This Week In Credit Card News: How AI Is Changing Online Holiday Shopping

How AI Is Transforming Online Shopping This Holiday Season

If there’s anyone who should be worried about artificial intelligence making their jobs obsolete, it’s elves. From personalized gift-giving recommendations to more targeted marketing campaigns to stronger security measures, AI is stepping in as our secret holiday helper, enhancing holiday shopping from product discovery to checkout. Though in-store shopping still makes up the majority of total retail spending, online shopping is increasing at a faster pace. On Black Friday, online retail sales grew 14.6%, while in-store sales grew 0.7%, and the Mastercard Economics Institute expects online retail sales to grow 7.1% year over year during the holiday season. AI may help that growth to continue. Here are three ways AI is transforming digital commerce. [Mastercard]

Average American Household Has More Than $10,000 in Credit Card Debt

The average American household credit card balance as of the third quarter of 2024 was about $10,757 after adjusting for inflation, according to a new study. WalletHub released its new Credit Card Debt Study, which found that consumers added $21 billion in debt during the third quarter of 2024. Early results for the fourth quarter of the year show preliminary data for October at a new record high for credit card debt in the month, in absolute terms. The record-high credit card debt in October 2024 reflects a 3% year-over-year increase after inflation adjustments, driven by rising interest rates, holiday spending and lingering economic pressures. While Q3 debt growth slowed compared to 2023, total debt remains high at $1.29 trillion, signaling potential challenges ahead for consumers. [The Center Square]

Tired of Overdraft Fees? A New Biden Administration Rule Would Cap Them

Bank overdraft fees, pricey penalties charged to customers who overdraw their accounts, face a $5 cap under new rules released Thursday by federal regulators. The cap on bank overdrafts continues an ongoing campaign against “junk fees” in the waning days of the Biden Administration, targeting everything from credit card late fees to hidden charges on concert tickets. Banks that don’t want to cap their overdraft fees have two other options, according to a final rule released by the CFPB. They can charge a fee equal to what it actually costs them to cover overdrafts. Or, they can treat an overdraft as a loan, giving customers a choice on whether to open a line of “overdraft credit.” [USA Today]

Credit Card Delinquency and Balance Growth Will Moderate in 2025

TransUnion forecasters think the impacts of pandemic-era stimulus and post-pandemic inflation growth are fading, with the former squeezed out of the economy and the latter easing. Overall credit card balances are still at record levels. The company projects that after seeing credit card usage rates grow, breaking the $1 trillion barrier in 2023, the rate of growth will level off. After growing at double-digit rates in 2022 and 2023, company projections indicate that growth will fall into low single digits in all of 2024 and will continue in single digits through 2025. Total credit card balances are still expected to increase in 2025. TransUnion forecasts that they will reach $1.136 trillion. The rate of growth for serious credit card delinquencies, those 90+ days past due, are still projected to increase in 2025, up 12 basis points by yearend, versus a projected 5 basis points by the end of 2024, contrasted with 78 basis points in 2022 and 33 in 2023. [The Financial Brand]

Grandpa, Cut Up That Card! A Large Share of Retirees Have Credit Card Debt

A historically large share of retirees have credit card debt, recent reports show, a sign of financial instability that worries retirement researchers. More than two-fifths of retirees carry balances on their credit cards, according to the 2024 Spending in Retirement Survey. Retirees are more likely to have credit card debt than any other kind. Roughly six in 10 retirees had debt in 2024. Of that group, 68% had credit card debt, 38% had mortgage debt and 34% had car loans, the three most common types. The share of older Americans with debt has risen over the decades. Among people 75 and older, 53% of households reported debt in the 2022 Federal Reserve’s Survey of Consumer Finances, up from 21% in 1989. [USA Today]

