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The Indian <keyword id="22196321" type="General" weightage="20" keywordseo="credit-card-industry" source="keywords">credit card industry</keyword> is struggling to grow, as new issues slow down on a year-on-year (YoY) basis. Not only has the growth i.e. issuance of new credit cards slowed down, but lenders are also becoming increasingly cautious of the asset qualities, a recent report by Nomura showed. From 19% in July 2024, the growth in the <keyword id="6368202" type="General" weightage="20" keywordseo="credit-card" source="Orion">credit card</keyword> spendings came down to 13% in August 2024. The year-to-date (YTD) growth has also significantly declined in FY25, currently standing at 17%, markedly down from 28% in FY24. For the fifth consecutive month, the number of new credit cards added to the system remained well below the 1-million, or 10 lakh mark. Around 9.2 lakh credit cards were added during the month, a slight uptick from the 7.55 lakh cards that came into the system In July 2024. However, there is growth in this space nevertheless, with about 10.55 crore active credit cards at present, marking a 15.6% YoY increase. Even the annualised spend per card, or the average amount spent via an annual card during an year grew 1% YoY to Rs 1.87 lakh. But this was far less than the 7% growth annual spends via one credit card saw in FY24. Meanwhile, what continues to burgeon consistently is the outstanding amount on these credit cards, which ballooned to Rs 2.7 lakh crore in June 2024, up from Rs 2.6 lakh crore in March 2024, and around Rs 2 lakh crore in the year ago period. To put this in perspective, pre-pandemic, the total outstanding amount stood at Rs 87,686 crore, which marks a 24% CAGR in this amount, in just a span of 5 years. <h2>Large drops, slowdown to sustain</h2>Even the monthly expenditure per card dropped 2% YoY to Rs 16,000 in August, 2024. Subsequently, the transaction volume via credit cards also dipped to 1.6% in August, along with the total amount of <keyword id="21084888" type="General" weightage="100" keywordseo="credit-card-spending" source="keywords">credit card spending</keyword>, which fell to Rs 1.69 lakh crore in August, from Rs 1.73 lakh crore in July. Also, there has been a hefty cutdown in provisions made for credit card reward points, which reflects in the quantum of credit card benefits that have been mowed out by companies of late, making credit cards far less lucrative than before. <h2>HDFC takes lead </h2>During August 2024, <keyword id="19895995" type="General" weightage="20" keywordseo="HDFC-Bank" source="keywords" meta.keywordsubtype="org" meta.entityname="HDFC Bank" meta.hostid="261" meta.entityid="HDFC Bank">HDFC bank</keyword> added a total of 2.41 lakh credit cards, taking its total tally of active credit cards to 2.19 crore. <keyword id="19900482" type="General" weightage="20" keywordseo="ICICI-Bank" source="keywords" meta.keywordsubtype="org" meta.entityname="ICICI Bank" meta.hostid="261" meta.entityid="ICICI Bank">ICICI Bank</keyword> came a second distant, adding 1.45 lakh credit cards during the month, which means that the second-largest credit card issuer now holds over 1.75 crore active credit cards. Axis Bank and SBI Cards also added 1.27 lakh and 1.1 lakh cards, respectively to their repertoire during the month, while the growth numbers at Kotak Mahindra Bank remained largely flat, stagnating the bank's total card tally at 54.13 lakh. This was due to the ongoing ban on the bank due to its weak IT infrastructural issues imposed by RBI in April 2024. If anything, the bank's number of credit cards declined by 61,191 during the month. Even as the festive season approaches, experts think that it is unlikely to make a major dent in credit card spendings, which are expected to see a further slowdown in the quarters to come.

Credit card growth experiencing a slowdown, as borrowers struggle to pay back loans

<keyword id="20599258" type="General" weightage="20" keywordseo="Indian-consumers" source="keywords">Indian consumers</keyword> demonstrated a significant increase in their <keyword id="21084888" type="General" weightage="100" keywordseo="credit-card-spending" source="keywords">credit card spending</keyword> in July this year, marking a 19% increase compared to the same month last year. According to a report released by <keyword id="19945737" type="General" weightage="20" keywordseo="SBI-Securities" source="keywords" meta.keywordsubtype="org" meta.entityname="SBI Securities" meta.hostid="261" meta.entityid="SBI Securities">SBI Securities</keyword>, the total expenditure by credit card users across the country reached an impressive Rs 1.7 trillion. This substantial uptick highlights the growing reliance on credit cards for transactions, reflecting broader economic trends and <keyword id="20740758" type="General" weightage="20" keywordseo="consumer-confidence" source="keywords">consumer confidence</keyword>. The report also highlighted a considerable increase in <keyword id="21118324" type="General" weightage="20" keywordseo="transaction-volumes" source="keywords">transaction volumes</keyword>, which surged by 39% year-on-year, reaching a total of 38.4 crore transactions in July 2024. This increase in the number of transactions underscores the widespread adoption and usage of credit cards as a preferred <keyword id="20632158" type="General" weightage="20" keywordseo="payment-method" source="keywords">payment method</keyword> among Indian consumers. "Credit card spending in India increased 19% YoY to Rs 1.7 trillion in Jul'24. The transaction volume during the month was 38.4 crore, up 39% YoY" said the report. The report also noted that among the banks, <keyword id="19895995" type="General" weightage="20" keywordseo="HDFC-Bank" source="keywords" meta.keywordsubtype="org" meta.entityname="HDFC Bank" meta.hostid="261" meta.entityid="HDFC Bank">HDFC Bank</keyword> emerged as the leader in terms of transaction volumes, with its credit cards facilitating 9.9 crore transactions during the month. <keyword id="19900482" type="General" weightage="20" keywordseo="ICICI-Bank" source="keywords" meta.keywordsubtype="org" meta.entityname="ICICI Bank" meta.hostid="261" meta.entityid="ICICI Bank">ICICI Bank</keyword> followed closely with 7.1 crore transactions, while SBI secured the third position with 6.3 crore transactions. In terms of transaction value, HDFC Bank again led the way, with a total spend of Rs 44,369 crore through its credit cards in July. ICICI Bank and SBI followed with Rs 34,566 crore and Rs 26,878 crore, respectively. The report said "In Jul'24, transaction volumes was led by cards issued by HDFC Bank (9.9 crore) followed by ICICI Bank (7.1 crore) and SBI (6.3 crore)". Additionally, the <keyword id="22988051" type="General" weightage="20" keywordseo="average-transaction-value" source="keywords">average transaction value</keyword> (ATV) also saw a marginal increase of 1.4% month-on-month in July 2024. This marks the first increase in ATV in ten months, suggesting a shift in consumer behaviour towards higher-value transactions after a period of stagnation. Overall, these figures reflect the growth of credit card usage in India, driven by increased consumer confidence and the convenience offered by credit card transactions.

