CardRates.com Weekly Credit Card Update — November 5, 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.

Credit cards are a flexible, widely accepted payment option allowing consumers to spread out large payments over time. But credit card interest rates have been rising steadily and recently surpassed 17% for only the second time ever, per Federal Reserve data.

The average rate on all credit card accounts assessed interest was 17.13% in Q3 2021. That’s up from 16.3% in Q2 and 15.91% at the beginning of the year. The only other time credit card rates have been this high was in 2019, when interest rates spiked to 17.14%. Rapidly rising credit card rates—coupled with a 10.9% increase in revolving debt balances in the second quarter of this year, according to the Fed—can spell disaster for consumers who have trouble making consistent monthly payments on their credit balances. 

• Story By: Erika Giovanetti, Fox Business

The Venture X, which will have an annual fee of $395, will open for applications starting Nov. 9. Its perks include $300 in annual statement credits for bookings made through the newly relaunched Capital One Travel portal, 10,000 bonus miles each year starting with the second year you have the card, up to $100 in credits for a Global Entry or TSA PreCheck membership and complimentary cell phone insurance.

The Venture X earns 2 miles for every dollar you spend on everything you buy, along with a total of 5 miles per dollar on flights booked through Capital One Travel, and 10 miles per dollar on hotels and rental cars booked via Capital One Travel. New card holders will be able to earn 100,000 bonus miles after spending $10,000 on purchases in the first six months after opening the account. And for a limited time, as part of the sign-up bonus, card holders will receive up to $200 in statement credits for vacation rentals like Airbnb and VRBO.

• Story By: Julian Kheel, CNN

Gen Z, which the company identifies as those born in 1995 and later, is not only opening accounts, but it is using the cards and building balances. What accounts for this growing reliance on credit cards when Gen Z has earned a reputation for being averse to credit cards and even, in some ways, frugal? 

The first is that Gen Z is simply growing older and that the oldest members of the generation, now 26, are reaching the acquisitive point of their lives. In short, they need stuff, and they need a way to pay for that stuff. Gen Zers are typically the children of Gen Xers, not Millennials. Gen Xers have been comfortable with credit, and were the last generation being courted by card companies while they were in college. 

• Story By: Steve Cocheo, The Financial Brand

The stress of carrying card debt through adulthood is linked to poor health, including joint pain or stiffness that interferes with daily activities, a recent study from the University of Missouri found. Beyond the worries about repaying debt, one reason for poor health may be that people with high debt have little money left to pay for resources that protect their health.

It found that people who carried consistently high levels of unsecured debt were 76% more likely to have pain that interfered with their daily life than people with no unsecured debt. People who carried debt over time reported worse physical health late in life.

• Story By: Ann Carrns, The New York Times

In the world of frequent flyer programs, there are few things as valuable as the Companion Pass from Southwest Airlines. This pass allows you to add a designated companion to any Southwest flight that you’re booked on, including award tickets.

By far, the quickest and easiest way for most people to earn the Companion Pass is through new account bonuses offered by the Southwest Rapid Rewards credit cards from Chase. To earn the Southwest Airlines Companion Pass with credit cards, you need to earn 125,000 points from one or more Southwest Rapid Rewards credit cards in a calendar year.

• Story By: Jason Steele, Money

Amazon currently has an offer that’s a great way to not only use your Chase points but to also save on your next Amazon purchase. Chase credit card holders targeted for this promotion can save 50% off their Amazon purchases, up to $15 in total savings when using Chase Ultimate Rewards points at Amazon between now and Dec. 31, 2021.

You must have a Chase credit card that earns Ultimate Rewards points. This includes popular credit cards such as the Chase Sapphire Preferred Card, the Chase Sapphire Reserve and the Chase Freedom Unlimited. If you have a Chase card that earns Ultimate Rewards points, you’ll need to link it to your Amazon account and enroll in the “Shop with Points” payment option.

• Story By: Jennifer Yellin, CNN

American Express unveiled its first-ever debit card as competition for small-business customers heats up. The card will be part of a new digital business checking account. While other banks have long used AmEx’s network for debit cards of their own, this marks the first time the payments giant is issuing a debit card itself. 

The checking account is slated to come with a $300 cash bonus for new users of the account and an annual percentage yield of 1.1%. Starting next year, customers of the product will also be able to earn AmEx’s membership rewards points and redeem them for deposits into their accounts. Throughout the pandemic, spending by small and medium-size businesses, or those with less than $300 million in annual revenue, has been a surprising bright spot for AmEx, which has seen overall volumes on its network suffer amid travel restrictions during the Covid-19 pandemic.

• Story By: Jennifer Surane, Bloomberg

The rapid rise of the buy now/pay later sector drew congressional attention Tuesday, with lawmakers weighing the benefits and possible risks of the emerging payment method. Democrats were relatively skeptical of BNPL lenders, whose short-term installment loans, typically offered through merchant websites, have grown in popularity during the pandemic.

At a House hearing, they questioned whether the products put consumers at risk of falling behind on loan payments and urged regulators to examine the industry.

• Story By: Polo Rocha, American Banker

In September, Mastercard acquired CipherTrace, and now it has announced a partnership with Bakkt, but products may take some time to appear. Bakkt offers Mastercard the ability to offer crypto custodial services.

However, four challenges may delay issuer productization: First, issuing banks need to decide they want to offer crypto services. Second, even if offered independent of the core system, each issuer will need to provide customer access to the crypto assets through its online and/or mobile banking channel. Third, those crypto assets will ultimately need to be reflected in the customer’s account overall balance that sits in the core system. Lastly, the crypto assets will need to be linked to the issuers’ cards so the assets can be spent.

• Story By: Tim Sloane, Payments Journal

Many of the most popular fintech banking apps have marketed their services as democratizing finance, with stress-free signups, transparent pricing, and the ability to easily access money when needed. And Americans are slowly starting to buy in.

About 30% of Americans use some type of online-only banking, according to Plaid’s 2021 Fintech Report. About 67% of U.S. customers use digital-first and traditional banks’ online or mobile apps. In a comprehensive review of 50 fintechs, we found many had fees and pricing clearly listed on their websites, albeit often in hard-to-locate portions of its FAQ and legal disclosure sections. But other hidden fees were tucked away where only the savviest consumers could find them. Here are the factors consumers may want to consider before ditching their traditional bank.

• Story By: Megan Leonhardt, Fortune

Nearly half of all U.S. consumers have made a purchase with a buy now, pay later option, according to a recent CreditKarma study. Among those, over a third have fallen behind on one or more payments. Buy now, pay later services grew 215% year-over-year within the first two months of 2021, an Adobe analysis suggests.

Retailers big and small are using installment plans to increase sales, from Amazon and Walmart to local boutique stores. And with holiday shopping already in full swing for many, you may be considering them to help offset costs this season. Here’s what you need to know about buy now, pay later, and why you should take caution before using these alternative payment plans.

• Story By: Alex Gailey, Next Advisor

GoHenry, a debit card and financial education app designed for children ages 6-18, has announced the launch of its first fully biodegradable debit card made from plants that promises to decompose after use, not in your wallet.

Unlike the traditional plastic debit cards that take over 400 years to decompose, GoHenry’s new biodegradable debit cards are made from a renewable material derived from field corn called polylactic acid and will break down in as little as six months when exposed to sunlight, soil, and the microorganisms found in soil.

• Story By: Polly Jean Harrison, The Fintech Times