How higher interest rates will hurt you; How the banking industry may soon change

How Higher Interest Rates Will Affect Americans’ Finances

On Wednesday, Fed policymakers collectively announced that they expect to raise their key rate up to seven times this year, taking its benchmark rate to between 1.75% and 2% by the end of the month. year. Officials expect four more hikes in 2023, which would leave their benchmark rate close to 3%. Chairman Jerome Powell hopes that by making borrowing incrementally more expensive, the Fed will succeed in cooling demand for homes, cars and other goods and services, thereby slowing inflation. Credit card interest rates and car loan costs will also likely increase. Savers may receive somewhat better returns, depending on their bank, while long-term bond fund returns will likely suffer. [ABC News]

Here’s how the bank will fare amid the ‘death’ of overdraft fees

Many major U.S. banks have begun eliminating their overdraft fees on checking and savings accounts, a move JD Power says will move the banking industry toward a more customer-centric strategy. “The decision to move from a punitive carrot-and-stick approach suggests that retail banks recognize that the role they play in the lives of their customers needs to evolve beyond the service provider and become more of a center financial advice and guidance. [Fox Business]

As fuel prices keep rising, is a gas credit card worth it?

With gas prices reaching record highs – the average price as of March 11, 2022 is $4.32 per gallon – is it worth getting a gas credit card to save money? It certainly sounds tempting. Gasoline credit cards, such as those offered by Shell or ExxonMobil, typically offer a discount of 5 to 10 cents per gallon of gasoline. So filling a 15 gallon tank, at an average cost of $64.80, could reduce the total by up to $1.50. But regular cash back credit cards could save you even more. A rewards card that pays you 5% off your gas purchases could mean a savings of $3.24 on that full 15 gallon, more than double the gas card. [Consumer Reports]

5 Credit Card Trends Experts Are Watching This Year and Beyond

Experts predict continued changes in how Americans use credit cards this year, including how and where we spend, more flexible payment options and growing ways to access credit. Balance transfer cards have made a comeback after disappearing during the pandemic, an influx of daily rewards categories has brought increased value to essential purchases like groceries and gas, and new card options like of crypto rewards have entered the market. There’s plenty more in store for the coming year. Here’s what the experts are predicting for credit cardholders through 2022 and beyond, and how you can prepare for it. [Next Advisor]

Credit card debt has increased by 30% in the last two years

A LendingTree survey found that 30% of Americans have seen their credit card debt increase over the past two years, mostly due to inflation and loss of income. In the study, 48% of consumers said inflation led to increased credit card debt, while 34% said loss of income was the main contributing factor. The study also revealed that 30% of consumers were able to increase their credit score over the same two-year period. Younger generations and parents have suffered more than most: 42% of millennials and 45% of parents with young children have struggled to pay their bills during the pandemic. While some consumers saw their credit score increase, one in five consumers said they hadn’t checked their score in two years. [ZD Net]

American Express CEO says shift to remote working has created a new segment of business travelers

American Express expects remote workers to create new business travel demand. CEO Steve Squeri said: “I think you’re going to have a lot more internal travel where colleagues and employees come into headquarters to be with their team for a few days. And they can do it several times a year. So I think that part of business travel will be a new play. [CNBC]

CFPB urged to act quickly on buy now, pay later loans

The speed at which the buy now, pay later loan industry is changing could prompt the Consumer Financial Protection Bureau to act once the March 25 deadline for consumer feedback ends. The CFPB hasn’t said when it might make its next decision, but the co-author of a new BNPL industry report from consumer advocacy organization US PIRG suggests some regulatory guidelines for the BNPL sector could soon to be provided in response to reports of increasing risk to consumers. [American Banker]

Brazilians spend more than half of their income on debt repayments

Finance professor Claudia Yoshinaga asked her international students at the Getulio Vargas Foundation in São Paulo to guess the average interest rate charged by Brazilian credit card issuers on unpaid balances. She asked them to guess high. The correct answer: 346.3%. Brazilians who have taken on debt during the pandemic are bearing the brunt of the central bank’s campaign to rein in stubborn double-digit inflation. Since March 2021, Brazil’s central bank has raised its benchmark interest rate, called Selic, by a total of 875 basis points. The strong medicine is starting to show results. Consumer prices rose 10.4% in January from a year earlier, an improvement from an 18-year high of nearly 11% in November. [Bloomberg]

Renowned partnerships give Mastercard a leg up in the BNPL arms race

Mastercard has added H&R Block, i2c, Walgreens and other partners to Mastercard Remittances, the buy now, pay later program announced in September. Mastercard installments allow card network merchants to offer BNPL options, including interest-free four-installment payment plans, through direct integration into their platforms. Mastercard can count on its vast reach to scale its BNPL program and increase volume. The card network has 78 million merchants in its acceptance network. The simple integration of the program can be a key selling point for merchants, as it allows them to build on their existing relationship with Mastercard instead of making deals with BNPL companies. [Business Insider]

As Visa and Mastercard prepare for new exchange hours, merchants brace for impact

After waiting for the past two years, the nation’s two largest card networks are preparing revisions to their exchange schedules that at least one research firm says will cost U.S. merchants an estimated $475 million in fees. additional transactions. The company’s estimates indicate that Visa’s pricing changes will result in an additional net cost of $145 million to acquirers. For Mastercard, the impact will amount to $330 million. The networks do not collect exchanges. In general, e-commerce merchants can expect the biggest impact. [Digital Transactions]

Biometrics is most popular for single country onboarding

Of 14 countries (plus Puerto Rico) surveyed worldwide, consumers in only two, Hong Kong and Brazil, prefer to verify their identity with biometrics when opening an account online, according to credit reporting firm TransUnion. And from Hong Kong and Brazil, only the South American giant seems totally convinced by biometrics for onboarding. Everyone felt safe with multi-factor authentication. The report’s message is that companies need to strike an optimal balance between strong authentication and an acceptable customer experience. [Biometric Update]

Ukraine legalizes crypto industry as digital currency donations keep pouring in

Ukraine has passed a law that creates a legal framework for the cryptocurrency industry in the country. The bill, which was passed by Ukraine’s parliament last month and signed into law by President Volodymyr Zelenskyy on Wednesday, will allow foreign and Ukrainian cryptocurrency exchanges to operate legally, according to the country’s Ministry of Digital Transformation. Banks will be allowed to open accounts for crypto companies. [CNBC]

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