Indians credit card spending increases 19% YoY to Rs 1.7 trillion in July 2024

<ul class="summary-list"><li>If you've gotten really into credit card rewards in recent years, you're not alone.</li><li>Some Americans go to great lengths to maximize points, sign-up bonuses, and cashback.</li></ul>Aaryan Desai picked up a hobby during quarantine: <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/credit-cards/best-credit-cards">researching</a> <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/credit-cards/transferable-credit-card-points-best-rewards-to-earn">credit card</a> <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/credit-cards/ways-to-use-credit-card-points-beyond-travel">rewards</a>.The 20-year-old swipes as much as he can. Right now he's <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/credit-cards/how-to-book-free-travel-cheap-deals-credit-card-rewards">banking points</a> for a concert in October and a big trip after he graduates from Georgia Tech.Desai is part of a new generation of credit card users: young, perks-focused, and ready to maximize. Today's credit cards, he said, are like the coupon books of yore. The perks might not always be the right fit, but, if you figure out a good configuration, you can find some big savings.For Desai and other <a target="_blank" class="" href="https://www.businessinsider.com/credit-card-rewards-points-friends-fights-brunch-money-payment-venmo-2024-7">rewards hounds</a>, the realization that they can perform a sort of points arbitrage was a real hook."Just using the money that I would be using otherwise or just getting together with friends and that, 'hey, I can just put it on my card and you can Venmo me later,' opening the door to getting 80,000 points from Chase or 175,000 from American Express — it was a new opportunity," he said, adding: "That's what got me into it."If it seems like the whole country suddenly has credit card point mania, you would be correct: An <a target="_blank" href="https://www.ipsos.com/en-us/majority-americans-value-their-credit-card-rewards">Ipsos poll</a> of 1,081 adults conducted from April 31 to May 1 found that 71% of respondents have a rewards or cashback credit card, and 68% said that they prefer using their credit card because of the rewards and points that they can earn.The poll found that a fifth of Americans ages 18 to 34 use their rewards to pay for things they wouldn't be able to afford otherwise. Younger Americans are flocking to previously fancy cards like <a target="_blank" href="https://www.businessinsider.com/american-express-platinum-card-gold-gen-z-millennial-rewards-2024-6">American Express</a>, willing to shell out hefty annual fees in exchange for perks like <a target="_blank" href="https://www.coachella.com/amex">exclusive access to Coachella tickets</a>.The rewards are a big reason <a target="_blank" class="" href="https://www.businessinsider.com/credit-card-rewards-points-friends-fights-brunch-money-payment-venmo-2024-7">credit cards</a> have become a cultural juggernaut among young Americans. As costs rise and <a target="_blank" class="" href="https://www.businessinsider.com/millennial-subsidy-uber-airbnb-prices-surge-pricing-dynamic-2024-8">the millennial subsidy fades</a>, credit card rewards help a new generation live lifestyles they may not otherwise be able to afford: first-class flights, hotel rooms, and VIP concert experiences. It doesn't hurt that social media is full of videos and blogs that offer the tantalizing promise of free trips, luxury lounges, and fancy restaurants — if you can cobble together the right puzzle of points and cards without digging yourself into too much debt.<h2 id="124d8b83-ad11-40eb-84a1-249d4ffa65bd">Living the high life on credit card perks</h2>At first, 29-year-old Willem Van Eck thought the rewards game was a snake oil salesman's gambit. Cut to: He's stretched out in a first-class seat, a glass of bubbly in hand."Wow," he thought, "this actually is a scheme that you can leverage with the right flexibility and with the right research," Van Eck, a software engineer in the Bay Area, said.Credit card rewards work as an incentive to get customers to swipe more. They can come in the form of cashback — which means you get a partial refund for a given purchase in the form of a credit on your bill or a transfer to another account. Or they come as points, which are more nebulous but can typically be used as currency for future purchases. And then there are other perks like hotel credits, airline miles, gift cards, and upgrades like Van Eck's.For instance, the Platinum Card from American Express — often considered one of the <a target="_blank" href="https://www.businessinsider.com/personal-finance/credit-cards/chase-sapphire-reserve-vs-amex-platinum-card#fees">top cards for rewards</a> — will cost you $695 in annual fees. In return, you'll get five points for every dollar spent on flights and a point for every other dollar spent. On average, <a target="_blank" href="https://www.businessinsider.com/personal-finance/credit-cards/what-are-points-miles-worth-value#amex-membership-rewards">per BI's calculations</a>, an Amex point is worth 1.8 cents. Say you spend $5,000, $2,500 of which went toward flights; you'd net 15,000 points, which could equal around $270 — a significant chunk of the annual fee.In addition, many cards will also offer substantial sign-up rewards. The Platinum Card offers 80,000 points for spending $8,000 in the first six months of holding the card. Those 80,000 points alone could be worth twice as much as the annual fee.Taking advantage of this system requires diligence and restraint to avoid paying more in interest and fees than you gain in rewards. According to <a target="_blank" href="https://www.federalreserve.gov/econres/feds/files/2023007pap.pdf">a paper</a> looking at who this system hurts and benefits, borrowers who carry balances and businesses — which pay a fee on each credit card transaction — subsidize the fun for the rest of us.Pre-pandemic, Van Eck was chasing cards with high sign-up bonuses, like the Chase Sapphire Preferred card, because they allowed him to transfer points to airlines so he could book business or first-class seats. During the pandemic, he took note of the <a target="_blank" href="https://www.wsj.com/articles/airline-cards-lose-luster-as-coronavirus-persists-11606991400?mod=article_inline">beefed-up bonuses and short-term benefits</a> that companies were offering in an attempt to lure customers; his Delta card offered a $15-a-month dining credit, for instance. That's when Van Eck noticed that more of his Gen Z and millennial friends starting to become adept at navigating their benefits.Van Eck is very cautious of lifestyle creep and ensuring that cards are worth his while, especially amid high interest rates, inflation, and recessionary fears."I've seen most of my peers, including me, reevaluate the value proposition of the cards," he said. Every year, he goes through his list of cards to see which ones paid for themselves without him changing his behavior. If one doesn't, he'll cancel it.But not everyone is as prudent as Van Eck. In the high-paying tech industry where he works, Van Eck still sees people changing their habits to maximize rewards, which he doesn't think is smart. This could be why delinquencies have been on the rise in recent years, with the youngest borrowers leading the pack. After all, credit cards are fun to use. No, really. Contrary to the belief that we overconsume with credit cards because they ease the pain of spending, <a target="_blank" href="https://mitsloan.mit.edu/experts/how-credit-cards-activate-reward-center-our-brains-and-drive-spending">research finds</a> that their bigger appeal is that they make our brains feel like we're getting a reward. All that stands between you and access to that first-class airport lounge are a few taps or swipes.<h2 id="0f454fca-2571-4637-a3e5-c54130cda971">Nothing good lasts</h2>Credit card companies aren't just giving away rewards for free.As Lulu Wang, an assistant professor of finance at Northwestern's Kellogg School of Management <a target="_blank" href="https://insight.kellogg.northwestern.edu/article/who-pays-generous-credit-card-rewards#">finds</a>, many businesses will pass on their costs to customers. For example, say you use a 1% cash back rewards credit card at your favorite local coffee shop on $100 worth of coffee for you and your friends. The shop pays a 2% fee on the transaction — $2 — to your card issuer. Then, your card issuer would use some of that 2% fee to give you your 1% back. To cover their fee, the shop might raise their prices."In some sense, when you benefit from those rewards, you're taking that money from some mix of the merchant and other cash and debit card consumers out there in the economy who are then not benefiting from those rewards," Wang said.Perks aren't always a great deal for everyone. Will Springer, a 41-year-old in Indiana, uses his Chase Sapphire Preferred and Amex Platinum cards primarily for perks like travel insurance and car rentals. Since he lives in a more rural area, an Equinox gym membership benefit is moot, and he can't really use the Uber benefit offered — he sometimes converts it into food delivery credit for Uber Eats.Other loyal credit card point users say you can't bank on your favorite perks sticking around. Brandon Zemel, a 32-year-old music producer in Las Vegas, puts pretty much everything on a credit card. He has two cards, the Chase Sapphire Reserved with a higher annual fee that's more travel-catered, and the Chase Freedom Unlimited, which has a fairly flat return on points. He said his travel card shaves hundreds of dollars off of his expenses, and he loves to use his points to get himself onto seat upgrade lists.But Zemel recently lost a hugely useful travel benefit: a "<a target="_blank" href="https://www.forbes.com/advisor/credit-cards/chase-sapphire-reserve-card-ending-priority-pass-restaurant-benefit/">priority pass</a>" that could be converted into a $28 dining credit for both him and a guest."It seems to be a thing these days that every year, two years, three years, these companies devalue their product or their perks provided by their product," Zemel said. "And I guess to some extent it's to be expected, but it does kind of remind you that the things that you currently enjoy are not necessarily going to be here long term."As Zemel has seen during his time as a cardholder, the rewards craze has basically "grown exponentially," propelled by popular blogs and TikTokers. That can also dim the appeal of previously exclusive perks, like overcrowded airport lounges."People got really used to anyone with a pulse basically having some kind of access to the lounge at the airports," he said. Now, Delta has <a target="_blank" href="https://www.cnn.com/travel/delta-ceo-bastian-skymiles-changes/index.html">recognized</a> that it had too many elite cardholders — leading it, in some cases, to restrict access to <a target="_blank" href="https://www.businessinsider.com/personal-finance/credit-cards/delta-sky-club-credit-card-access">lounges</a> to higher spenders.It's what Wang says is an example of "<a target="_blank" href="https://www.huffpost.com/entry/what-money-cant-buy_b_1442128">skyboxification</a>" — an increasing stratification of life among haves and have-nots, like a baseball stadium that's divided between crowds in the stands and richer fans in box seats."I can totally understand this looming dread that society is getting splintered into those who have access to this kind of stuff and those who don't," Wang said.I can relate to this sentiment. At a music festival this summer, I learned that my Chase Sapphire credit card would let me skip the line and access an air-conditioned tent with free water.However, when I arrived I learned a hard truth: I actually needed the card one tier above mine to get in. For one brief moment, as I gazed at the sparse crowd inside, I thought about applying on the spot. But I ultimately decided it wasn't in my best interest to incur a higher annual fee and open another line of credit.And yet, as I stood among the packed and sweaty masses, waiting nearly an hour to get food and water, I felt haunted by the skybox appeal. Would a new credit card do anything positive for my finances? Most likely not. Would it make me feel like a VIP at this event? Definitely. Maybe I'll try to get the Sapphire Reserve before next year's festival.Are you passionate about your credit card rewards? Have you gotten into debt trying to play the points game? Contact this reporter at <a target="_blank" href="mailto:jkaplan@businessinsider.com">jkaplan@businessinsider.com</a>.

