Latest news with #BrianDoubles
NBC News
07-05-2025
- Business
- NBC News
Banks are keeping credit card rates high even after the CFPB rule they blamed for high APRs was killed
Last year, banks quickly raised interest rates to record levels and added new monthly fees on credit cards when a Consumer Financial Protection Bureau rule threatened a key revenue source for the industry. Now, they're far more reluctant to reverse those steps, even after bank trade groups succeeded in killing the CFPB rule in federal court last month. Synchrony and Bread Financial, two of the biggest players in the business of issuing branded credit cards for the likes of Amazon, Lowe's and Wayfair, are keeping the higher rates in place, executives said in recent conference calls. 'We feel pretty comfortable that the rule has been vacated,' Synchrony CEO Brian Doubles said on April 22. 'With that said, we don't currently have plans to roll anything back in terms of the changes that we made.' His counterpart at Bread, CEO Ralph Andretta, echoed that sentiment, 'At this point, we're not intending to roll back those changes, and we've talked to the partners about that.' The CEOs celebrated the end of a proposed CFPB regulation that was meant to limit what Americans would pay in credit card late fees, an effort that the industry called a misguided and unlawful example of regulatory overreach. Under previous Director Rohit Chopra, the CFPB estimated that its rule would save families $10 billion annually. Instead, it inadvertently saddled borrowers with higher rates and fees for receiving paper statements as credit card companies sought to offset the expected revenue hit. Retail cards hit a record high average interest rate of 30.5% last year, according to a Bankrate survey, and rates have stayed close to those levels this year. 'The companies have made a windfall,' said David Silberman, a veteran banking attorney who lectures at Yale Law School. 'They didn't think they needed this revenue before except for [the CFPB rule], and they're now keeping it, which is coming directly out of the consumer's pocket.' Synchrony and Bread both easily topped expectations for first-quarter profit, and analysts covering the companies have raised estimates for what they will earn this year, despite concerns about a looming U.S. economic slowdown. Retailer lifeline While store cards occupy a relatively small corner of the overall credit card universe, Americans who are struggling financially are more likely to rely on them, and they are a crucial profit generator for popular American retailers. There were more than 160 million open retail card accounts last year, the CFPB said in a report from December that highlighted risks to users of the high-interest cards. More than half of the 100 biggest U.S. retailers offer store cards, and brands including Nordstrom and Macy's relied on them to generate roughly 8% of gross profits in recent years, the CFPB said. Banks may be taking advantage of the fact that some users of retail cards don't have the credit profiles to qualify for general-purpose cards from JPMorgan Chase or American Express, for example, said senior Bankrate analyst Ted Rossman. Nearly half of all retail card applications are submitted by people with subprime or no credit scores, and the card companies behind them approve applications at a higher rate than for general-purpose cards, the CFPB said. 'Companies like Bread or Synchrony, they rely a lot more on people who carry balances or who pay late fees,' Rossman said. Rates on retail cards have fallen by less than 1% on average since hitting their 2024 peak, and they are typically about 10 percentage points higher than the rates for general-purpose cards, Rossman said. That means it's unlikely that other large players in the retail card sector, including Citigroup and Barclays, have rolled back their rate increases in the wake of the CFPB rule's demise. The most recent published APR on the Macy's card, issued by Citigroup, is 33.49%, for instance. Citigroup and Barclays representatives declined to comment for this article. Debt spirals Synchrony's CEO gave some clues as to why banks aren't eager to roll back the hikes: borrowers either didn't seem to notice the higher rates, or didn't feel like they had a choice. Retail cards are typically advertised online or at the checkout of brick-and-mortar retailers, and often lure users with promotional discounts or rewards points. 'We didn't see a big reduction in accounts or spend related to the actions' they took last year, Doubles told analysts. 'We did a lot of test and control around that.' Synchrony will discuss future possible changes to its card program with its brand partners, according to a spokeswoman for the Stamford, Connecticut-based bank. That could include bumping up promotional offers at specific retailers, Doubles said during the April conference call. 'Our goal remains to provide access to financial solutions that provide flexibility, utility, and meaningful value to the diverse range of customers, partners, providers, and small and midsized businesses we serve,' Synchrony said in a statement. A Bread spokesperson declined to comment for this article. Alaina Fingal, a New Orleans-based financial coach, said she often advises people who've been trapped in a debt spiral from using retail credit cards. Some have to take on side gigs, like driving for Uber Eats, to work down the balances, she said. 'They do not understand the terms, and there are a lot of promotional offers that may have deferred interest clauses that are in there,' Fingal said. 'It's extremely predatory.'
