Cash advance
The credit card industry consolidates
Good morning, budget bosses. This is your Stock Market Rundown for February 27th, 2024. Thanks for being here. Let’s get started:
TODAY’S TOP STORY: CHARGE IT
Credit cards… they’re like toxic exes. They lure you in with promises, spend all your money, leave you in debt, and then pitch you on an “exclusive offer” to win you back.
But there’s no stopping the spend: 84% of Americans have at least one card. With consumer balances and late payments on the rise, the financial services industry is cashing in.
Last week, Capital One announced it plans to acquire Discover in a $35 billion deal that unites two of the largest US credit card companies. Buying Discover gives Capital One access to the Discover payment processing network, and the juicy fees it generates.
Some analysts are skeptical regulators will approve the deal, given the Biden administration’s hostility to mergers that reduce competition for consumers. (Senator Elizabeth Warren tweeted a demand that regulators “block it immediately.”)
But some in Washington may support the deal as a challenge to the Visa-Mastercard duopoly, which has a chokehold on consumer payments. Just any small business owner about the sky-high swipe fees they pay Visa and Mastercard—you’ll get an earful.
Whether the deal goes through or not, there’s no question credit-card borrowing is popping. In the fourth quarter of 2023, Americans collectively had a balance of over a trillion dollars. Just remember, folks: minimum payment means maximum interest.
NEW FEATURE: The comment section is now open, and I’d love to hear from you. What did you think of today’s story? Are you a fan of credit cards, or do you pay all your bills with crumpled twenties? Weigh in:
SO WHAT ELSE IS GOING ON?
If you’re booking a flight any time soon, prepare to pay up: global airlines are jacking up ticket prices as they grapple with plane shortages. Guess I’m downgrading my next hotel stay from the Ritz to the Travelodge.
The EU is set to slap Apple with a €500 million fine for breaching competition law. Given Apple made $97 billion in profit last year, they can probably fund the fine through their cut of Candy Crush in-app purchases.
American Airlines is raising its checked-bag fee, ensuring passengers will check even fewer bags and be even more annoying when lining up to board the plane. No, Karen, your cello will not fit in the overhead compartment.
Reddit is going public, and management is reserving some shares for top moderators, to reward them for their countless hours of unpaid labor in mom’s basement. Congratulations to Reddit moderators MrAwkwardCrotch and RamsesThePigeon on their upcoming windfall.
That’s it for today, homeslices; let’s circle back first thing tomorrow morning. Yours in capitalism, The Axe
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