During the first quarter of 2024, the overall average #CreditCard #InterestRate among dozens of credit cards studied in a CardRatings.com survey was 25.03%. This quarter, the numbers are down. See the latest results. https://bit.ly/3URp3IO
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In the headline review this morning, new data on Credit Card Arrears levels. This points to stretched affordability for cardholders and changes to acquisition criteria post pandemic. The impacts are clearly continuing to flow through. From FICO's UK credit card trends report, by Liz Ruddick (edited extract below) Before the pandemic, the number of customers missing either one, two or three payments was always higher for the New segment, those who have held the card for less than 12 months. Post-pandemic, it is the Established group of customers (those who have held the card for between one and five years) who are now more likely to miss payments. Reasons include: They would have taken out cards during the pandemic, when their affordability may have looked better than usual due to lack of spending opportunities and increased savings. Over the last 12 months, many of these customers would have come to the end of promotional balance transfer offers at a time when interest rates are higher than they were previously. The range of balance transfer offers has also declined, meaning they may now be having to pay back these balances at a higher rate than expected. Veteran segment, customers who have held their card for more than five years, the increase in missed payments is even more apparent. One, two and three missed payment balances have all increased at a higher rate since December 2023. There were also increases in two missed payment balances between March and August 2023, and again between June and October 2023. https://lnkd.in/enPBBgDe ---- This last comment on veteran customers is particularly concerning and could be a good data point on wider structural affordability issues, bubbling up. Another nuanced indicator to watch.
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Over the last decade, the average credit card annual percentage rate (APR) has nearly doubled. Today, the Consumer Financial Protection Bureau released an analysis finding that interest rate margins are at an all-time high, costing consumers an extra $25 billion each year. The CFPB is working to ensure that families and businesses can obtain competitive rates on credit cards, rather than getting stuck in products with high rates and junk fees. https://lnkd.in/eeXnMKax
Credit card interest rate margins at all-time high | Consumer Financial Protection Bureau
consumerfinance.gov
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The average APR on credit cards reached 22.8% in 2023, according to a report from the Consumer Financial Protection Bureau This figure is the highest level recorded since the Federal Reserve began collecting this data in 1994. Over the last 10 years, the average APR on credit cards has almost doubled, standing at 12.9% in late 2013. Interest rates have been rising consistently over that time frame, but that’s only a small part of the equation. Equally important is the fact that the APR margin—the difference between the average APR and the prime rate—has reached an all-time high. Read more: https://ow.ly/cNVv50QISM4 #payments #creditcards #APR #interestrates
APR Margins Are Driving Sky-High Credit Card Rates
https://www.paymentsjournal.com
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Monday Credit Tip ❗️❗️ Call the bank and increase your credit limit Options for getting a higher credit limit 1.Make a request online. Many credit card issuers allow their cardholders to ask for a credit limit increase online. Sign in to your account and look for an option to submit a request. You may have to update your income information. A higher income may indicate that you have greater financial security, which issuers may take into consideration while evaluating your request. 2.Call your card issuer. Call the number on the back of your card and ask a customer service representative whether you're eligible for a higher credit limit. The rep may ask the reason for your request, as well as whether your income has gone up recently. 3.Look for automatic increases. Some companies give cardholders an automatic credit limit increase when they’ve had the card for a while and have been using it responsibly. 4.Apply for a new card. If you’ve been good about making on-time payments with the lines of credit you already have, and your credit is in good shape, you could be approved for a new credit card with a higher limit. Even if the limit on the new card isn't higher than the current one, it still increases your overall available credit.
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The CFPB's new credit card late fee rule goes into effect May 14, 2024. As I previously posted the max late fee will move from $41 to $8 with no inflation adjustments. Despite credit card interest rates being at record highs (see article below), they are moving higher. Synchrony just announced to offset the impact of the late fee rule, they are rising interest rates across the board. The Synchrony T.J. Max card APR is moving to 34.99% with the penalty rate moving to 39.99%. The Synchrony Walgreens credit card APR is moving to 25.99% from 23.24%, the cash advance rate to 34.99% from 29.99%. Bread Financial has also decided to raise interest rates on their credit card products, I am sure other issuers will follow. What the long term impact on the consumer will be is still unknown. What do you believe the long term impact of the new CFPB late fee rule to be? Comment below.
