star membership through Stacksocial will receive a $45 Digital Costco Shop Card now through Jan. 31, 2025. To receive the Digital Costco Gift Card, you must provide a valid email address at the time of sign-up. [AL.com]