Welcome to credit card points mania

Lana Linge has $42,000 in credit-card debt, but it's not the giant tab that has her most frustrated.The 29-year-old says she takes full responsibility for her debt. After getting her first credit card in her early 20s, Linge accumulated small amounts of debt but was always able to pay it off. That changed in 2020: Linge struggled with managing her spending on necessities and other items, like clothes, while in isolation, causing her bills to grow. Things got worse after she lost her job this past October, and she eventually depleted her savings to keep up with the payments on her card."I know for a lot of people, they're in debt because of these freak things that are outside of their control," Linge tells me. "The reason that I'm in debt primarily is from overspending, and I don't try and negate that in any way."Overwhelmed, Linge is going through the painful bankruptcy process to discharge the debt. Looking back, she regrets not paying more attention to the details of her card's interest rate. Wooed by the rewards and perks the companies were offering, Linge signed up for a card with an interest rate she says ballooned to over 20%. The growing interest payments meant that even as she worked to get her spending under control, the bills kept growing.Linge's experience may be on the extreme end of America's personal finance journeys, but she isn't alone in her interest-rate woes. Consumers are always looking for deals, and it's easy to be swayed by credit-card companies offering glitzy rewards and points. As Adam Rust, the director of financial services at the Consumer Federation of America, told me, issuers are "putting the sizzle before the steak." But many of these cards come with high rates and hidden fees, and by the time consumers realize just what they signed up for, credit-card companies have raked in the profits."Credit-card companies can get away with charging high rates of interest because consumers aren't necessarily paying attention and marketing doesn't focus on that," he said.The average credit-card interest rate is now just over 21%, up from about 15% a decade ago. More importantly, the gap between the interest rate that credit-card companies pay banks that oversee their business and the one they charge you is the widest it has been in nearly 30 years. Even with existing regulations and the recent interest-rate cuts from the Federal Reserve, credit-card companies have the power to exploit consumers, and people with growing debt piles have few avenues for relief. Additionally, as credit-card companies continue to charge high interest rates, more cardholders in debt become delinquent — and that could push the US economy closer to recession."What we're seeing from the data shows a rapidly deteriorating financial landscape for Americans," Bruce McClary, a senior vice president at the National Foundation for Credit Counseling, tells me, "with a lot of people teetering on the brink of severe financial crisis."<h2 id="ddbac9bc-8e83-4317-902e-7a4e1408e665">The squeeze is on</h2>Americans have a lot of debt piled up on their little pieces of plastic. The Federal Reserve Bank of New York said in August that Americans owed a record $1.14 trillion on their credit cards in the second quarter and that balances increased by $27 billion from the same period a year ago, a 5.8% jump. TransUnion says the average credit-card balance per debtor stands at $6,329, up by 4.8% from a year ago. Most worryingly, according to the New York Fed, the percentage of people who had fallen more than 90 days behind on their payments climbed to 6.4% by the end of 2023, up from 4% at the end of 2022. Austan Goolsbee, the president of the Federal Reserve Bank of Chicago, described those rising delinquencies as "uncomfortably high" and a "warning sign" for the economy.This may be worrying news for average households and the US economy, but it is wonderful news for the credit-card companies. Credit-card issuers make money in a few ways, but one of the most important is interest payments. When a customer doesn't pay off their full balance each month, they pay interest that the credit-card company collects, so increasing interest rates is an easy way to bring in more profit. To better understand the strength of the credit-card industry, look at the split between the federal funds rate — the interest rate at which banks make very short-term loans to each other, which is also used as the benchmark for almost every other type of loan — and the average credit-card interest rate. Data from the St. Louis Federal Reserve indicates the difference between the rates is at a nearly three-decade high, suggesting credit-card companies feel free to charge high interest rates regardless of what the Federal Reserve does with the federal funds rate."We should never lose sight of just how profitable credit cards are," Rust says. "You've got interest, you've got interchange, you've got late fees; credit-card companies are making so much money."The Consumer Financial Protection Bureau estimated in February that major credit-card companies earned about $25 billion in additional interest revenue in 2023 by raising their annual-percentage-rate margins, or the difference between the APR and the interest rate set by banks, known as the prime rate. It also found that major issuers raised the average margin by 4.3 percentage points over the past decade, to an all-time high. Using data on how Americans deploy their cards to paint a representative picture, the CFPB estimated that the margin increase cost the average consumer with a balance of $5,300 more than $250 in 2023. On top of that, the bureau's 2023 report to Congress on the credit-card market said companies charged consumers over $105 billion in interest in 2022, helping boost the profit margin for these companies to 5.9% from 4.5% in 2019.These staggering numbers are made possible by the tactics that credit-card companies use to lure in new customers. Antoinette Schoar, an economist at MIT who coauthored a paper examining credit-card companies' use of behavioral biases to acquire customers, says companies use data to determine a prospective customer's education and income levels and will tend to offer products with hidden fees and high rates to people with lower educational attainment and income. For example, a company might advertise a 0% APR, but the consumer might not realize that that rate can't last forever, leading them to take on balances higher than they can afford to pay off. She says that while the tactics companies use to appeal to certain consumers can lead to high balances and credit-card debt, the companies aren't the only ones to blame — government regulations to prevent this kind of misleading marketing by credit-card companies could force the companies to compete by offering customers a better deal."We need better regulation so that the card companies are competing on the right dimensions and not on increasing convolution or increasing confusion to their customers," Schoar says.<h2 id="a19bffcc-ffc0-46bd-9211-4a8e68d3409d">'The highest credit-card rates we've ever seen'</h2>Until 1978, most states had laws capping interest rates for credit cards and consumer products. But a Supreme Court decision that year allowed banks to charge whatever interest rate they wanted if they were headquartered in a state without a usury law. This inspired a race to the bottom, with states like South Dakota and Delaware doing away with their laws in order to attract more business from banks. The industry ended up with, as David Silberman, a senior fellow for the Center for Responsible Lending, put it, virtually "no legal constraints on the interest rate they charge." Lawmakers have tried to rein in the industry — for instance, the CARD Act, enacted in 2009, required card issuers to notify consumers of interest-rate increases at least 45 days in advance and put restrictions on things like late fees and withdrawal fees. The legislation, however, didn't cap interest rates or rate increases. Lowering the current high interest rates, and the profits that come with them, has become a priority across the aisle. GOP Sen. Josh Hawley introduced a bill in 2023 that would cap interest rates at 18% and impose penalties on companies that violate the cap. "Americans are being crushed under the weight of record credit card debt—and the biggest banks are just getting richer," Hawley said in a statement, adding that "capping the maximum credit card interest rate is fair, common-sense, and gives the working class a chance." Democratic Sen. Elizabeth Warren brought up the issue during a Senate hearing in May, saying credit-card companies had "grown their profits through interest and fees."The Federal Reserve cut its benchmark interest rate in September after holding it steady for over a year, but credit-card holders with high interest rates won't feel any relief off the bat. Michele Raneri, a vice president and head of US research and consulting at TransUnion, told me that's because consumers have to pay off their balances at the interest rate in place when they accumulated the debt, so the lower rate wouldn't apply."It'll take a while for the consumer to realize the benefit of it," Ranieri says.The high inflation of the past few years has also made it easier for consumers to fall into credit-card debt. Ted Rossman, a senior industry analyst at Bankrate, described the feedback loop of high prices and high interest rates as "a tough cycle to break." Credit-card companies know what they need to do to maximize profit: If they offer rewards and bonuses up front, they can snag new customers before they realize the high rates they're signing up for. Profits keep rolling in for issuers, while consumers fall further behind.<a target="_blank" rel="" href="https://www.businessinsider.com/author/ayelet-sheffey">Ayelet Sheffey</a> is a senior economic policy reporter on Business Insider's economy team.