Credit card interest rates are at record highs. Cards have 'never been this expensive,’ CFPB says
cnbc.com
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CFPB Report Finds Credit Card Companies Charged Consumers Record-High $130 Billion in Interest and Fees in 2022 The Consumer Financial Protection Bureau (CFPB) today released its biennial report to Congress on the consumer credit card market. The report found that in 2022 credit card companies charged consumers more than $105 billion in interest and more than $25 billion in fees. Total outstanding credit card debt eclipsed $1 trillion for the first time since the CFPB began collecting this data. The report highlights areas of concern, including more consumers carrying balances month to month, with many falling deeper into debt over time, while credit card company profits remained significantly above pre-pandemic levels. https://lnkd.in/eer_DJyv
CFPB Report Finds Credit Card Companies Charged Consumers Record-High $130 Billion in Interest and Fees in 2022 | Consumer Financial Protection Bureau
consumerfinance.gov
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Continuing our discussion about the rhetorical distance between the CFPB's press releases and the CFPB's actual data, the Consumer Bankers Association released our second "Facts Matter" blog post today. The write-up explores the difference between the bleak portrait of the credit card fee landscape described in the CFPB's press releases and speeches with the much richer story reflected in the CARD Act Report and its data. As set out in the post, the CFPB's actual data appears to show that: (1) Late fees have not meaningfully increased as a proportion of credit card balances for the last several years; (2) To the extent that overall fees have grown in proportion to balances, it looks to be attributable to two factors: an increase in credit card availability for subprime and deep subprime cardholders and growth in credit card annual fees; and (3) Most of the growth in annual fees is paid by prime and super-prime consumers. In fact, annual fee prevalence has actually decreased in recent years for subprime and deep subprime consumers. In short, the data seems to indicate that card issuers are making deliberate changes to provide access to credit broadly and equitably. #creditcards #policy #truthmatters https://lnkd.in/dzq5pK95
Facts Matter: CARD Act Report Reveals Credit Card Fee Landscape In Stark Contrast To CFPB's Misleading Headlines
consumerbankers.com
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If you've applied for a credit card recently or carry a balance, you probably have noticed that credit card APRs have gone up. APRs are now 20%+, a big change from just a few years ago. So what does that mean for you and why are the rates rising? I cover that in my latest piece for U.S. News & World Report https://lnkd.in/gxJysXWT
Credit Card APRs Are on the Rise: What This Means for You
money.usnews.com
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Read this morning that credit card interest rates are at RECORD HIGHS 🚀 📈 We're talking nearly 23%. APRs have also ballooned as the Feds have made it harder to access capital. Let's assume this goes down later in the year.. the tailwinds will be felt for much longer friends. How do you combat this? Most resort to tighter underwriting strategies. These clamps or other lending playbooks may be necessary but also hinder the org's ability to grow. How should you combat this without having to make drastic adjustments to your lending strategies? I implore you to understand your consumers or members and how to best engage with them. If you can cast a bigger & better safety net behind your walls, you'll catch more before they fall. Quick hitters for you: 🔘 72% of all buying interactions occurred across digital channels last year 🔘 60% of U.S. consumers prefer to receive 📧 as the 1st communication vs. 14% who prefer 📱 🔘 Not all digital is created equally, and TrueML Products has a 96% email deliverability rate If you're looking around wondering why your balance sheet isn't adding up, start with your engagement strategy in early delinquent lifecycles. Then give me a shout 📞
Credit card interest rates are at record highs. Cards have 'never been this expensive,’ CFPB says
cnbc.com
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On display here is the naturally occurring member-centric and holistic approach that Credit Unions take when addressing the financial needs of their members and community. CU’s not-for-profit structure, and quite frankly DNA, keeps them focused on pricing and fee designs that cover costs, fuel innovation in service to their members, and fund safe and sound capital and liquidity positions. Regulators should take note and remember to carve out exceptions for credit unions from onerous rules and regulations designed to curb behavior more often found in for-profit bank settings.
Today, the CFPB reported on the first set of results from the newly updated Terms of Credit Card Plans survey. The survey data reveal that large banks are offering worse credit card terms and interest rates than small banks and credit unions, regardless of credit risk. https://lnkd.in/e3TVC9kj
CFPB Report Finds Large Banks Charge Higher Credit Card Interest Rates than Small Banks and Credit Unions | Consumer Financial Protection Bureau
consumerfinance.gov
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