CardRates.com Weekly Credit Card Update — July 26, 2021

For media inquiries on these stories and more, contact credit card expert and industry analyst Bill Hardekopf at (205) 985-9725 or billh@cardrates.com.

For decades, nearly every consumer credit decision revolved around a three-digit number — the FICO credit score. That is changing. Big lenders are moving away from FICO. Capital One and Synchrony Financial don’t use its scores for most consumer-lending decisions.

They are becoming a smaller factor in some underwriting decisions at JPMorgan Chase and Bank of America. A key financial regulator, meanwhile, is encouraging banks to de-emphasize credit scores in an effort to expand access to affordable credit. And housing-finance giants Fannie Mae and Freddie Mac are considering allowing lenders to use other scores when evaluating mortgage applicants.

• Story By: AnnaMaria Andriotis, The Wall Street Journal

According to the June 2021 J.D. Power Banking and Payments Insight, nearly a quarter (23%) of respondents said that the pandemic was a factor in their decision to shop for a new card, with 4% pinpointing it as the primary reason.

J.D. Power notes that this segment of new credit cardholders are revolvers, or customers who carry balances month to month and pay them off over time. They report being worse off financially in 2021, with credit scores of 659 and below.

• Story By: Elizabeth Gravier, CNBC

Americans whipped out their credit cards in May and borrowed the most amount of money in five years, reflecting growing optimism about the economic recovery and a greater willingness of consumers to spend. Total consumer credit rose by 10%, or $35 billion, in May, according to Federal Reserve Consumer Credit Report.

That’s the biggest increase since March of 2016. Households tend to use more credit when the economy is good and people feel like they have a lot of job security.

• Story By: Jeffry Bartash, MarketWatch

Apple is readying a new service that will allow Apple Pay users to buy products and pay them off in monthly installments, rivaling existing monthly payment plan options from the likes of Affirm and PayPal. This feature is in development and internally named ‘Apple Pay Later’.

However, Apple’s service would be directly integrated with Apple Pay. Apple is said to be partnering with Goldman Sachs on the new scheme. Goldman Sachs already serves as the backing bank behind the Apple Card. The new Apple Pay Later scheme will not require Apple Card ownership. Essentially, Apple will soon allow users to easily buy anything with Apple Pay and get it on a monthly financing plan.

• Story By: Benjamin Mayo, 9to5Mac

Twitter CEO Jack Dorsey confirmed to investors that bitcoin will be a “big part” of the company’s future, as he sees opportunities to integrate the cryptocurrency into existing Twitter products and services, including commerce, subscriptions and other new additions like the Twitter Tip Jar and Super Follows.

Recently, Dorsey launched a $23.6 million bitcoin fund with Jay Z and announced plans to lead his other company Square into the decentralized financial services market by way of bitcoin. Square also this year acquired a majority stake in Jay-Z’s TIDAL music service with an eye toward how blockchain technologies and cryptocurrencies could change the music business.

• Story By: Sarah Perez, TechCrunch

Spending at restaurants, shops and entertainment venues has come back in force as vaccines become more common and it fueled a revenue surge at American Express during the second quarter. That momentum picked up as the quarter progressed, particularly spending from younger customers.

Demand for fee-based Platinum cards is getting stronger, and American Express registered 2.4 million new cards in the quarter. American Express took a hit in the pandemic, with fewer Americans traveling, dining out or shopping. Spending on corporate and individual charge and credit cards dropped, and those who kept a revolving balance paid off their debts. That spending freeze thawed as infections plunged during the vaccine rollout.

• Story By: Michelle Chapman, Associated Press

In the world of mobile payments, PayPal is the Big Kahuna with more than 377 million users generating nearly $1 trillion in payment volume over 15.4 billion transactions in 2020. Its dominance against competitors like Apple Pay, Google Pay, and Square Cash App is under attack, however.

PayPal is hardly in danger of becoming obsolete, but it will see its dominance in mobile payments chipped away as 1) Google transforms Google Pay; 2) Buy Now, Pay Later gains traction in the US; and 3) in-network payment adoption and use grows.

• Story By: Ron Shevlin, Forbes

The events of the last year have not only accelerated the shift to online, but it’s also created increased appetite for the adoption of new payment methods. All around the world people are shopping differently and paying differently.

International research we commissioned in March this year among 8,000 consumers found that 86% said their payment habits have changed over the last 12 months, and 59% had tried a new payment method. And, the early signs are that our new habits will endure. Consumers are discovering more convenient ways of buying and paying, and, as in other aspects of their lives that have changed due to the pandemic, they will adopt new behaviors in the long term if they make their lives easier.

• Story By: Roy Aston, Tech Radar

California will strengthen the security of the debit cards it uses to issue unemployment insurance and other benefits following a wave of fraud. The state agency plans to work with Bank of America to start rolling out chip-enabled debit cards to new claimants, as well as those in need of replacements.

The news comes about a week after a CNBC investigation highlighted the lack of chips in many government cards, which contributed to stolen unemployment insurance for more than 100,000 recipients during the pandemic.

• Story By: Leslie Picker and Jennifer Schlesinger, CNBC

Greece’s government will offer the country’s young adults a prepaid gift card to encourage them to get their first Covid-19 vaccination dose. A prepaid card worth $179, to be known as the ‘Freedom Pass’, will be given to Greeks between the ages of 18 and 25 after getting their first jab.

The move began  July 15. Young Greeks who have completed their vaccination with one of the four available vaccines will be able to spend their gift on travel, leisure, accommodation, cinemas, theaters and museums. The move will direct public funds to sectors being hurt by the pandemic, such as tourism and culture.

• Story By: Eleni Chrepa, Bloomberg