Credit card companies are ripping you off like never before

<ul class="summary-list"><li>21-year-old Skylar Griffin has four credit cards, including and AmEx Gold and Platinum.</li><li>She got her first credit card as a freshman to build up her credit score and kept a strict budget.</li></ul>This as-told-to essay is based on a transcribed conversation with Skylar Griffin, a 21-year-old college student in Georgia. Griffin financial claims have been verified with documentation. The following has been edited for length and clarity.When I was a child, my mom often shared financial advice. She told us never to cosign for someone's loan and don't buy anything unless we could buy it twice.On several occasions, she advised us kids never to get a credit card unless we were responsible enough to pay it off each month.She didn't want us to struggle financially like she did as a single parent.In high school, I started watching YouTube videos about finances. I saw financial struggles firsthand, and I didn't want to be in that position as an adult. The videos taught me I'd need to build up my credit score to buy a car or a house or if I might need a loan.<h2 id="102ef261-a63c-412a-8936-6e2d5bc894d4">I got my first credit card before going to college</h2>In July 2021, I was preparing to study business management at Columbus State University in the fall. Without my mom's knowledge, I ordered a Bank of America student card. It was a Visa card with no annual fees. My mom wasn't happy. I reassured her I'd done my research and could handle the responsibility.During college, I worked at a call center during the school year, paid internships in the summer, and received refund checks because my scholarship was more than school costs. I also earned a bit of money doing social media content.My first card had a limit of $500. I would buy little things here and there, making sure I had enough in my checking or savings account to pay it off each month. I'd marked all the due dates in my calendar, and I was never late for a credit card payment. There were temptations to buy new clothes or tech, but I always fought it.<h2 id="fc7cfef9-313f-436d-be60-a1a46519f707">Getting an AmEx for the travel points</h2>I kept using the Bank of America card throughout my freshman and sophomore years of college, but in April 2023, I decided to take out an Amex Gold card as well.I'd heard about travel credit cards through watching financial advice videos online. If I used this card for buying groceries or dining out, my two main expenses in college, I would get four times the points to use on travel. Although I wasn't traveling much, I planned to travel. At the time, the card had a $250 annual fee, which was worth it for the points I felt.I only used my card for things I needed or had saved for. I never bought things just to earn points.In March 2024, I took a big leap and opened an Amex Platinum credit card. It comes with a high price tag — a $695 annual fee — but I thought the benefits outweighed the price. Because it was another Amex card, all of my points were added to the points earned from the Amex Gold.I only use this card for booking flights and hotels because this is what I get the highest points for. With the card, I get five times the points when booking flights and hotels, a $200 yearly airline credit, and a $200 yearly hotel credit.When I stay at Marriott or Hilton, I get 'high status' and often get my room upgraded. But my favourite perk is the CLEAR Plus membership which gets me through TSA quicker at the airport.I knew I was planning some big trips in 2024 to Japan and New York, and then a cruise to the Bahamas, so planned to make all my travel purchases on the Platinum. Since getting an Amex, I've been able to fly to Japan, New York, and Miami for free in 2024.With this card, I accessed airport lounges on the long trip to Japan and was part of the President's Circle with Hertz Car Rentals, so I was guaranteed a car upgrade when I rented a car to get around the country.<h2 id="ec2f29ef-d145-470e-972f-0e160d4e0cd5">I took out a fourth credit card so I could earn points for other purchases</h2>In June 2024, I decided to take out another Amex card — the Amex Blue Business Plus. This card means I can earn points paying for things like gas, that don't earn me points on my other cards.There's no annual fee, and I could only take it out because I'm considered a sole proprietor. I own a Mercari shop where I resell vintage clothes I find at flea markets.I only use my Bank of America card when Amex isn't accepted. I never use a debit card unless I'm pulling cash out of the bank.Even though I am confident and comfortable using credit cards, I still don't spend anything that isn't in my checking or savings account. I never base a purchase on the money that I'm expecting in my account, because you never know how finances could change.I put all my due dates in my calendar and aim to pay each of them off earlier than required. Sometimes, I feel the urge to overspend. But then I remember the interest rates on my cards, and I snap back to reality. Paying high interest because I can't afford to pay my bill in full is not worth the momentary satisfaction of shopping.In addition to all the benefits I've received when traveling, my credit cards helped me raise my credit score to 755.<h2 id="1abacec9-c073-4582-ac5e-15c3908118fc">I never stop learning about finance</h2>I think college students should consider getting a student credit card with no fee. They have low limits and can help start building a credit score. However, if you're impulsive or have poor spending habits, I wouldn't recommend it.My mom now says she's proud of how I manage my finances. I've always found personal finance interesting and the concepts easy to understand, but it takes dedication to stay on track financially. I never stop learning to make sure I'm doing what's best for my financial future.

I'm a college student who pays nearly $1,000 in annual fees for 4 credit cards. It's worth it for good credit and travel perks.

Amid questions on the depleting <keyword id="20776807" type="General" weightage="100" keywordseo="loan-to-deposit-ratio" source="keywords">loan-to-deposit ratio</keyword> in <keyword id="19895091" type="General" weightage="20" keywordseo="Indian-banks" source="keywords">Indian banks</keyword>, a recent report by <keyword id="19896146" type="General" weightage="20" keywordseo="Motilal-Oswal" source="keywords" meta.keywordsubtype="org" meta.entityname="Motilal Oswal" meta.hostid="269" meta.entityid="Motilal Oswal">Motilal Oswal</keyword> suggests that the loan-to-deposit (LD) ratio is likely to subside on its own in the coming months. The debate on loan-to-deposit ratio (LD), particularly concerning sluggish <keyword id="19998084" type="General" weightage="20" keywordseo="deposit-growth" source="keywords">deposit growth</keyword> and potential risks to <keyword id="20089808" type="General" weightage="20" keywordseo="financial-stability" source="keywords">financial stability</keyword> is raised by even the finance minister and the <keyword id="20151998" type="General" weightage="20" keywordseo="RBI-governor" source="keywords">RBI governor</keyword>. However, the report notes that on closer examination, the situation may not be as alarming as it seems. As of 9th August, 2024 the Indian <keyword id="19964544" type="General" weightage="20" keywordseo="banking-sector" source="keywords">banking sector</keyword>'s loan-to-deposit (LD) ratio stood at 77.2 %, which is slightly below its recent peak of 78.2 % on 22nd March 2024, and its all-time high of 78.8 % in September 2013. The report stated that typically a rising LD ratio is indicative of a tightness in the banking sector, potentially indicating overheating. A lower LD indicates that the bank is aggressive in its credit disbursement practises, which could be risky. It highlighted that an analysis of the sector's transactions with the Reserve Bank of India (RBI) through the liquidity adjustment facility (LAF), along with recent trends in the weighted average call rate (WACR), suggests that the current rise in the LD ratio does not indicate tightness, which is why there is no immediate cause of concern. In fact, the report added that the concern over weak deposit growth may be overstated. Historical data show that bank deposits grew at an average rate of 9.5 % during the pre-COVID period (January 2015 to February 2020) and 10.4 % in the post-COVID period (March 2020 to August 2024). Earlier, Finance Minister Nirmala Sitharaman also urged state-run banks to enhance deposit mobilization through attractive offers and focusing on Tier-2 and Tier-3 cities. Loan-to-deposit ratio pegs the total deposits received by the bank against the loans it has offered. It helps in understanding how liquid the bank is. The loan-to-deposit ratio (LDR) is a financial metric that compares a bank's total loans to its total deposits. It's used to assess a bank's liquidity and credit risk, and to inform lending and deposit-taking decisions The report said while the exact measures are unclear, the deposit growth could potentially be increased by making other asset classes less attractive through taxation or interest rates, or by boosting fiscal spending to increase net credit to the government. In its forecast, the report noted that private banks will witness a moderation in their <keyword id="19998083" type="General" weightage="20" keywordseo="credit-growth" source="keywords">credit growth</keyword>, while public sector banks will maintain a healthy credit growth rate. "Our analysis suggests that deposit growth could be raised by either making other asset classes unattractive (through taxation and/or interest rate) or increasing the growth in net credit to the government by pushing fiscal spending higher" the report added. Alternatively, policymakers might consider curtailing loan growth to lower the LD ratio. However, this could slow deposit growth, particularly if corporate credit growth remains weak. Encouraging savers to shift investments from other assets to bank deposits could also be an option, but this carries risks of overreach and potential damage to economic confidence. Das had also flagged the excessive growth, or froth developing in the personal loan space. Notably, while credit growth in unsecured personal loans like credit cards continues to decline, it remains elevated at 23.3% as of June 2024. However, this is a significant reduction from 34.2% witnessed in November 2023. As fiscal spending increases, bank credit to the government is likely to grow, which should elevate deposits and broad money supply. The report said "However, the extent of foreign capital inflows and the RBI's policy for managing these inflows remain uncertain". Last month, RBI governor Shaktikanta Das had also addressed this issue in the 50th meeting of MPC (Monetary Policy Committee). Per him, deposit mobilisation has been lagging credit growth for some time now. This may potentially expose the system to structural liquidity issues. "While there could be a debate regarding ‘deposits funding loans’ vis-à-vis ‘loans funding deposits’, the current regulatory concern stems from the fact that there could be structural changes happening which banks need to recognise and, accordingly, devise their strategies. Households and consumers who traditionally leaned on banks for parking or investing their savings are increasingly turning to capital markets and other financial intermediaries", Das said. Per him, while bank deposits continue to remain dominant as a percentage of financial assets owned by households, their share has been declining consistently, since households are now increasingly allocating their savings to mutual funds, insurance funds, pension funds and other avenues.

