Credit Card Trends for 2017

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In 2016, high-end credit cards attracted a lot of attention with generous rewards and perks. But this year, issuers are going back to basics – and perhaps charging you more in the process. Here are four credit card industry trends taking shape for 2017. More bread-and-butter rewards. Higher interest rates. A growing subprime market. Smoother transactions. [USA Today]

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Apple Pay Records 50% Growth in 2016, as Mobile Apps and Websites Prove Most Popular

The number of monthly US Apple Pay credit card transactions conducted in-app, online and at the in-store point of sale grew by 50% between December 2015 and December 2016, new research showed, with mobile apps and websites attracting the highest proportion of transactions. US convenience store chain Duane Reade has the highest proportion of Apple Pay credit card transactions out of all supporting in-store locations with 1.80%, followed by supermarket chain Whole Foods with 1.70%. All other in-store retailers have Apple Pay transaction volumes of less than 1%. [NFC World]

Costco has Become a Major Driver of Citi’s Business

Citigroup’s acquisition of Costco’s co-branded credit card portfolio from Amex in June 2016 continues to pay off. In its Q4 2016 earnings release, Citi posted 8% overall revenue growth on a constant-currency basis. The Costco portfolio appears to be a major driver of Citi’s overall growth right now. Costco cards are still driving massive spending. The customer base, which likely totals roughly 12 million, saw over $52 billion in purchase sales in its first six months, and over $6 billion in loan growth. That’s really strong performance—for context, Amex saw roughly $80 billion in Costco billed business in 2015, which puts Citi’s annual run rate roughly $24 billion ahead of the Amex card. That’s propelling growth in Citi’s US branded cards business. Citi’s branded cards earned $2.2 billion in revenue in Q4 2016, posting 15% growth year-over-year. [Business Insider]

Yahoo Faces SEC Probe Over Data Breaches

U.S. authorities are investigating whether Yahoo’s two massive data breaches should have been reported sooner to investors, in what could prove to be a major test in defining when a company is required to disclose a hack. The Securities and Exchange Commission has opened an investigation, and in December issued requests for documents, as it looks into whether the tech company’s disclosures about the cyberattacks complied with civil securities laws. The SEC requires companies to disclose cybersecurity risks as soon as they are determined to have an effect on investors. The investigation is likely to center on a 2014 data breach at Yahoo that compromised the data of at least 500 million users. Yahoo disclosed that breach in September 2016, despite having linked the incident to state-sponsored hackers two years earlier. To date, Yahoo hasn’t explained why the company took two years to disclose the 2014 incident publicly or who made the decision not to go public sooner with this information. [The Wall Street Journal]

IRS Hunts Debit Cards For Tax Evasion, As Court Approves John Doe Summons

The IRS has gone after tax evasion in Swiss and other offshore accounts, and has collected a staggering $10 billion. Then, the IRS turned to virtual currencies like Bitcoin, after a court allowed an IRS John Doe summons for bitcoin and other virtual currencies. Now, the IRS is going after some debit card use, too. How does the IRS get on to you, you might wonder? If the IRS knows who you are, it can audit or investigate you. But increasingly, one important technique is the John Doe Summons. In 2008, the lid came off the hushed world of Swiss banking when a judge allowed the IRS to issue a John Doe summons to UBS for information on U.S. taxpayers using Swiss accounts. Now, the IRS has turned to certain debit cards. With a normal summons, the IRS seeks information about a specific taxpayer whose identity it knows. A John Doe summons allows the IRS to get the names of all taxpayers in a certain group. [Forbes]

United States Number One in Data Breaches

The United States led the world in data breaches in 2016, according to new research. Last year, nearly half (47.5%) of announced data breaches and 68.2% of breached records came from the United States. America had nearly 2,000 breaches, which was 10 times as many as the second highest country, the United Kingdom, which had 203. From those 2,000 breaches, more than 2.9 billion user records were exposed. That is also 10 times as many as Russia, which was second in breached records. Yahoo’s two massive breaches, which accounted for 500 million and 1 billion records, pushed the United States far into the number one position, as these are two of the largest breaches in history. Worldwide, 2016 was a noteworthy year for data breaches as the top four breach of all time took place. [LowCards.com]

Here’s the Average American’s Credit Card Debt and How to Get Yours Under Control

The average U.S. consumer holds about two bank-issued credit cards and carries a total balance of $5,551. That’s a lot of money, especially if you’re paying interest of 15% to 20%. The average American’s total credit card balance of $5,551 represents 30% of their total available credit limits. Only 38.1% of all American households carry any credit card debt at all. This implies that the average household that carries a balance owes a whopping $16,048. Furthermore, there is significant variation among different generations and regions. An Experian report found that Baby Boomers and Gen X-ers carry more than twice the credit card debt of Millennials. However, the younger generations use a greater percentage of their available credit than older Americans. [USA Today]

Credit Card Lender Measures Potential, Not Risk, of International Students

More than 1 million international students are studying in the United States. Many of them find it helpful to have a smartphone and a credit card. Unlike many cash-based societies, credit cards are widely used in the U.S., especially with the advent of e-commerce. With a mobile application, users with a credit card can buy things and order food or a car ride. Obtaining a credit card, however, is not easy for international students. Traditional U.S. lenders often require an applicant’s Social Security number and a record of their credit history, which most international students don’t have. SelfScore measures the potential of the student, and not just the risk, through an unconventional way of determining an applicant’s creditworthiness. SelfScore looks at documents such as passports and visas. There is also the academic criteria, such as an applicant’s acceptance to a school, and potential ability to pay. [Voice of America]

Mastercard Built a Mobile Marketplace for Farmers in East Africa

More than two billion people across the world continue to stay unbanked. One of the biggest reasons for that exclusion is accessibility. In developing countries in particular, low-income groups tend to get left out of the fold because they don’t have access to basic banking services. But now, as simple services like mobile banking have proven to help people transition out of poverty in Africa, organizations are starting to focus on the financial inclusion of vulnerable communities. 2Kuze, a mobile payment solution from Mastercard Labs, is one such initiative that is built for farmers in Kenya. 2Kuze, which translates to “let’s grow together” in Swahili, is a digital platform that connects farmers with agents and buyers for cashless transactions. When a buyer enters an online inquiry, the system generates a text message that taps into the farmer community. A farmer can choose to respond with an offer to provide that produce entirely or pitch in with what’s available at the time. [Engadget]

LowCards.com Weekly Credit Card Rate Report

Based on the 1,000+ cards in the LowCards.com Complete Credit Card Index, the average advertised APR for credit cards is 14.97%, slightly higher than last week’s average of 14.96%. Six months ago, the average was 14.62%. One year ago, the average was 14.89%. [LowCards.com]

Bill Hardekopf, Contributor

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