A Record Number of Consumers Are Making Minimum Credit Card Payments as Delinquencies Also RiseConsumer stress has intensified, with an escalating share of credit card holders making only minimum payments on their bills, according to a Philadelphia Federal Reserve report. In fact, the share of active holders just making baseline payments on their cards jumped to a 12-year high, data through the third quarter of 2024 shows. Along with the trend in minimum payments came a move higher in delinquency rates. The share of balances more than 30 days past due rose to 3.52%, an increase from 3.21%, for a year-over-year gain of more than 10%. It also is more than double the delinquency level of the pandemic-era low of 1.57% hit in the second quarter of 2021. [CNBC]
Paper Checks Are Dying
A 2024 study by GoBankingRates revealed that 46% of U.S. adults didn’t write a single check in the preceding year. This shift away from traditional paper checks has been accelerated by the COVID-19 pandemic, which pushed consumers towards contactless and digital payment options. As we move into 2025, it’s clear that digital payment methods are not just convenient, they’re essential. In 2021, 11.2 billion checks were written in the United States, a stark decline from 18.1 billion in 2015. This downward trend is likely to continue, with major retailers such as Target discontinuing acceptance of personal checks as of 2024. Other big names like Aldi, Whole Foods, Old Navy, and Lululemon have followed suit, moving towards what industry experts are calling a “check zero” policy. [Fortune]
American Express to Pay $230 Million Settlement over Claims of Deceptive Credit Card, Wire Service Sales Tactics
American Express said it will pay about $230 million to settle criminal and civil probes into alleged deceptive practices in selling credit card and wire transfer products to small business customers. The credit card and travel services company agreed to pay $138.4 million, including about $108 million in fines, and enter a non-prosecution agreement to end criminal and civil probes by the US Department of Justice. Between 2014 and 2017, some AmEx staffers used aggressive sales tactics to pressure small-business owners into signing up for credit cards, according to a DOJ press release. [New York Post]
Ally Sells $2.3 Billion Credit Card Business to CardWorks
Ally Financial has sold its credit card business to consumer finance company Cardworks. The deal will see CardWorks and its subsidiary Merrick Bank acquire Ally’s credit card portfolio of $2.3 billion in credit card receivables and 1.3 million active cardholders. The news comes two weeks after reports that Ally was laying off a little less than 5% of its staff, ending mortgage originations and re-examining its credit card business. [PYMNTS]
UK to Launch Independent Firm to Boost Variable Recurring Payments
British regulators are setting up an independent company that will advance variable recurring payments, allowing third-