To face record inflation, Americans have opened a record number of credit cards
As Americans grapple with the highest inflation rate in 40 years, the number of new credit cards has soared as more Americans rely on it to keep up with the high prices. According to a recent report from the Federal Reserve, revolving credit (credit cards and lines of credit) is up 19.6% from the previous year to $1.103 trillion. By February 2022, Americans received 11.5 million new bank credit cards, according to an Equifax survey. This is an increase of 31.4% compared to the previous year. Total limits on these credit cards were $55.5 billion, up 59.2% from the prior year. Total credit limits now stand at $4.12 trillion, $224 billion above pre-pandemic levels. [USA Today]
Rising inflation has led to the opening of a record number of new credit card accounts.
Don’t let the new Visa and Mastercard policies drive you crazy at the gas station
It is not only petrol prices that rise if you pay at the pump in the summer of 2022. Thanks to the new policies of Visa and Mastercard, the temporary financial commitments on the debit or credit cards you use to pay for petrol are also in effect. the increase by no less than 40%. The new limit is $175. While those funds won’t actually leave your account, the withholding can cause you to run into overdraft issues on a debit card or affect spending limits on a credit card. [Clark.com]
Lawmakers push Visa and Mastercard to do more to tackle consumer fraud
Lawmakers criticize Visa and Mastercard for their hands-off approach to shutting down consumer fraud on their networks and have raised the possibility of legislative action. The investigation found that while Mastercard and Visa closely monitor companies flagged for lying to customers, lying to banks and breaking the law, they rarely cut those companies off. Instead, the card networks continue to facilitate the transactions of the companies and collect a percentage of each sale. Visa and Mastercard say it is the responsibility of banks to take direct action against fraudsters, rarely using the tools at their disposal to avoid harming consumers. But lawmakers say this isn’t good enough. [Buzz Feed News]
This is why the CFPB is concerned about late fees for credit cards
The Consumer Financial Protection Bureau has announced it is investigating the fees credit card companies charge consumers for late payments, specifically whether those late fees are “reasonable and proportionate” to the amount people owe. The CFPB is now looking into this as credit card companies can change their late payment fees based on inflation, and given the high inflation lately, they are concerned.
Current rules on late fees for credit cards date back to 2009. In the wake of the financial crisis, Congress looked for ways to protect people from over-indebtedness. In 2010, the Federal Reserve set a $25 limit on late fees. But it also allowed credit card companies to adjust those rates annually based on the consumer price index. [Marketplace]
Why This Crypto Crash Is Different
Driven by war and pandemic, a new macroeconomic paradigm is emerging. High inflation is back after a 30-year hiatus, and with it a much tighter monetary policy. Interest rates are rising and central banks around the world are burning money. The era of abundant dollars is coming to an end. And that means continued lower prices for cryptocurrencies. Crypto markets have never known anything but easy money. Bitcoin was born in the wake of the 2008 financial crisis, when many people feared that central banks’ experimentation with ultra-low interest rates and quantitative easing would trigger runaway inflation. Ten years later, interest rates were still well below pre-financial crisis levels and central bank balance sheets were still massively inflated. And the runaway inflation predicted by bitcoiners had not materialized. Instead, asset prices had soared, including cryptocurrency prices, as investors desperate for returns piled up in bitcoin and other cryptocurrencies. [Coin Desk]
Meta launches Meta Pay, a special digital wallet from Metaverse
Meta tries to solve the problem of transaction and value interactions in the metaverse. The company announced the launch of a new digital wallet that will support users’ economies in the upcoming iteration of Meta’s metaverse. The wallet, called Meta Pay, will be an evolution of what is known today as Facebook Pay, and will still support the range of payments it currently handles, but with a new focus on digital identity and proof of ownership. According to Meta (formerly Facebook) CEO Mark Zuckerberg, Meta Pay will solve two problems in the metaverse: accessibility to digital goods and proof of ownership. [Bitcoin.com]
Like Klarna and Affirm Falter, a new breed of ‘Buy now, pay later’ startups is stealing the spotlight
With the hype about the “buy now, pay later” trend fading, some investors are betting they’ve found the next big thing. Buy now, pay later Companies like Klarna and Affirm, which let customers defer payments to a later date or split purchases into interest-free installments, are under enormous pressure as consumers become more wary of spending due to the rising cost of living, and because higher interest rates drive up borrowing costs. They also face increasing competition, with tech Apple entering the ring with its own BNPL offering. But venture capitalists are betting that a new breed of startups from Europe will be the real winners in the space. Companies like Mondu, Hokodo and Billie have been raking in huge amounts of money from investors with a simple pitch: companies, not consumers, are a more lucrative customer base for the buy now, pay later trend. [CNBC]
Wells Fargo Introduces New Rewards Credit Card
Wells Fargo has announced a new rewards credit card, the Autograph Credit Card. The new card offers 3 points per dollar on six different daily spending categories, similar to what the discontinued Wells Fargo Propel credit card offered before it was discontinued last year. The card will be available for new applications from 13 July. New cardholders can also take advantage of a welcome bonus and an introductory 0% APR promotion. [Investopedia]
Grubhub, Amazon and other gift cards get 25% bonus on Prime Day
There will be a ton of deals to shop during Amazon Prime Days, from electronics and beauty to Amazon’s own devices, some of which are already discounted. A bunch of gift cards reduced to 25% off. There is a nice deal for Prime members who also buy Amazon gift cards. Prime members get $12.50 in promotional credit with a $50 Amazon Gift Card purchase, meaning you’ll be piling up some savings on your next express shipping order. Only one promotional credit is allowed per Prime primary email address. [SF Gate]