Loan-to-deposit ratio will subside on its own in coming months, notes Motilal Oswal report

Pam's circle of parent friends likes to <a target="_blank" class="" href="https://www.businessinsider.com/how-much-kids-cost-raising-child-inflation-childcare-tax-exemptions-2024-1">split the financial load</a> when it makes sense, whether it's ordering pickup or delivery, going out for a group meal, or getting <a target="_blank" class="" href="https://www.businessinsider.com/cost-summer-camp-childcare-inflation-parents-debt-work-schedules-2024-7">tickets to a theme park or a movie</a>. But there's one dad who has recently picked up a habit that irks her: He insists on putting all their group purchases on his credit card.The gesture comes off as nice, but it ends up making extra work for Pam because she's constantly having to use apps like <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/digital-payments-apps-send-my-kids-money-2023-9">Splitwise or Venmo</a> to pay him back. Even when it would be easier if she just paid her family's part, he seems to slide his card in first. Once, when the guy was in line in front of her at a fast-casual restaurant, he waited for her to order before butting in to try to put the purchase on his card. It's not the end of the world, but Pam told me it's bothersome — especially because this dad acts like no one is picking up on what's going on. He's not doing all this out of the kindness of his heart; he's doing it because he wants the <a target="_blank" href="https://www.businessinsider.com/personal-finance/credit-cards/ways-to-use-credit-card-points-beyond-travel">credit-card rewards</a>."I overheard this person say that, 'Oh, with all of this spend on my credit card, I get 5% off this or 20% off this.' And I'm thinking, 'Oh, so this is just benefiting you,'" Pam, who lives in San Francisco and asked to use a pseudonym so the jerk in her group wouldn't know she thinks he's a jerk, told me. "I like people who are just up front versus trying to sneak things in and manipulate."Consumers love their rewards. In a recent poll from Ipsos, 71% of Americans surveyed said they had some sort of rewards, points, or cash-back card, and 80% of those with such a card said they valued their rewards. They'll cling onto those rewards even if it means a tough outcome for others: A 2019 LendingTree survey found that people were likelier to support a cap on how high credit-card companies could set their interest rates if the limit reduced access for people with imperfect credit than they were if it meant the cap would lower their rewards. Credit-card issuers and banks love rewards, too — they're a good way to attract customers.But maybe we love our credit-card rewards too much, to the point that it's making us act in less-than-ideal ways toward those we hold near and dear. Money is always complicated, and the standoff over who gets 1.5% cash back or three times the airline miles after paying for brunch is no exception. And it seems like no matter who picks up the check, everyone is a bit dissatisfied: For every Jane angry at Joe for insisting on putting everything on his credit card so he can upgrade his honeymoon to Singapore, there's a Mary fuming at Mike for shortchanging her when he paid back his part of the bar tab, making the points she got for paying the up-front cost a wash."It does seem like one of those ultimate pick-your-battles kinds of things," Matt Schulz, the chief credit analyst at LendingTree and the author of "Ask Questions, Save Money, Make More," said in an interview. "It's an awkward thing, and you just don't want to be that person who makes things uncomfortable over something like credit-card rewards."But credit-card rewards are, indeed, making things uncomfortable.Plenty of people have had the experience of the check landing after a group meal and multiple people trying to put their credit cards down so they'll earn the rewards. Usually, it winds up fine — you agree to split it, or you all decide to take turns, one person pays this time for the points, another next time. Not everyone at the table cares about maximizing their rewards, but just like some people are super into Taylor Swift or fantasy football, others are obsessed with gaming credit-card points. Whatever the case, a lot of points-related interactions can start to feel pretty icky pretty fast. Take a spin around Reddit, and you'll find all sorts of rewards-related conflicts. There are people complaining that their spouses don't want to play the rewards game, and other point obsessives weighing whether it's OK to refuse to split their rewards with their point-indifferent partners. <a target="_blank" href="https://www.reddit.com/r/AmItheAsshole/comments/108kjlj/aita_for_paying_for_my_share_of_the_trip_with/">One user asked</a> whether they should be expected to share their travel bonus with friends after booking a group trip. <a target="_blank" href="https://www.reddit.com/r/CreditCards/comments/vstsmq/paying_with_points_on_a_group_trip/">Another sought advice</a> after a friend asked whether they might be able to use their rewards to get a discount on a hotel for their group of friends. "I do have points," the person wrote, "but they are perks I get." They asked whether it might be acceptable to use their points but charge people the monetary value of the booking anyway.Jen, from Chicago, pays for everything she can to rack up rewards, and she's pretty sure it doesn't bother anyone else. "I haven't really run into anyone who's been super pissed off," she said, though she cools it in professional settings. If anything, it's a hassle for her. When traveling in a group, she's typically burdened with all the planning so that she can put all the flights and hotels on her card. Her partner refuses to get his own rewards card, which is frustrating, so she finally made him an authorized user on one of hers so at least she can get points from his purchases. "He doesn't seem to care," Jen, who asked to withhold her last name to protect her privacy, said. "Everything he gets, I get paid back."She did recently have a small dispute over points at a dinner with two longtime friends. When the roughly $120 check came, Jen took out her card, as she always does, but noticed another friend did, too. She'd gotten a new card through work and wanted to rack up points for flights. They decided to split the bill in half so that both got their points. Their third, nonpoints friend sent them each a Zelle payment, getting no reward for her trouble. When I asked Jen how much she thought the haggling was worth, she said maybe a couple of bucks. But it all adds up, she insisted. "It's enough for me, over time, to where it matters," she said. "I'm not trying to be greedy."A small disagreement over credit-card points isn't going to end a relationship, but it is a situation where animosity can build up over time, especially if there isn't good up-front communication. The person constantly in debt to the person who puts everything on their card can start to feel like they're being taken advantage of, and the person trying to track everyone down to get paid back can get upset, too."It is more work to chase down all of the payments, and so I think you have to decide for yourself what is the value of the rewards that you're going to earn by putting this whole thing on your card? And is that worth the time and energy?" Emily Thompson, a credit-cards editor at The Points Guy, said. If you're trying to hit $8,000 in spend to get a welcome bonus, the answer might be yes. If you're earning a point per dollar, which is worth about $0.01 in many cases, you may want to stand down. Lending money is often fraught, and people are effectively doing this when they toss everything onto their credit cards. In a CreditCards.com survey, 59% of respondents who had lent money or paid for a group expense with the expectation of being paid back said they'd had something bad happen. Forty-two percent of lenders said they lost money because they weren't repaid, and 26% said their relationship with the borrower was damaged."People should tread carefully because it only takes one person stiffing you for it not to be worth it," Ted Rossman, senior industry analyst at Bankrate, said. "Are you OK taking the risk? Are you going to follow up? I find that there are very quick diminishing returns with this. If you don't get paid back quickly, you probably won't get paid back at all."Someone slightly miscalculating the tip or tax on the reimbursement might negate the rewards earned, not to mention if they miss the payment entirely. Eating a $50 loss in the name of $2.50 in rewards is not a worthwhile trade-off.Friendships come with so much more gray area compared with, say, business relationships. What may seem completely fine to someone — taking a couple of weeks to pay a friend back or asking a friend to pay the cash equivalent of points they used for a hotel booking — might seem completely out of line to someone else."There are more clear terms for business, for romantic partnerships. But in friendship, what's normal? What's not? What do I owe you? We don't know," Danielle Bayard Jackson, a friendship coach and educator, said. "We have a lot of these friendships that end prematurely or that get bogged down by a lot of resentment and confusion."Most people I talked to about this story had some sort of rewards-related anecdote with at least mild tension. One person said his friend group never has a problem with points hoarding … before name-checking one friend who goes too far. Another said she sees paying on her card at restaurants as a way to save servers the headache of trying to divvy up the bill, though that means she has to warn everyone that she's a big tipper and make sure they're on board. I recently booked a fight with a friend who remarked she'd gotten some $300 in travel credit from her rewards card. I briefly wondered whether she would offer to split the discount with me. (She didn't, and she was right.)"As much as calculating the value of the rewards that you can earn, you also have to calculate any potential negative impact on your relationship with the person," Thompson said. When she books trips for friends using her rewards, she comes up with a price that's still a "really good deal" for her friends, but it "isn't nothing," she said. That seems fair, though I'd be curious what her friends think. It's not just friendships that credit-card points can get in the middle of — but also romantic relationships. Matt (a pseudonym), from Alaska, got super into rewards a couple of years ago, watching endless YouTube videos and scouring financial-advice websites for tips. His wife was not so into it — she's the "kind of gal that's like, 'Just give me the stupid card if I use it if you want but don't expect me to have this rotating collection,'" he said. The issue came to a head when they planned a trip to Florida. Matt was procrastinating on booking, so his wife went ahead and did it without using the right card. He had her cancel everything so he could rebook with the card he wanted to use, but that wound up being a mistake — when he went to make the new reservation, prices had increased."We lost the rooms and things that she booked, and we ended up paying more. And for what? We got like 2% back on the whole deal," he said. "I should have just let her be right and be done with it."Matt has pretty much given up on the rewards game now; he uses a 2% cash-back card but doesn't pay much attention beyond that. All the hassle around it "got to be pretty stupid," he said, and the Florida drama was just "petty shit." He and his wife are now divorcing (but not over the points).Whether all this fuss over rewards is justifiable, relationally and financially, is context-dependent. Points maxing isn't low effort, and unless you're willing to spend a bunch of time figuring the system out, you're just wasting your and everyone else's energy in trying to hoard rewards. More importantly, if you are not paying off your credit-card bill at the end of every month and instead are carrying a balance, the rewards are not worth it."If you carry a balance, you shouldn't be chasing rewards. You should be focusing on paying your balance down," Schulz of LendingTree said. "You don't have to be an accountant to understand that paying 27% interest to get 2% cash back doesn't make a whole lot of sense."Credit-card rewards can be great, and they're definitely popular. Plopping down an <a target="_blank" href="https://www.businessinsider.com/american-express-platinum-card-gold-gen-z-millennial-rewards-2024-6">American Express Platinum Card feels fancy</a>, as do the perks that go along with it. But as with everything, there are trade-offs.On a macro level, the rewards aren't free. They're funded by <a target="_blank" href="https://www.businessinsider.com/stores-credit-card-companies-battle-fees-2018-9">swipe fees</a> paid by merchants that often get passed on to all consumers in the form of higher prices, regardless of how they pay, on top of interest payments and late fees. One recent Federal Reserve study found that this system led to a redistribution of $15 billion in wealth each year from the poor to the rich, the less educated to the more educated, and high-minority areas to low-minority areas.On a micro, more day-to-day level, rewards are a fun, little benefit that can become unfun fast. A local restaurant implements a 3% surcharge for credit cards to try to make up for swipe fees, and suddenly you find yourself vowing to never return even though the difference for you was $1.50. Or you see a friend on Instagram bragging about upgrading their flight and realize that's why they've been so insistent on putting brunches and happy hours on their card all year. Even though it doesn't really affect you, you feel a little cheated.Experts say if you're the points maxer trying to charge every group purchase, it's good to be up front about what you're doing. (As in, don't be like Pam's dad friend.) But if people don't want to go along, you might just need to accept that. Or realize that if they are going along, they may still think what you're doing sucks.<a target="_blank" href="https://www.businessinsider.com/author/emily-stewart">Emily Stewart</a> is a senior correspondent at Business Insider, writing about business and the economy.

