This Week In Credit Card News: Card Delinquencies, Debt Point To Tough Times Ahead

U.S. Credit Card Delinquency Rates Hit Levels Not Seen in 12 Years

U.S. consumers accumulated debt at a slower rate in the second quarter, but the amount of credit card holders falling behind on their bills hit levels not seen in more than a decade. According to the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit, 10.93% of credit card accounts were delinquent by more than 90 days, the highest it’s been since the first quarter of 2012. [Investopedia]

Americans Continue to Rack Up Credit Card Debt, Hitting a Record $1.14 Trillion

U.S. consumers collectively owe a record $1.14 trillion in credit card debt, figures released Tuesday by the Federal Reserve Bank of New York show. That’s $27 billion more than the $1.13 trillion in credit card debt they carried during the second quarter of 2024. The high tally comes amid concerns of an economic downturn triggered by modestly rising unemployment, and as soaring costs in food, housing and auto rates continue to drain household budgets. Americans have increasingly been relying on credit cards to make ends meet, with 6 in 10 adults, or 60%, using credit cards to buy groceries in 2023. Prolonged debt also plays a factor in the historic amount as more Americans fall behind on their credit card bills. About 7.18% of cardholders fell into delinquency in the second quarter, up from 5% in the previous quarter, Fed statistics show. [CBS News]

Inflation and High Interest Rates Push Americans Towards Credit Card Debt Crisis

More Americans are accumulating credit card debt, and the longer it lingers, the harder it becomes to pay off. A recent report from Bankrate reveals nearly half of Americans with credit cards carry a balance from month to month, with the majority of that group remaining in debt for over a year. Age appears to play a significant role, as more than half of Millennials and Gen Xers reported carrying credit card debt, compared to just 42% of younger Gen Z cardholders. [WSB]

Study Finds Debit’s Importance to Consumers Continues to Increase

The 2024 PULSE Debit Issuer Study reveals a rise in the use of debit cards among U.S. consumers. Key findings include an increase in the total number of debit cards, transactions, and annual spend per active card in 2023. Active cardholders averaged 34.6 transactions per month, with 46.89% of transactions being card-not-present and 38% of debit cards loaded into mobile wallets. The average debit ticket size was $46.89, with an annual spend per active card at $17,274. Mobile devices accounted for 7% of all debit transactions, and issuers plan to introduce digital instant-issuance capabilities. The study also notes challenges such as a pending reduction in Regulation II’s interchange cap, increased competition, and the impact of real-time payments growth. [Stock Titan]

Banks Eye Buy Now, Pay Later as Way to Reach Gen Z

The popularity of BNPL services has seen remarkable growth, driven primarily by younger, digitally savvy consumers. This trend is particularly evident during peak shopping seasons; for instance, consumer spending on BNPL transactions reached $17 billion between November and December, marking a 14% increase from the previous year. This surge indicates a clear shift in consumer preference toward flexible payment options that allow for the deferral of costs without incurring significant interest. The appeal of BNPL services lies in their seamless, user-friendly nature. Customers appreciate the convenience of managing payments in small, manageable installments, which helps alleviate financial strain during uncertain economic times. [PYMNTS]

Americans Are Happy to Swap Physical Wallets for Mobile Phones

The U.S. demand for new payment solutions such as mobile wallets is high, and growing. 46% of U.S. respondents said they’ve used a form of contactless payments in the last seven days, compared to 80% in the United Kingdom and 69% in Australia. When it comes to mobile wallet use, more than half of U.S. consumers surveyed have at least one payment card in their mobile wallet, and 53% of them feel confident enough to leave their physical wallets at home, a figure that rises to 67% among 18 to 25 year olds. 71% of all U.S. consumers surveyed expressed they were neutral or did not have any worries about moving to a cashless society. Almost one-third (31%) of U.S. consumers surveyed reported using cash less than they did 12 months ago, showing continued, steady movement toward digital payments. [Vending Market Watch]

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Zelle Scams Prompt Federal Probe into Whether Banks Are Doing Enough to Protect Customers

The online-payment platform Zelle is extremely popular with consumers, which helps explain why it’s also become a hit with scammers. Another reason: Zelle payments can’t be reversed once they’re sent. They’re a nearly instantaneous transfer of cash from your account to someone else’s, and if that someone else is a scammer, you can’t simply stop the payment (like a check) or dispute it (like a credit card). Now, the federal regulator overseeing financial products is probing whether banks that offer Zelle to their account holders are doing enough to protect them against scams. [Los Angeles Times]

Over 75% of Transactions at Paris Olympics were Contactless

About three-quarters of the international purchases made during the first weekend of the Paris Olympics were made using contactless payments. According to a report released by Visa, 78% of those purchases were contactless, 9% higher than that for the same weekend in the previous year. [IBS Intelligence]

American Red Cross Offering Amazon Gift Cards Amid Emergency Blood Shortage

The American Red Cross is offering gift cards to anyone who donates blood this month amid a nationwide shortage. The organization said it’s been experiencing an emergency shortage as the national blood supply has fallen by more than 25% since July 1. The shortage comes as many parts of the country are dealing with dangerous levels of heat. Red Cross officials said the extreme heat impacted more than 100 blood drives last month in nearly every state, and contributed to a shortfall of more than 19,000 donations. [Fox 32]