CardRates.com Weekly Credit Card Update — December 16, 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.

Most consumers look for a minimum of four different features when deciding for which credit cards they should sign up, but some consider as many as six, according to a new study. 

Consumers living paycheck to paycheck who struggle to pay their bills and those living with children are the most demanding when it comes to what they expect from their credit cards. Among the consumers living paycheck to paycheck, 82% say the safety measures taken are “very” or “extremely” important when determining preferences between different credit cards, and 74% say the same of rewards programs.

Other top factors are customer service quality, cited by 64% of the consumers living paycheck to paycheck, and interest rates or fee applied, cited by 62%. Among the active users who are parents, 75% cite credit-building tools as a key factor when deciding between cards. 

• Story In: PYMNTS

A threat is that new fintech players bypass the networks altogether. So-called digital wallets from PayPal and Block, formerly Square, allow consumers to pay merchants directly through bank transfers.

These wallets, which also include Apple Pay, accounted for 28% of ecommerce on average across North America and Europe, according to Worldpay. But consumers often load cards into their digital wallets rather than using direct bank transfers, meaning Visa and Mastercard still process the purchases. Meanwhile, fast-growing buy-now-pay-later upstarts like $46 billion Klarna and $34 billion Affirm give shoppers the option of breaking up their purchases into monthly instalments. That threatens credit cards, the traditional mainstay of Visa and Mastercard’s business. None of those risks are as terrifying as they seem.

• Story By: Liam Proud and Karen Kwok, Reuters

The Federal Reserve is paving the way for possible interest rate hikes next year, in an effort to contain stubbornly high inflation. At the conclusion of a two-day policy meeting Wednesday, the central bank announced plans to phase out its large-scale bond-buying program faster than initially planned. The Fed started purchasing bonds during the pandemic as a way to keep borrowing costs across the economy low and to prevent any market disruptions.

Ending the bond purchases earlier would give the Fed more flexibility to raise interest rates sooner, if necessary, to keep prices from spiraling out of control. The Fed is taking a harder line against inflation after consumer prices in November jumped 6.8% from a year ago, the largest increase in nearly four decades.

• Story By: Scott Horsley, NPR

Chase added a brand-new business card to its Ink lineup and it’s a winner for big spenders. The new $195-annual-fee Chase Ink Business Premier comes with a generous welcome offer of $1,000 cash back on $10,000 in business purchases in the first three months of account opening.

The card earns ongoing unlimited rewards of 2% cash back, but purchases of $5,000 or more will earn 2.5% cash back and travel booked though Chase Ultimate Rewards will earn 5% cash back, making it one of the more generous rewards rates currently available on a business card. The card is also Chase’s first “Pay In Full” card, meaning cardholders will either have to pay the balance in full each month, or opt-in to Chase’s Flex for Business payment plan and make fixed monthly payments towards the balance.

This is a departure from most business credit cards which charge a variable APR each month to carry a balance. The payment structure also puts the Chase Ink Business Premier in direct competition with the Capital One Spark 2% Cash Plus, which is a charge card and earns 2% cash back on every purchase.

• Story By: Robin Saks Frankel, Forbes

Debit trumps credit usage when consumers shop in physical stores, while credit cards are the most popular payment method for online purchases, according to a new report.

More than 38% of the consumers use debit cards to pay for their purchases in physical stores, while nearly 33% use credit cards. The opposite is true when making online purchases, with 37% of consumers using credit cards to pay and 33% using debit cards. Overall, 37% of consumers used debit cards to pay for purchases, while 32% said they used credit cards. Cash, used by 13% of consumers, is the third most popular payment method.

• Story In: PYMNTS

China has convinced financial policymakers everywhere of its resolve to create a digital version of its currency, even helping to spur the Federal Reserve to study developing an electronic version of the dollar. The tougher battle might be persuading China’s consumers that they need the digital yuan, known officially as e-CNY.

Policy makers the world over are watching China’s progression for signs of how digitized money might replace cash. Digital money promises to change how governments track and manage their economies; it might potentially unlock financial services for the poor world-wide and in the process shake up banks, foreign-exchange markets and cryptocurrencies such as bitcoin, while increasing personal convenience and eroding individual privacy.

• Story By: James T. Areddy, The Wall Street Journal

American Express expanded its partnership with startup Nova Credit so US immigrants can use their home-country credit history to apply for Amex cards. Nova Credit helps extend credit access to immigrants, whose credit histories traditionally aren’t transferred into the US financial system.

The tie-up helps US immigrants coming from Australia, Canada, India, Mexico, and the UK and will expand to immigrants from Brazil, the Dominican Republic, Kenya, and Nigeria. Nova Credit’s Credit Passport technology converts foreign credit data into a score and report similar to the US underwriting process. This credit data is delivered in real time to banks and is integrated directly into Amex’s online card application process.

• Story By: Grace Broadbent, Business Insider

The U.K.’s antitrust watchdog has given the clearest signal yet that interventions under an upcoming reform of the country’s competition rules will target tech giants Apple and Google, including their duopolistic command of the mobile market, via iOS and Android; their respective app stores; and the browsers and services bundled with mobile devices running their operating systems.

So it could mean good news for third-party developers trying to get oxygen for alternatives to dominant Apple and Google apps and services down the line.

• Story By: Natasha Lomas, TechCrunch

The busiest days of the holiday shopping season may be over, but some young consumers have yet to pay their dues to the likes of Klarna and Afterpay. The wildly popular buy now, pay later services were the go-to payment option of about one in five holiday shoppers, 22% of which were Gen Zers, according to NerdWallet.

Of the Gen Z respondents who’ve used BNPL, 43% said they missed at least one BNPL payment this past year compared to just 31% of millennials, an October report from Piplsay shows.

• Story By: Maria Monteros, Retail Dive

Citigroup and Macy’s renewed their longtime credit card partnership after the two spent months renegotiating the terms of the agreement. As part of the deal, Citigroup will continue to provide payment offerings for the retailer’s Macy’s and Bloomingdale’s brands through March 2030. 

The move comes after Citigroup informed Macy’s of its plans to terminate their current credit card deal after the department-store chain’s sales were hammered during the pandemic. Under the terms of their previous deal, Citigroup had an option to terminate the tie-up if Macy’s sales fell by more than 34% over a 12-month period compared to the year ended June 2007, a threshold that was triggered earlier this year. 

• Story By: Jennifer Surane, Bloomberg

When you think of computer crimes, identity theft usually comes first to mind. That’s because it cost Americans a staggering $56 billion last year, according to Javelin Strategy and Research. But it tends to feel more like an inconvenience than theft, because you usually get your money back thanks to a nearly half-century-old law designed to protect consumers from any “unauthorized” credit charges. The fees we pay help cover the losses to that fraud.

But it’s different with gift cards; they have no such legal protections. When a victim shares the card number with a scammer, they’ve effectively authorized its use. Even identity fraud insurance, which would cover ID theft in the case of a data breach, often doesn’t apply when you’ve given the information willingly.

• Story By: Ian Sherr, CNET

Citi added two capabilities to its digital bill payments platform, Citi Present and Pay, which helps institutional billing clients streamline transactions. Citi Verify lets billers validate customer bank account details in real time, helping ensure compliance with rules set by the National Automated Clearing House Association.

Request for Pay, a standardized Automated Clearing House (ACH) network message, lets billers send electronic invoices to customers, who can then initiate near-real-time payments.

• Story By: Adriana Nunez, Business Insider