Credit card rewards are turning us into jerks

In mid-March, a scammer in California tried to buy $150 worth of <a target="_blank" href="https://www.businessinsider.com/trying-wingstop-first-time-review-photos-2022-9">Wingstop</a> using my debit card. Aside from being impressed at the sheer size of the order, I was relieved because Citibank, which issued my card, declined the transaction on the spot and alerted me to the fraud. In minutes I was able to shut off my card, heading off any more purchases by the scammers, and order a new card. All's well that ends well.When I went to Buenos Aires in April, I figured I might <a target="_blank" href="https://www.businessinsider.com/personal-finance/why-was-my-credit-card-declined">run into a similar situation</a>. Sure, the banks say you don't have to call ahead when you travel anymore, but I assumed I'd still have some purchase flagged as potential fraud, as had happened in past trips abroad. Miraculously, everything went off without a hitch. I don't know how JPMorgan Chase knew that I would spend $200 on Botox in Argentina, but it did. (No, I didn't book my flight on the same card, and whatever, <a target="_blank" href="https://www.businessinsider.com/botox-injections-fillers-plastic-surgery-gen-z-social-media-filters-2024-5">everybody gets Botox now</a>.)It's great that banks and credit-card companies are getting better at discerning which payments are fraudulent and which are legit. Many people have some horror story about having their credit card stolen or having their own legitimate transactions flagged as suspicious. And it's nice not to have to spend 20 minutes on the phone before a vacation explaining where you're going and when. Credit-card fraud protection is still far from perfect, but there's no denying that the technology is improving. On the flip side, it's also kind of wild to consider just how much financial institutions must know about you to make the right calls.I was curious about how it all works — and, frankly, a little creeped out. So I reached out to some credit-card companies and academics to learn more. Why don't people have to alert their credit-card companies about travel anymore? And, more broadly, just how have banks gotten so good at figuring out what's normal about our spending habits and what isn't?The Federal Trade Commission receives thousands of card-fraud complaints each year. The Nilson Report, which tracks the card industry, says payment-card fraud resulted in $33 billion in losses worldwide in 2022 and $13.6 billion in losses in the US. As such, credit-card issuers and banks are keen to do what they can to spot fraud. They want to keep their customers happy, and, more importantly, they want to stem their losses. In the US, the major credit-card issuers and banks <a target="_blank" href="https://www.businessinsider.com/personal-finance/credit-card-lost-stolen-what-to-do">generally have a zero-liability policy</a>, which means that when a customer gets scammed, the organization, not the customer, has to eat the cost.Years ago, whether a transaction went through was based on things like whether a physical card was present, whether you had enough money to make the purchase, and (if the cashier wanted to look) whether your signature on the receipt matched the one on the back of your card. In some cases, the cashier may have even asked for ID or called the bank to verify the funds. We've come a long way from those bad old days by using the same tools that power most innovations: data and computers. Credit-card companies and banks know a lot about us — where we shop, when we spend, and how much we're usually willing to pay for things — and they're getting better and better at turning that knowledge into action. While it's <a target="_blank" href="https://www.businessinsider.com/generative-ai-exaggeration-openai-nvidia-microsoft-chatgpt-jobs-investors-markets-2024-3">all the rage to talk about newfangled forms of artificial intelligence</a>, fraud detection owes a lot to machine learning, a field within AI that's been around for years. A bunch of data gets dumped into computer systems, and algorithms figure out patterns and relationships. The algorithms create decision trees to predict the likelihood of different outcomes and identify what may be considered normal or fishy. It's not that your credit-card company knows that you, specifically, would blow a bunch of cash on A and not on B — it knows that customers with your profile are in the "likes A" camp and not the "likes B" one."It's looking at what's happening that is very much out of the ordinary for your general behaviors," said Tina Eide, an executive vice president of global fraud risk at American Express. "And when I talk about general behaviors, it is generalized, right? It is not down to the specific purchase or to the specific merchant." Eide added, "The models are evaluating a trillion dollars' worth of transactions a year."The machines know more now than ever. Mike Lemberger, Visa's regional risk officer for North America, said that over the past five years the number of data points people generate with their credit cards has grown tremendously. People are increasingly using cards over cash. And they don't just have a physical card they're pulling out at the store — they've got their card credentials in their Amazon account, Netflix account, iPhone, etc. The more purchases the card issuer can analyze, the more accurate the fraud detection will be."Visa, we don't have consumer information — that's your financial institution that has that — but what we have is this triangulation of all these data points," Lemberger said. "We can create more and better scores, layer on top of that machine learning and AI abilities, and it becomes a much, much more powerful predictor, which we then feed into all of our partners to say, 'Hey guys, if you want to make the best decisions, here's a whole bunch of really good information.'"Visa isn't going to block your card directly, but it'll alert your bank that your purchase looks suspicious or that fraud has been detected at the merchant you're dealing with.This all seemed pretty simple until I talked to Yann-Aël Le Borgne and Gianluca Bontempi, a pair of researchers at the Université Libre de Bruxelles in Belgium who <a target="_blank" href="https://fraud-detection-handbook.github.io/fraud-detection-handbook/Foreword.html#authors">work on machine learning and card fraud</a>. They emphasized the vast scale of this fraud-detection technology. Companies and their algorithms are ingesting millions of transactions and creating so many decision trees to categorize certain activities that it can defy human logic, they said. Basically, the computer may be right that your transaction looks funky even if it's made in your home city at a fairly innocuous vendor, or it may be right that the transaction is fine even though it's made in a faraway place — but when humans try to figure out what did or didn't sound the alarm, nobody will really be able to pinpoint why."Machines can consider many more features, and at the end of the day it's not clear if all those features have meaning for humans," Bontempi said. "Humans are used to working with two, three features, at most five features, while machines can work with hundreds of features. So there are really different