This Week In Credit Card News: Covid Causing Card Debt To Rise; Don’t Throw Away Your Stimulus Payment

51 Million Americans Increased Their Credit Card Debt Because of Covid

During the coronavirus crisis, 51%, of adults with credit card debt—roughly 51 million people—added to their balances, according to a report by CreditCards.com. And 44% blame the pandemic. In addition, Americans’ confidence in their ability to pay their card balances fell in January, according to a separate survey from LendingTree

Stimulus Checks Arriving as Prepaid Debit Cards Are Being Confused For Scams

Stimulus payments arriving in the form of prepaid debit cards are being confused for scams. Some Americans expecting their second $600 payment are reportedly discarding the mail, believing the cards to be fake. About 8 million Americans are set to receive their payment as a prepaid debit card mailed to their home address, instead of a paper check or direct deposit. [Newsweek]

Credit Card Fraud Will Increase Due to the Covid Pandemic

The United States is the most credit card fraud-prone country in the world. Covid-19 is playing a major role in the explosive growth in credit card fraud activity. Experts warn there aren’t enough regulations protecting small businesses from chargebacks caused by fraudulent transactions. Companies such as Visa are looking to technological solutions including artificial intelligence to solve credit card fraud.

Twice As Many Online Shoppers Believe Credit Cards Are More Secure Than Debit Cards

Security is at the heart of distinctions between consumers’ attitudes toward using debit, credit or other options to pay online: 35% of credit card users believe they offer protection against theft of funds, twice the share of debit card users. Consumers also appear to have more confidence in the overall security of credit cards as 27% of credit card users cite data security as a motivating factor, while only 14% of debit card users cited it. In addition, 41% of consumers prefer to pay online with credit cards, while 31% prefer debit and 15% prefer digital wallets. [PYMNTS]

A New Way to Cut Credit Card Debt: Pay Off One Purchase at a Time

Rather than asking credit card borrowers to make payments toward their total balances, Harvard researchers tested a method that lets consumers choose which purchases to pay off each month. Consumers who used this “repayment-by-purchase” method, on average, paid 12% more toward their balances. For people struggling to chip away at high balances, targeting specific items on their credit card bills can provide much-needed control and encouragement. [Harvard Business School]

Nearly 1/4 of U.S. Adults Have a Personal Loan

Personal loans were the fastest-growing debt category in 2019, but new data from Experian found that changed in 2020. While personal loans saw a 12% year-over-year increase in 2019, the category only grew 1% in 2020 with fewer people taking out loans. On average, personal loan balances sat at $16,458 in the third quarter of 2020. Nearly one-quarter (22%) of U.S. adults have a personal loan. Online lenders provide alternative ways to finance big expenses like weddings and home improvements. [CNBC]

Janet Yellen Will Consider Limiting the Use of Cryptocurrency

Cryptocurrencies could come under renewed regulatory scrutiny over the next four years if Janet Yellen, Joe Biden’s pick to lead the Treasury Department, gets her way. At her confirmation hearing before the Senate Finance Committee, Yellen said “Cryptocurrencies are a particular concern. I think many are used—at least in a transactions sense—mainly for illicit financing.” [Wired]

Mastercard to Raise Fees by at Least 400% for EU Firms Selling to UK Customers

Mastercard plans to increase the fees EU firms face to take payments from online shoppers from the UK by at least 400%, a move that could mean higher prices for consumers. Mastercard’s interchange fee is currently 0.3% on credit card payments and 0.2% on debit card payments but it has told EU firms that these will increase to 1.5% and 1.15% respectively. [The Guardian]

Identity Theft a Risk to Consumers as Online Purchases Increase

The coronavirus pandemic has changed almost every aspect of American life, including shopping habits. In fact, 56% of Americans reported an uptick in their online shopping between mid-March and December of last year. Nearly 1 in 5 survey respondents said they fell victim to identity theft or attempted identity theft in the past year. Many Americans view identity theft as a real threat, with 60% saying it’s at least somewhat likely they’ll suffer a financial loss due to the crime in the next year. [Journal of Accountancy]

Sam’s Club Loyalty Members Can Join New Mastercard Rewards Program

The leading warehouse club retailer, a subsidiary of Walmart
WMT
, is introducing a new Sam’s Club Mastercard rewards program that provides additional value for cardholders, including expanded rewards and digital enhancements. Members of the Sam’s Club Plus loyalty program using their Sam’s Club Mastercard earn 3% back on purchases in-club; they earn an additional 2% back from their Plus membership, for a total of up to 5%. [Chain Store Age]

How Do Credit Card Refunds Work?

When you make a purchase with a credit card, your credit card company is who pays the merchant. The available credit on your account goes down after your card issuer approves the transaction. Then, you pay them back for the purchase when you make payments to your account. Credit card networks are the companies that process the transactions between your credit card issuer and the merchants where you make purchases. So, the merchant has to send your refund back to your credit card issuer before they can credit your account for the purchase. That is why credit card refunds often take several days to process, and you can only receive a refund in the original payment method. [Bankrate]