America’s dependence on credit cards is increasing. A rate hike by the Fed will make it more painful

As prices continue to rise, Americans are increasingly relying on credit cards to make purchases. And now, with the recent Federal Reserve hike by three-quarters of a percentage point, many of them will pay more for the debt they’ve accumulated. At just over 18%, the average annual percentage of new credit cards is within a percentage point of an all-time high of 19% set in July of 1991. TransUnion I found that there are more credit cards today, and there is more debt on those cards. TransUnion said 161.6 million people in the United States โ€” nearly half of the total population โ€” have access to a credit card In the second quarter, a jump from 153.3 million a year ago. In the same time frame, the average debt per borrower rose from $4,817 to $5,270. [CNN]

Some consumers use credit card rewards to pay for essentials amid high inflation

Americans are leaning toward credit card rewards to help offset the rising costs of everyday purchases amid inflation concerns. A Wells Fargo study found that 92% of Americans are concerned about rising inflation and that nearly half of rewards card holders have used these earned benefits to help offset the price of some daily expenses. Nearly three-quarters (71%) of Americans said they have rewards cards, and 45% of rewards card holders said their credit card use increased during the pandemic. Furthermore, two-thirds of rewards card holders (65%) said they care about credit card rewards now more than ever. [Fox Business]

House lawmakers add credit card competition bill

An accompanying bill aimed at Visa and Mastercard’s dominance was introduced in the House on Monday by Representatives Peter Welch (D-VT) and Lance Gooden (R-TX), after the Senate passed such legislation passed in July. The bill seeks to inject more competition into the credit card network industry by requiring a minimum number of networks through which credit transactions can be routed, with at least one network other than Visa or Mastercard. This can include smaller competitors such as NYCE or Shazam, or other large credit card companies such as American Express or Discover Financial Services. [Payments Dive]

GOP prosecutors are calling on credit card companies to drop plans for a gun store code

Twenty Republican attorney generals are urging Visa, MasterCard and American Express to abandon their plans to adopt a new merchant class code for firearms retailers, saying the move would violate consumers’ privacy. In a letter sent to the companies on Tuesday, prosecutors warned credit card companies that they could face legal action if they go ahead with the code adopted by the International Organization for Standardization. [CNBC]

Can a Visa-Mastercard Duopoly be broken?

America is home to the highest exchange fees of any major economy. The costs are an order of magnitude greater than in Europe and China. This greatly benefits two companies: Visa and Mastercard, which facilitate more than three-quarters of credit card transactions in the country. Doing so has made them some of the most profitable companies in the world, with net margins last year of 51% and 46%, respectively. It ranks every company (excluding REITs) in the S&P 500 by average net profit margins last year, five years ago and a decade ago, and only 4 appear in the top 20 each time. There are two financial information companies, Intercontinental Exchange and CME Group. The others are Mastercard and Visa. [The Economist]

Citigroup joins industry efforts to lend to people without credit scores

Citigroup joins government-sponsored efforts to expand access to credit in underserved communities. The bank is launching two pilot programs early next year under the oversight of the Office of the Comptroller of the REACh currency project, or the Roundtable for Economic Access and Change. One program will issue credit cards to people without credit scores, while the other will make it easier for small businesses owned by minorities, women, and veterans to obtain credit. [The Wall Street Journal]

The number of BNPL users expected to rise by 2027

The number of buy now and pay later users will exceed 900 million globally by 2027, up from 360 million in 2022, according to a new study from Juniper Research. "This significant growth of 157% will be driven by the expected economic downturn, which will increase demand for low-cost credit solutions," the company said. The report noted that BNPL services do not require difficult credit checks and that an increasing number of merchants are accepting this payment method, making it easier for consumers to access than traditional credit. [CU Today]

T-Mobile credit card powered by Goldman Sachs is coming

T-Mobile, the second largest wireless carrier in the United States, is planning to launch its own credit card. Although nothing has been announced yet, reports from Bloomberg indicate that Goldman Sachs and T-Mobile have reached a partnership agreement. This will be Goldman Sachs' third credit card. It is also the issuer of the popular Apple Card and My GM Rewards Card. For T-Mobile, it's an opportunity to join the credit card world just as rival Verizon did a few years ago. [The Motley Fool]

TD Bank, Targeted Credit Card Partnership Will Last Until 2030

Target's RedCard credit card offerings will continue to be developed by the same team as TD Bank and Target have expanded their credit card partnership, which began in 2013, to 2030. With this contract extension, TD Bank will remain the exclusive source for Target credit cards. Co-branded and private to consumers. In one of their latest product innovations, Target and TD Bank have expanded the RedCard Mastercard program and enabled cardholders to earn instant savings of 2% on eligible food and gas purchases and 1% elsewhere as well as 5% at Target. In addition to the savings, the partnership enables Target to offer its customers other benefits such as free Target.com shipping on most items, extended return times, and exclusive offers. [PYMNTS]

Visa Eyes B2B, Remittances for Growth

Vasant Prabhu, Chief Financial Officer of Visa, said Visa is targeting the business and remittance markets for significant growth in the future. Prabhu noted that the $20 trillion "cardable B2B segment" is roughly the size of the company's consumer payments business and looks a lot like it, but is growing faster. The company is also targeting the $800 billion remittance market, which revolves around migrants sending money across borders to family and friends. The chief financial officer said that the largest geographic regions for this growth are in the United States, the United Arab Emirates and Saudi Arabia due to the movement of funds from those countries. [Payments Dive]

Majority raises $37.5 million to meet banking needs of American immigrants

The majority of Immigrant Mobile Bank raised $37.5 million in a Series B funding round to expand its suite of core services while continuing its growth path to support nearly 50 million immigrants in the United States. The majority have seen the volume of monthly transactions among their immigrant user base quadruple this year, and their revenue has increased 5-fold in the past year. To join the majority, members pay a monthly fee of $5.99 for a cross-section of immigrant-focused services that include a bank account, debit card, community discounts, free international money transfer, and discounted international calling. People can register without a Social Security number or US documents. All they need to register for membership is a government-issued international ID and some proof of US residency. [PYMNTS]

Kim Kardashian's credit card earrings cause a stir

Ka Ching. Kim Kardashian is no stranger to collecting high bills at Balenciaga, her favorite fashion brand, and may have mocked that fact with her choice of accessories on Tuesday. The New York City reality star came out to promote Hulu's second season of "The Kardashians" on "Good Morning America," rocking a pair of Balenciaga's all-sold-out credit card earrings. [Page Six]