Americans keep accumulating more and more debt

American consumers continue to deal with rising prices and supporting a sagging economy with their credit cards. Total consumer debt rose another $23.8 billion in July to a record $4.644 trillion, according to the latest data from the Federal Reserve. On an annual basis, consumer debt is up 6.2%, somewhat moderating from the past few months as the CPI cooled thanks to lower energy prices. Federal consumer debt numbers include credit card debt, student loans, and auto loans, but do not take into account mortgage debt. When you include mortgages, American consumers are buried under $16.2 trillion in debt. [Schiff Gold]

CFPB plans to regulate buy-now-pay-later businesses

The US Consumer Financial Protection Bureau plans to begin regulating “buy now, pay later” companies like Klarna and Affirm over concerns that their fast-growing financing products are harming consumers. The watchdog, which does not currently oversee BNPL companies or products, will issue guidelines or a rule to align industry standards with those of credit card companies. The development would be a blow to the sector, which is already under pressure due to rising financing costs and lower US consumer spending while inflation is rising. [Reuters]

The Treasury will warn the White House that encryption needs major regulations

The Treasury will warn the White House that cryptocurrencies could pose significant financial risks that outweigh their benefits unless the government puts in place major new regulations, according to two people familiar with the matter. Treasury reports will highlight the economic risk of cryptocurrencies in several key areas, including the fraud risks they pose to investors. The Treasury Departmentโ€™s assessment concluded that cryptocurrencies do not yet pose a risk to the stability of the broader financial system, but the situation could change quickly. [The Washington Post]

Average credit score hasn’t risen this year for the first time in over a decade

Credit scores jumped during the first year of the pandemic. Now, amid high inflation and rising consumer debt, they’re flat, which isn’t necessarily a good thing. The national average FICO credit score sits at 716, which remains an all-time high but is unchanged from last year, according to a new report from FICO. The average credit score remained flat in part due to a slight increase in missed payments. As of April, just over 15% of the population had dealt with a bill overdue for more than 30 days in the past year. Then there is the rising level of consumer debt. Average credit card use was 31% as of April, up from 30% as of April 2021. Finally, more consumers are getting credit, bringing new credit activity back to pre-pandemic levels. [Money]

Goldman’s Apple Card Has a Surprising Mortgage Problem

America’s weakest borrowers are starting to miss payments and default on their loans, and it shows in one surprising place: Goldman Sachs. While competitors like Bank of America enjoy repayment rates at or near record levels, Goldman’s loss rate on credit card loans was 2.93% in the second quarter. This is the worst among major US card issuers and “much higher than sub-prime lenders,” according to a September 6 note from JPMorgan. More than a quarter of Goldman’s card loans went to customers with a FICO score of less than 660, according to filings. It could expose the bank to higher losses if the economy experiences a downturn, as expected by many forecasters. [CNBC]

Credit card companies will adopt a new sales code for weapon transactions

The US credit card giants said they will implement a new merchant category code for the country’s retail gun sellers, which gun control activists say will help flag potential mass shooters and gun smugglers. The Geneva-based International Organization for Standardization approved the law on Friday. The system will separately categorize sales at gun and ammunition stores, which advocates say can help track suspicious transactions for firearms and ammunition. Almost every retail item has a merchant category code. Prior to Friday’s decision by ISO, gun store sales were classified under the general merchandise or sporting goods category. Merchant codes track where the consumer used the credit card, but will not identify which specific items were purchased. Gun rights activists have argued that the law will unfairly monitor the purchase of legal weapons. [CNN]

Walmart, urged target lawmakers to pass a bill aimed at Visa and MasterCard fees

More than 1,600 merchants, including Walmart and Target, are urging US lawmakers to pass legislation aimed at breaking Visa and Mastercard's control of the credit card market. The bill, introduced by Senators Richard Durbin (D, Illinois) and Roger Marshall (R.) In a letter this week to all members of Congress, merchants said the proposed legislation would increase competition, lowering the fees they pay when they accept credit cards. [The Wall Street Journal]

Zero down payment, no credit check mortgages can come to a city near you

Mortgage without down payment? It may now be possible for some. Bank of America is launching a new program to help first-time homeowners in certain neighborhoods. The program offers mortgages with no down payment, zero closing costs, and no minimum credit. Instead of a credit check, it takes into account other factors such as paying rent and utilities on time. The bank is conducting beta testing in major cities with predominantly black and Hispanic populations. The plan will be rolled out in Los Angeles, Dallas, Detroit and Charlotte. Anyone who lives in those neighborhoods, regardless of race, can apply. The program depends on how much people earn and their location. [KATU 2]

California says Amazon online shopping is ruined, sues to raise prices

Amazon is again under fire for its policies that allegedly prevent online retailers from selling their products at lower prices on websites and other retail platforms. Critics say this has led to years of higher prices for consumers rather than allowing markets to set fair prices. Last year, the District of Columbia sued Amazon for the same reason and lost in court in March 2022. But then in April, the Department of Justice issued a statement in support of DC's case, and soon after, DC filed an appeal in August. Now, California's attorney general, Rob Ponta, has added to the pressure, announcing a lawsuit against Amazon for allegedly blocking price competition in California as well. [Ars Technica]

JPMorgan Acquires Fintech Payments for Rival Stripe and Block

In an effort to fend off its fintech rivals, JP Morgan has acquired payments firm Renovite. Through the acquisition, cloud-native payments fintech will become part of JP Morgan Payments, which combines corporate treasury services, trade finance, and card and merchant services capabilities. The bank said the acquisition of the company will speed up its ability to offer new offers to merchants. Although JP Morgan is the world's largest provider of commercial services by transaction volume, its fintech competitors, including Stripe and Block, are growing rapidly and approaching the 10 largest acquirers by volume. [Alt Fi]

Apple Card Credit Head to Start Credit Card X1

Abhi Baba, Apple Card Head of Credit for Apple Card, has left the company. Pabba will join California-based credit card company X1 starting next week as Chief Risk Officer. In the past few years, there have been a series of exits from Goldman Sachs' consumer business, which deals with the lending and issuance of parts of the Apple Card. But the defections on Apple's part were less visible. With the Apple Card, the tech giant is not aiming to generate revenue from aggressive lending decisions, but rather to make the iPhone more important to its customers. The card is primarily accessed and managed through the iPhone. [CNBC]

Fintech startup chartered to own Kafene raises $18M to battle BNPL

Cavaney, a charter-to-own startup targeting underbanked consumers who don't have access to traditional credit, has raised $18 million in a Series B funding round. Many argue that BNPL is just another form of debt, but it is grouped differently. Instead, Cavaney's agreements, according to its CEO, are debt-free. Another way it differs is that BNPL is often used for more "nice" purchases, while lease-to-own is mainly for "essential" purchases, such as refrigerators or tires, for example. The Caveney model is based primarily on the premise that at the point of sale, the primary consumer is likely to transact BNPL, while the secondary consumer does not have a credit score to do so and usually leases to own. as an alternative financing mechanism. [Tech Crunch]