The Dangers of Taking Your Salary in Crypto; Interest rate hikes are coming

Fed signals likely to raise interest rates in March to contain inflation

The Federal Reserve is pulling the gloves off in its effort to combat a historic rise in inflation. The Fed kept its key interest rate close to zero on Wednesday, but said it will be “appropriate shortly” to raise it, pointing out that a March rate hike is anything but certain. The increase would be the first in more than three years and the start of what will likely be a flurry of three or more quarter-point increases this year aimed at curbing soaring consumer prices. “With inflation well above 2% and a strong labor market, the Committee expects it will soon be appropriate to raise its key interest rate,” the Fed said. [USA Today]

The high price of a crypto salary

Bitcoin price plunged to its lowest point in six months on Monday. This is bad news for anyone who has invested in crypto, including a motley crew of politicians, celebrities and athletes who recently announced they will be accepting their paychecks in cryptocurrency. New York City Mayor Eric Eric Adams, basketball player Klay Thompson and NFL quarterback Aaron Rodgers are all facing major pay cuts after bitcoin prices fell below $33,000 this week, a far cry from a November high of nearly $69,000. NFL receiver Odell Beckham Jr., who reportedly converted a $750,000 salary into bitcoin, may have lost the equivalent of nearly $350,000, according to an analysis by MarketWatch. [Vox]

Experian Lets Americans Create Their Own Credit Reports

Consumers invisible to banks thanks to America’s puzzling credit reporting system have a new tool at their disposal. Experian, one of the three major credit bureaus, is introducing a new program that allows consumers to easily create their own credit reports. The program, called Go, will engage customers in linking “recurring non-debt bills” (think cell phone payments or utility bills) to build the foundation on which to build a credit score. The process is aimed at converting consumers from invisible to banks to having creditworthiness and a greater chance of getting a loan approved. Beginning in 2018 and 2019, Experian and other credit reporting agencies began allowing consumers who already have credit reports to improve their scores by adding additional information of their choosing, primarily the above items, such as utility payments and phone bills. This makes Experian the first credit bureau to allow daily cash flow data to be used as a ramp for building credit. [Fast Company]

40% of millennials say credit card debt is their biggest financial setback

Two in five millennials (40%) say credit card debt is their biggest financial setback, according to a new survey. Millennials also worry about money an average of 7 times a day, more than any other generation. However, the survey also found that millennials feel more financially secure than any other age group, and they are the most optimistic about what their finances will look like 10 years from now. Aside from that, 61% of US consumers also believe that weathering the pandemic has made the younger generations more financially proficient. [Fox Business]

Apple lets iPhones accept credit cards as a threat to Square

Apple is planning a new service that will allow small businesses to accept payments directly on their iPhones without additional hardware, according to those in the know. The company has been working on the new feature since about 2020, when it paid about $100 million for a Canadian startup called Mobeewave, which developed technology for smartphones to accept payments with a tap on a credit card. The system will likely use the iPhone’s Near Field Communications or NFC chip currently used for Apple Pay. [Bloomberg]

CFPB signals broad action against hidden costs for banks, credit cards

The Consumer Financial Protection Bureau signaled widespread crackdown on hidden and excessive fees charged by banks, mortgage lenders and other financial entities. The federal agency is seeking input from consumers about so-called junk fees associated with their bank, credit union, prepaid or credit card account, mortgage, loan or payment transfers. There has been an “explosion” of junk fees, such as overdraft fees charged by banks, late fees charged by credit card companies, and closing costs when buying a home. The CFPB will use public comments to address new rules, provide advice to companies and focus its oversight and enforcement resources. The response period runs until March 31. [CNBC]

Capital One’s marketing costs rise as card competition heats up

Capital One Financial’s marketing spend is on the rise, reflecting increased competition among credit card issuers seeking to capitalize on consumers’ renewed credit needs. Marketing expenses at Capital One rose to nearly $1 billion in the fourth quarter, up from $751 million in the prior quarter, largely due to higher credit card-related spending. Other major credit card companies have also spent more on marketing. JPMorgan Chase recently estimated that its marketing costs will increase by 35% this year, largely as a result of its efforts to attract more credit card customers. American Express spent $1.6 billion on marketing last quarter, up $200 million from the third quarter of 2021. And Discover Financial Services posted $271 million in marketing spend last quarter, up $159 million a year. earlier. [American Banker]

Data breaches break record in 2021

The number of reported data breaches rose 68% last year to the highest total ever. According to the Identity Theft Resource Center’s 2021 Data Breach Report, there were 1,862 data breaches last year, surpassing both the 2020 total of 1,108 and the previous record of 1,506 from 2017. The numbers reflect a year of high-profile cyberattacks targeting everything from the country’s largest oil pipelines to companies entrusted with the personal information of millions of American consumers. [CNet]

Walmart-Backed Fintech Startup Acquires Two Companies and a New Name

The Walmart-backed financial technology startup, to be called ONE, wants to build a “super app for financial services.” The company, headed by two former Goldman Sachs Group executives, will buy Even Responsible Finance, which is used by employers to offer employees their pay early and Walmart considers a major customer. It will also purchase ONE Finance, a financial services mobile app known as a neobank that allows users to manage money and request a debit card or other services that come at a lower cost than traditional banks typically charge. [The Wall Street Journal]

Capital One Introduces Up To $3,000 Welcome Bonus For New Spark Cash Plus Customers

The Capital One Spark Cash Plus credit card is a solid business credit card that offers unlimited 2% cash back with every purchase. Beginning January 25, the card comes with a welcome offer for new cardholders, which can earn you up to $3,000 in bonus cash back. When you sign up for the Spark Cash Plus credit card, you are eligible to earn $500 once you spend $5,000 in the first three months of card membership, and $2,500 once you spend $50,000 in the first six months. [CNBC]

Huawei Taps Curve for Mobile Payments

Huawei is circumventing US restrictions that prevent the use of Google’s Android software by installing NFC payment functionality on its smartphones using its card consolidation app Curve. All Huawei users in Europe can now download Curve Pay to make mobile payments, with the added benefit of 1% cashback on all third-party telephone purchases and 5% in Huawei’s online stores in the Czech Republic, France, Germany, Italy, the Netherlands, Poland, Portugal, Romania, Spain and the UK. The deal with Huawei is similar to a previous deal between Curve and Samsung, allowing the Korean company to use Google Pay as part of its payment ecosystem. [Finextra]

Santander in Spain launches buy now, pay later platform for all markets

Spain’s Santander announced the launch of Zinia, a new buy now, pay later platform that it plans to roll out in its markets this year, starting in the Netherlands and Spain. The initiative is part of a broader strategy by European lenders aimed at boosting their revenues as they grapple with low interest rates while trying to fend off competition from tech companies. Buy now, pay later services have become hugely popular in tandem with the acceleration of e-commerce during the pandemic. However, they have been criticized by regulators for concerns that they will lead to excessive debt, especially among younger consumers. [Reuters]

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