levels between what a machine can do."There are human-written rules, which are generally interpretable, and there are machine-written rules, which can be a black box. They're more accurate, but they may be harder, if not impossible, for people to reverse engineer. And banks may be using several different algorithms, making this even more complicated. Data scientists are the ultimate decision-makers, but the information they're dealing with is based on highly complex tech. When I explained to experts my somewhat embarrassing wings-versus-wrinkles conundrum and asked what may have triggered one alert and not the other, they offered up different explanations. Eide, from American Express, said that even though I hadn't booked my trip to Argentina with the credit card I used to buy the Botox, something else had probably tipped off the system that I was there. I realized I'd also bought a package of spin classes in Buenos Aires on my phone with the same card. I had also paid for a meal in the city. Lemberger, from Visa, emphasized that it's about all the data and spending patterns and said that given my spending patterns, the Botox likely matched my profile more than the massive delivery order."I hate to say this to you, but at the end of the day, all these data points build personas. Just like in marketing somebody would use personas to market to you, we're using that same technology to protect you," he said. "And the fact is that we use those data points to not just secure you but the whole ecosystem."At some point it occurred to me that the supercomputers that credit-card companies and banks are working with could know more about me than I even know or understand about myself."It's probable that the exact reason why a transaction caused your card to be blocked has no straightforward interpretation," Le Borgne said.I also asked whether there was a big difference in credit-card protections and debit protections and was told not really — maybe banks will be a little more restrictive about credit because they're technically lending you money that's not limited by your actual cash balance. I also asked if companies don't worry about preclearing travel because they don't care as much about losing money to fraud anymore, to which the answer was a hard no."At the end of the day, somebody's got to pay for the fraudulent activity," Lemberger said. Credit-card companies will give you your money back if you're a victim of fraud, but they'll find another place to recoup that money, <a target="_blank" href="https://www.businessinsider.com/credit-card-late-fees-cap-swipe-mastercard-visa-jpmorgan-rewards-2024-4">just as they always do</a>.Instinctually, I am not a technology-is-awesome person — if the AI really is going to kill us, I feel like we should unplug it. I'm not super freaked out about the privacy stuff, but I also don't love the idea that AmEx and JPMorgan and Citi have me so pegged. But it's cool that companies really are making fraud detection better, especially in a world where fraudsters themselves are constantly getting better. I don't want to be like "Yay, banks!" but maybe here the answer really is a little "Yay, banks!" At least that's the case until the next major data-privacy breach, at which point I will regret everything.<a target="_blank" href="https://www.businessinsider.com/author/emily-stewart">Emily Stewart</a> is a senior correspondent at Business Insider, writing about business and the economy.

Banks have finally fixed the single most annoying thing about credit cards

India has witnessed the fastest jump in alternative payment share for <keyword id="21422684" type="General" weightage="100" keywordseo="e-commerce-payments" source="keywords">e-commerce payments</keyword> in the <keyword id="20122305" type="General" weightage="20" keywordseo="Asia-Pacific-region" source="keywords">Asia-pacific region</keyword> from 20.4% in 2018 to 58.1% in 2023 as per a report by GlobalData, a data and analytics company. Options for payment other than traditional cash include <keyword id="19900911" type="General" weightage="20" keywordseo="UPI" source="keywords">UPI</keyword>, <keyword id="6354770" type="General" weightage="20" keywordseo="debit-cards" source="Orion">debit cards</keyword> and <keyword id="6387037" type="General" weightage="20" keywordseo="credit-cards" source="Orion">credit cards</keyword> among others. "This significant uptake of alternative payment solutions can be attributed to the widespread usage of <keyword id="21223853" type="General" weightage="20" keywordseo="mobile-wallets" source="keywords">mobile wallets</keyword>, largely driven by UPI, which facilitates mobile payments in real-time simply by scanning <keyword id="19993724" type="General" weightage="20" keywordseo="QR-codes" source="keywords">QR codes</keyword>," GlobalData report elaborated. The report highlights that in the Asia-Pacific (APAC) region, the payment solutions such as mobile and digital wallets have displaced traditional payment methods like cash and bank transfers for e-commerce payments. The report states that such alternative payments are already immensely popular in countries like <keyword id="1334" type="General" weightage="20" keywordseo="china" source="Orion">China</keyword> and India and are also gaining traction in other APAC markets as well. However, China led the way in 2023, with alternative payments accounting for nearly two-thirds of the total e-commerce payments value in 2023 that took place in the entire Asia Pacific region. However, India is also not far behind, with a significant surge in alternative payment methods since 2018. The e-commerce analytics by the company revealed that even traditionally cash-intensive countries in APAC such as the Philippines, Malaysia, and Indonesia, are witnessing a similar trend. "While most Asian markets are traditionally cash-dominated, the adoption of alternative payment methods for both online and in-store payments is growing across many markets in the region, even outpacing the West. This trend is driven by the rising smartphone and internet accessibility, increasing convenience of electronic payments, and the proliferation of mobile and QR code-based payment solutions" said Shiv Gupta, Senior Banking and Payments Analyst at GlobalData. The report also highlights that within the Asia-Pacific region, China and India have a higher adoption rate of alternative payment methods as compared to their peers. According to the company's 2023 Financial Services Consumer Survey, alternative payment solutions account for more than 65% of the e-commerce transaction value in China, the largest e-commerce market globally. It represents a significant increase from 53.4% in 2018. Other Asian markets like Indonesia, Hong Kong, Singapore, and the Philippines are also seeing higher adoption of alternative payment solutions. "Alternative payment solutions accounts for lion share in e-commerce markets across many APAC countries, supported by rising internet and smartphone penetration, and growing acceptance of digital payments by merchants. With the convenience, speed, and security they offer, coupled with high expected growth in the overall e-commerce market in the region, these payment tools are anticipated to further gain traction and disrupt the consumer payment space in the region" said Gupta.

