This Week In Credit Card News: Pandemic Brings Huge Drop In Credit Card Debt And Spending

New Report Shows Historic Drop In Credit Card Debt Amid The Coronavirus Pandemic

In the months since the coronavirus pandemic hit and sent millions of Americans to shelter at home, consumer debt on credit cards has fallen fast to unprecedented levels. According to a new report, the second quarter of 2020 saw a staggering $82 billion decline in credit card balances. A drop this big in the second quarter of the year hasn’t happened since at least two decades ago. [CNBC]

Credit Card Spend Declines As Enhanced Unemployment Benefits Lapse

The expiration of enhanced unemployment benefits at the end of July may already be having an impact on consumers. According to PSCU’s latest shopping trends analysis, overall card payment growth rates trended downward for the week ending Aug. 4, just a few days after the $600 benefits initiative provided by the Federal CARES Act was allowed to lapse. Spending on credit cards was down 4.3% year-over-year. [Credit Union Times]

Goldman Sachs Vies For GM’s Credit Card, Betting You’ll Buy Coffee With Your Car

Goldman Sachs is seeking to acquire the credit card business of General Motors, doubling down on consumer banking and betting on a future where people pay for gas, takeout and groceries from the driver’s seat. The firm is among a small number of bidders for the auto maker’s credit card business, which has about $3 billion in outstanding balances. [The Wall Street Journal]

The Newest Fintech Unicorn Is A Credit Card, And It’s Betting Against Big Banks

Two demographics inspired fintech start-up cred.ai to create its Unicorn Card: banking newcomers and millennial/Gen Z Americans with weak credit histories who are distrustful of the financial system. The CFPB says as many as 23 million Americans have a limited or no credit history. Competition is growing and includes the Apple
AAPL
Card, online bank Chime, and J.P. Morgan Chase’s new digital credit card called Marqeta. [CNBC]

AmEx In Advanced Talks To Buy SoftBank-Backed Kabbage

American Express’s small-business aspirations just took another step forward. The credit card giant is in advanced talks to buy Kabbage, a deal that would make AmEx a bigger lender to mom and pop shops. The online small-business lending industry has been battered by the coronavirus pandemic, forcing many firms to halt new originations and extend relief to borrowers who have had to shut their operations for months. [Bloomberg]

Square Tests Short-Term Loans On Cash App

Square is currently testing short-term loans with around 1,000 users with its peer-to-peer payments solution Cash App. It is currently offering loans in amounts between $20 and $200. Users who receive these loans will need to pay it back in four weeks, along with a flat fee of 5%. That is an APR of 60%. If users do not pay off the loan after four weeks, they’ll get an additional one-week grace period, then Cash App will start adding 1.25% non-compounding interest each week. [Mobile Payments Today]

PayPal And eBay Credit Cards Sweeten Welcome Bonus Offers For A Limited Time

PayPal and eBay credit cards have temporarily upped their welcome bonus offers for select new credit card applicants. The PayPal Cashback Mastercard is offering select customers a chance at 4% cash back on everyday purchases for a limited time. And the eBay Mastercard has raised its welcome bonus offer to $150. [Clark.com]

Just Over 7% Of Auto And Personal Loans Are In Financial Hardship Programs

Just over 7% of auto and personal loans are in some type of financial hardship program as of June, while 6.79% of mortgages and 3.57% of credit card accounts are in some kind of payment relief. That’s according to TransUnion
TRU
, which defines financial hardship plans as a deferred payment, forbearance program, frozen account or frozen past due payment. [CNBC]

What Mastercard’s Crypto Plans Signal For The Future Of Digital Payments

Major payment companies have long looked on at cryptocurrencies as too risky to touch, but too tempting to ignore. Mastercard’s latest move signals that the card brands are ready to make a firm pitch for crypto spending. Mastercard made its first significant move into cryptocurrency products in July, announcing Wirex as the first crypto provider to roll out through Mastercard Accelerate, which Mastercard has primed as a turnkey launching pad for other cryptocurrency providers. [Payments Source]

What It Will Take For Business To Finally Get Rid Of The Paper Check

U.S. consumers don’t exactly love the paper check. Roughly 38% report that they’ve stopped using them entirely, and that shoots up to almost 50% when talking about millennials. Some 70% of consumers report wanting an instant payout option (defined as within five seconds), while 44% say they’re willing to pay a small fee to access their money instantly and electronically. [PYMNTS]

Google Pay Will Support Mobile Checking Accounts Starting Next Year

Google is getting into mobile banking through a new partnership with a total of eight US-based banks, including BBVA. The bank accounts will exist entirely within Google Pay, with customers able to access checking accounts handled digitally on the front end by Google while partner banks handle the infrastructure, FDIC insurance, and other backend technology. The banking feature is slated to go live sometime in 2021. [The Verge]