Gen Z Severely Delinquent on Credit Card Debt

Maxed-out credit card balances and delinquent payments are on the rise, especially among younger generations. Factors like inflation and social media pressures may be contributing to higher delinquency rates among Gen Z borrowers. Managing impulse purchases and prioritizing high-interest debt payments are critical to maintaining healthy credit. [U.S. News & World Report]

Court Ruling Will Reignite Debate Over Credit Card Late Fees

Late last week, a federal judge upheld an order blocking a cap on credit card late fees. But the debate over the fees, their usefulness or whether they should exist at all, is far from over. For the moment, though, the move by the CFPB to cap those fees at about $8 through a safe harbor provision, where they’ve most recently been at an industrywide level of about $32, has been stayed by injunction. In the ruling itself, U.S. District Judge Mark Pittman wrote that “the CARD Act explicitly allows card issuers to impose ‘penalty fee[s].’” He added that the CFPB’s Final Rule, however, lowered the fees to $8 for card issuers because it would “cover pre-charge-off collection costs for Large Card Issuers on average…But fees to cover ‘costs’ and fees that constitute ‘penalties’ are not the same thing.” [PYMNTS]

Netflix, Mastercard Team to Offer Cardholders Perks for Streamer’s Live, In-Person Experiences

Netflix and Mastercard want to turn culture into commerce through a new partnership. Under the pact, Mastercard cardholders will have access to exclusive benefits for Netflix’s immersive live, in-person experiences based on its popular programming, including presale tickets. Mastercard will be the “preferred payments partner” for some of Netflix’s immersive in-person events and experiences. A recent Mastercard study found that 60% of consumers are “actively saving to indulge in the experiences that fuel their passions. [Variety]

Tariffs May Be an Inflation Worry But So Are Credit Card Processing Fees, Some Say

While many Americans worry about tariffs potentially boosting inflation, merchants continue to warn of a cost increase that’s already certain: credit card swipe fees. Swipe fees are often merchants’ second largest expense after labor and eventually get passed down to consumers, experts said. They already cost the average household more than $1,100 annually, up from $900 in 2021, and will continue to climb unless Congress acts, according to the National Retail Federation. While consumer prices have risen about 20% since the pandemic, swipe fees have increased by 50% and hit a record $172 billion in 2023, the Merchant Payments Coalition estimates. [USA Today]

Amex Copies Capital One with Change on Airport Lounge Access

Frequent flyers will all have experienced a common frustration. They pay hundreds of dollars a year for a credit card promising lounge access, only to face long lines when you arrive. But American Express has a solution – a new online waitlist feature now available for all Centurion Lounges in the U.S. Similar to Capital One’s system introduced earlier this year, Amex’s new digital waitlist allows cardholders to join the line remotely through their app. You can sign up while you’re still on the way to the airport, and you’ll get a notification when it’s your turn to enter, giving you 15 minutes to check in. This means no more standing in line – you just show up when your spot is ready. [Daily Mail]

Black Friday Sales: 64% New Buyers, 80% Mobile Transactions

64% of digital shoppers were new to retailers this Black Friday, according to new insights from Bluecore. The retail technology company reports that despite this influx of new customers, many retailers were focused on bringing back past customers and previously identified shoppers. Retailers now know who 30% of all their shoppers are (up from approximately 20% last year). And retailers that focused their efforts on getting existing shoppers to shop again were, for the most part, those that saw an increase in order values, some by as much as 10%. An overwhelming amount of Black Friday activity, up to 85% for Footwear retailers, took place on mobile. [MartechCube]

Klarna Opens Pay-Later Offerings to Canadian Apple Pay Users

Klarna says its pay later options are now available to Apple Pay users in Canada. The Swedish payments company announced the new integration Wednesday, saying it was available online and in apps for iPhone/iPad users with iOS 18 and iPadOS 18 or later. Klarna is the first buy now, pay later (BNPL) operating on Apple Pay in Canada. The service began operating on Apple Pay in the U.S. and U.K. in October. [PYMNTS]