Inflation Causing Financial Anxiety, Threats To America’s Economy

Two-Thirds of Americans Experiencing Financial Anxiety

An early April survey by U.S. News & World Report reveals that more than two-thirds of Americans are experiencing financial anxiety. Nearly 32% of respondents say the cause of their financial anxiety is the increase in prices due to inflation. Almost one in four say the main source of their stress is living paycheck to paycheck. Among those who say inflation has affected their financial health, here’s how they sum up the impact: extreme impact: 12.4%; significant impact: 27.8%; moderate impact: 40.4%; and small impact: 19.4%. [U.S. News and World Report]

Two-thirds of Americans are experiencing financial anxiety, caused primarily by inflation.

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JPMorgan CEO Jamie Dimon Says ‘Powerful Forces’ Threaten U.S. Economy

JPMorgan Chase’s pandemic boom ended with a 42% drop in profits and a warning: Rising inflation and the war in Ukraine pose big threats to the U.S. economy. Chief Executive Jamie Dimon said the economy is strong and growing, citing double-digit growth in card spending, low delinquencies and healthy household and consumer balance sheets. But the bank surprised Wall Street by setting aside $900 million in new funds to prepare for economic turmoil; a year ago, it freed up $5.2 billion it had reserved for potential loan losses in the pandemic’s early months. [The Wall Street Journal]

Store Credit Cards Generate Corporate Profits and Disgruntled Workers

Clothing retailers sell their shoppers more than jeans and sweaters. Major apparel companies also sell credit, often with very high fees, like The Gap’s 21.7% starting interest rate, and $27 to $37 late payment charge. In 2019, Macy’s store credit card revenue of $771 million accounted for more than half of Macy’s operating income. As researchers studying retail clothing workers, we never expected to learn about retail credit cards. When we asked the workers about the worst part of their jobs, we expected to hear about low wages, inconsistent schedules and rude shoppers. But many workers identified mandates to push credit card applications on customers as the worst part of their jobs. Our research shows that they know, sometimes from personal experiences, how credit cards can ruin a person’s finances. [The Conversation]

Visa Changes Rules for Gas Stations to Avoid $125 Pump Limit

Visa and Mastercard are planning a raft of changes to rules for gas stations to allow larger transactions after a surge in fuel prices across the U.S. made it hard for some drivers to fill up using credit cards. Many gas stations have a $125 limit for Visa transactions at the pump because larger transactions trigger higher fees for certain cards, as well as additional liability in the event of fraud. In recent months, that’s forced some customers—those who drive large SUVs in states with high fuel prices, for example—to pay using two transactions to top off their tanks. [Bloomberg]

1 in 3 Adults Hit by Gift Card Payment Scams

More than a third of U.S. adults have been asked by a scammer to pay a fake financial debt with a gift card, a new AARP survey finds. About a quarter of those targeted bought gift cards and shared the numbers with the crooks, losing an average of $200. The sweepstakes scenario was the most common tactic in gift card payment scams, reported by 15% of survey respondents. Next most popular was being asked to pay in advance for a service or product (12%), help out a friend or colleague in need (12% each) or pay someone’s phone or utility bill (10%). No matter what the pitch, anyone asking you to pay them with a gift card is a scammer, according to the Federal Trade Commission. [AARP]

Mastercard Using AI, Open Banking to Manage Faster Payments Risk

Up to one out of every 50 ACH transfers fail, an issue that Mastercard contends can be addressed through a mix of new data-sharing techniques and machine learning. The card network is using technology from Finicity, an open banking provider Mastercard acquired in 2020 for $825 million, to improve performance for account-to-account transfers. Mastercard is reducing overdraft risk through faster processing, as well as increasing its ability to serve consumers, issuers and merchants beyond card transactions, an important move as card networks attempt to become less reliant on the fees they collect at the point of sale. [American Banker]

New Apps Help Latinos Get Debit Cards Without Bank Accounts

Latino households are less likely than non-Hispanic whites to use the banking system, and some financial tech companies want to change that by helping unbanked Latinos get debit cards so they can make cashless transactions. A 2019 FDIC survey showed that 12.2% of Hispanic households were “unbanked,” compared to 2.5% of white households. To help Latinos obtain debit cards that allow them to make cashless transactions, some fintech companies are offering mobile apps that don’t require a social security number and will accept an Individual Taxpayer Identification Number or a Mexican Matrícula card. [9News]

Peer-to-Peer Payment Apps Like Venmo, Cash, PayPal Are Booming. Do You Still Need a Bank?

Peer-to-peer payment, also known as P2P, lets you pay without knowing account details; simply search under someone’s name or phone number. The transfer is quick and generally free. Usage varies by age, but the majority of Americans are now using mobile payment apps. According to a study by Nerdwallet, 94% of millennials use mobile payment apps compared to 87% of Gen Zers, 88% of Gen Xers, and 65% of baby boomers. Nerdwallet found that—among those who already use mobile payment apps—53% are using them primarily to pay for online purchases through retailers. Paying back friends or family members was the second most common reason at 43%, followed by paying bills at 40%. [CNBC]

Payday Loans Cost 4 Times More in States with Few Consumer Protections

Since 2010, four states—Colorado, Hawaii, Ohio, and Virginia—have passed comprehensive payday loan reforms, saving consumers millions of dollars in fees while maintaining broad access to safer small credit. In these states, lenders profitably offer small loans that are repaid in affordable installments and cost four times less than typical single-payment payday loans that borrowers must repay in full on their next payday. This proves that states can effectively reform payday lending to include strong consumer protections, ensure widespread access to credit, and reduce the financial burden on struggling families. [The Pew Charitable Trusts]

Coinbase Eliminates Transactions Fees for Its Crypto Debit Card

Coinbase has announced that it has removed transaction fees for its Coinbase Card to allow customers to more easily spend their cryptocurrencies. The popular cryptocurrency exchange is reimagining the crypto spending and earning experience by removing transaction fees and giving users more opportunities to earn rewards. While Coinbase customers often spend USDC and other stablecoins, crypto spending fees on other assets are viewed as a barrier when it comes to using crypto for everyday purposes. [Tech Radar]

Workers Are Trading Staggering Amounts of Data for Payday Loans

Argyle is part of an emerging set of payroll data companies founded over the last four years to cash in on workers’ personal information. They build secure connections between payroll providers like Paychex

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and businesses that want to access that data, like B9. Argyle acts like a courier, shuttling data from one account to another, the same way banking data is transmitted to apps like Venmo. Its competitors include Atomic, Pinwheel, Truv, and Plaid. The data that workers provide can be used to underwrite financial products like loans, mortgages, insurance policies, and buy-now-pay-later apps; simplify direct deposit switching; or verify income and employment for apartment and job applications. [Wired]

Nexo and Mastercard Launch ‘World First’ Crypto-Backed Payment Card

Crypto lender Nexo said it has teamed up with global payments company Mastercard to launch what it calls the world’s first “crypto-backed” payment card. It signals the latest move by crypto and incumbent financial networks to join forces as digital assets become more mainstream. Nexo said the card, available in selected European countries initially, allows users to spend without having to sell their digital assets such as bitcoin, which are used as collateral to back the credit granted. The card is linked to a Nexo-provided, crypto-backed credit line and can be used at 92 million merchants worldwide where Mastercard is accepted, allowing investors to spend up to 90% of the fiat value of their crypto assets. [Reuters]