India's non-cash payments on e-commerce platforms surge to 58.1% in 2023

Most people have, at some point in their lives, made an <a target="_blank" href="https://www.businessinsider.com/millennial-regret-buying-house-remote-work-travel-airbnb-buyers-remorse-2024-1">"oops" purchase</a> — you buy a thing and almost immediately regret it. In the age of online shopping, such purchases are <a target="_blank" href="https://www.businessinsider.com/impulse-spending-retirement-delayed-2024-5">easier than ever to make</a>. They are not, however, easier to reverse. Sometimes, you can quickly cancel an order, but oftentimes, the window to do so is so tight that you end up missing it.I recently found myself in such a situation. I bought yet another inane thing I really do not need that I will not name because it is slightly embarrassing. Before anything had shipped, I reached out to the seller to call the whole thing off. Unfortunately, I was denied. Annoyed, mostly at myself but also a little bit at the seller, I had a sinister thought: What if I file a dispute with my credit-card company? I could try to initiate a <a target="_blank" href="https://www.businessinsider.com/personal-finance/what-is-a-chargeback">charge-back</a>, say the shipment was taking too long or I'd ordered it erroneously, and maybe get my money back. Perhaps I could even get to at least try the thing I was pretty sure I didn't want, but hey, if it was free. To be clear, I did not do this, and I don't know whether it would have worked. But I seriously considered it. One of the best perks of my credit card — the ability to dispute a transaction to get a refund — had almost turned me into a bit of a jerk. Without knowing the term for it, I'd weighed engaging in first-party fraud, colloquially known as "friendly fraud," an increasingly common phenomenon where customers, accidentally or intentionally, dispute legitimate transactions as fraudulent with their credit-card issuer or bank.A credit-card charge-back happens when a consumer sees something they don't like or recognize on their statement and asks the bank to look into it. The bank then investigates the claim and decides whether to issue a refund — under federal law, a consumer can't be on the hook for more than $50 for an unauthorized charge. The merchant can respond, too, if they have proof that the transaction was fine. The bank plays the umpire and decides what to do with the money — maybe it takes it back from the merchant and gives it to the customer, maybe it makes the consumer cough the money up, after all, or maybe it pays out both parties and eats the cost itself."Charge-backs are a huge problem for many merchants. That's not something they can just sweep under the rug," said Oscar Bello, the chief sales officer at Chargeback Gurus, a company that helps merchants navigate charge-backs and manage disputes.There are plenty of legitimate reasons to file disputes and initiate a charge-back, first and foremost, for a transaction that was made by a fraudster, not the consumer. There are other fair explanations, too — there was a billing error, the product or service wasn't delivered as promised, the transaction wasn't authorized in the first place.Then there are charge-backs that can toe the line, ethicswise, or even tip into fraud by the cardholder. People lie and say they didn't get a pair of shoes delivered, even though they did, or they say the shoes came damaged, even though they were fine or had a tiny bit of damage but were still plenty wearable. Perhaps they cancel a restaurant reservation and dispute the cancellation fee, even though the penalty was listed plainly on the restaurant's website. Or a person paid to have their car fixed up and then said the workmanship was shoddy. In those instances, the customer is engaging in fraud or crossing a questionable line, but it can be hard for credit-card issuers to tell what actually happened. It can be quite the ordeal to trace whether a shoebox shipped in the mail wound up in the buyer's hands, let alone for a bank to decide whether all the work an auto-repair shop did was necessary and good.There's no "silver bullet" for figuring out who's in the right in every instance of a consumer dispute, said Domenic Cirone, the vice president of acquirer solutions at Kount, a fraud-prevention company owned by Equifax. And as much as artificial intelligence is helpful, he added, you often need people to sift through the data and complexities. And, he said, most consumers are well-meaning.Charge-backs and friendly fraud aren't new issues, but they're ones <a target="_blank" href="https://www.businessinsider.com/retailers-lost-millions-in-organized-online-refund-fraud-scheme-2023-11">exacerbated by e-commerce</a>. It's a lot easier to say that the sweater you got at the Gap never arrived than it is to claim you bought it at the store and, I don't know, forgot to take it with you or suddenly realized once you got it home that it sucked. A 2023 report from Ethoca, a Mastercard-owned platform that helps merchants handle fraud and disputes, said charge-backs in the US could reach $15.3 billion by 2026, more than double the $7.2 billion in 2019. Much of that is friendly fraud: The report cited a statistic from the data-analytics company Datos Intelligence that 75% of all the fraud digital businesses see is first-party fraud.Beyond the <a target="_blank" href="https://www.businessinsider.com/retail-enters-new-normal-ecommerce-brick-and-mortar-2022-11">e-commerce explosion</a>, some other factors have made <a target="_blank" href="https://www.businessinsider.com/free-shipping-free-returns-online-shopping-companies-charging-expensive-amazon-2024-2">friendly fraud more commonplace</a>. Consumers are increasingly using disputes for service-related issues — a product showed up damaged, or a service wasn't up to snuff. Inflation and economic pressures may also make the prospect of disputing a charge more appealing.What's more, people are constantly <a target="_blank" href="https://www.businessinsider.com/banks-cashless-world-disaster-economy-business-fintech-cash-crypto-2022-6?">paying through digital transactions</a> that are really hard to keep track of. Perhaps they <a target="_blank" href="https://www.businessinsider.com/subscription-services-forgotten-cost-consumers-payments-2022-6">don't remember making a purchase</a>, or their <a target="_blank" href="https://www.businessinsider.com/teen-spends-life-savings-tips-protect-money-2024-3">kid put something on their card</a> and didn't tell them, so they mark the charge as fraudulent even though it wasn't. Last year, I almost committed accidental friendly fraud against an airline because I forgot I'd paid to check my bag and tried to dispute the charge before realizing it."It's really quick and easy to check out, which is great because we love that as consumers. That leads to a lot of transactions," Robert Painter, the vice president of global channel sales at Kount, said. "The old adage, more money, more problems, right? So in addition to that, there's confusion."Of course, what's happening here on the end of consumers is not always confusion — sometimes, it's taking advantage of the system. Kevin, an entrepreneur who asked me to keep his identity protected because he was worried his business partner would get mad at him for talking to the press, has lost thousands upon thousands of dollars and endless hours on what he believes are frivolous and often fraudulent disputes. One of his gigs is selling tickets for a swamp tour near New Orleans. According to Kevin, people who go on the tour have disputed charges because they claim they didn't see enough alligators. Or customers of his auto-transport company, which he recently sold, disputed claims because their vehicles arrived a day or two later than desired or, in one case, because a driver didn't speak "good" English. Essentially, some people are using disputes as a review system, and if they don't give the experience five stars, they tell the credit-card company they want their money back. Kevin has won charge-backs before — he recently succeeded in pushing back against a cancellation claim after customers agreed to move their tour time but then backed out at the last minute. More often than not, however, he loses, and regardless, the whole thing is a huge time suck."Customers now, what we found post-COVID, are very trigger-happy on the dispute system," Kevin said.Kevin is not above using questionable dispute tactics as a consumer himself (he recognizes the irony here). He recently successfully disputed a $200 charge from a golf course after being told he couldn't change a tee time.The ability to dispute transactions is generally a <a target="_blank" href="https://www.businessinsider.com/credit-card-travel-alert-fraud-detection-american-express-visa-chase-2024-5">nice benefit of credit cards</a> and one that most consumers use as a last resort once they've tried to talk to the merchant (if they can get ahold of them). Still, it's weird that Citi or Amex or whoever ends up playing arbiter in charge-backs because the business incentive is to prioritize the customer over the merchant. It's hard to feel bad for big businesses that might lose money on a transaction that barely registers on their records, but for smaller businesses, this can really be a strain.In some cases, there's a pretty clear line between what is fraud and what's not, what's a legitimate charge-back and what isn't. Your online order never arrived, and the customer-service number never picked up: legitimate. Your order arrived and you claim it didn't: fraud. Right or wrong, many cases never get litigated out to the end, anyway."Not every merchant is equipped to fight," Bello of Chargeback Gurus said.There's some gray area, too. If you place an order and it arrives in 12 days instead of the 10 days promised, you might very well win in a dispute. Is that really fair? Mmm.I do not know whether my dispute on the mystery item would have been approved. (It was some stupid health supplements I saw online, OK?) But I wouldn't be shocked if it did. I've never disputed a purchase before, and my credit-card company would like to keep me happy. I do not think I would have felt particularly bad about initiating a charge-back, either, since <a target="_blank" href="https://www.businessinsider.com/supplements-vitamins-bad-or-good-health-2017-8">the supplements industry is unregulated and scammy anyway</a>. That doesn't mean it would have been the most awesome thing for me to do.<a target="_blank" href="https://www.businessinsider.com/author/emily-stewart">Emily Stewart</a> is a senior correspondent at Business Insider, writing about business and the economy.

You Searched For "icici bank credit cards" and got 10 results

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Welcome to credit card points mania

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Loan-to-deposit ratio will subside on its own in coming months, notes Motilal Oswal report

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Credit card rewards are turning us into jerks

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Banks have finally fixed the single most annoying thing about credit cards

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India's non-cash payments on e-commerce platforms surge to 58.1% in 2023

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One of the nicest perks on my credit card is making me a jerk

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