CNBC
07-05-2025
- Business
- CNBC
Banks are keeping credit card rates high even after the CFPB rule they blamed for high APRs was killed
The New York Stock Exchange is seen during morning trading on July 31, 2024 in New York City. Last year, banks quickly raised interest rates to record levels and added new monthly fees on credit cards when a Consumer Financial Protection Bureau rule threatened a key revenue source for the industry. Now, they're far more reluctant to reverse those steps, even after bank trade groups succeeded in killing the CFPB rule in federal court last month. Synchrony and Bread Financial, two of the biggest players in the business of issuing branded credit cards for the likes of Amazon , Lowe's and Wayfair , are keeping the higher rates in place, executives said in recent conference calls. "We feel pretty comfortable that the rule has been vacated," Synchrony CEO Brian Doubles said on April 22. "With that said, we don't currently have plans to roll anything back in terms of the changes that we made." His counterpart at Bread, CEO Ralph Andretta, echoed that sentiment, "At this point, we're not intending to roll back those changes, and we've talked to the partners about that." The CEOs celebrated the end of a proposed CFPB regulation that was meant to limit what Americans would pay in credit card late fees, an effort that the industry called a misguided and unlawful example of regulatory overreach. Under previous Director Rohit Chopra, the CFPB estimated that its rule would save families $10 billion annually. Instead, it inadvertently saddled borrowers with higher rates and fees for receiving paper statements as credit card companies sought to offset the expected revenue hit. Retail cards hit a record high average interest rate of 30.5% last year, according to a Bankrate survey, and rates have stayed close to those levels this year. "The companies have made a windfall," said David Silberman, a veteran banking attorney who lectures at Yale Law School. "They didn't think they needed this revenue before except for [the CFPB rule], and they're now keeping it, which is coming directly out of the consumer's pocket." Synchrony and Bread both easily topped expectations for first-quarter profit, and analysts covering the companies have raised estimates for what they will earn this year, despite concerns about a looming U.S. economic slowdown. While store cards occupy a relatively small corner of the overall credit card universe, Americans who are struggling financially are more likely to rely on them, and they are a crucial profit generator for popular American retailers. There were more than 160 million open retail card accounts last year, the CFPB said in a report from December that highlighted risks to users of the high-interest cards. More than half of the 100 biggest U.S. retailers offer store cards, and brands including Nordstrom and Macy's relied on them to generate roughly 8% of gross profits in recent years, the CFPB said. Banks may be taking advantage of the fact that some users of retail cards don't have the credit profiles to qualify for general-purpose cards from JPMorgan Chase or American Express , for example, said senior Bankrate analyst Ted Rossman. Nearly half of all retail card applications are submitted by people with subprime or no credit scores, and the card companies behind them approve applications at a higher rate than for general-purpose cards, the CFPB said. "Companies like Bread or Synchrony, they rely a lot more on people who carry balances or who pay late fees," Rossman said. Rates on retail cards have fallen by less than 1% on average since hitting their 2024 peak, and they are typically about 10 percentage points higher than the rates for general-purpose cards, Rossman said. That means it's unlikely that other large players in the retail card sector, including Citigroup and Barclays , have rolled back their rate increases in the wake of the CFPB rule's demise. The most recent published APR on the Macy's card, issued by Citigroup, is 33.49%, for instance. Citigroup and Barclays representatives declined to comment for this article. Synchrony's CEO gave some clues as to why banks aren't eager to roll back the hikes: borrowers either didn't seem to notice the higher rates, or didn't feel like they had a choice. Retail cards are typically advertised online or at the checkout of brick-and-mortar retailers, and often lure users with promotional discounts or rewards points. "We didn't see a big reduction in accounts or spend related to the actions" they took last year, Doubles told analysts. "We did a lot of test and control around that." Synchrony will discuss future possible changes to its card program with its brand partners, according to a spokeswoman for the Stamford, Connecticut-based bank. That could include bumping up promotional offers at specific retailers, Doubles said during the April conference call. Brian Doubles, Synchrony President "Our goal remains to provide access to financial solutions that provide flexibility, utility, and meaningful value to the diverse range of customers, partners, providers, and small and midsized businesses we serve," Synchrony said in a statement. A Bread spokesperson declined to comment for this article. Alaina Fingal, a New Orleans-based financial coach, said she often advises people who've been trapped in a debt spiral from using retail credit cards. Some have to take on side gigs, like driving for Uber Eats, to work down the balances, she said. "They do not understand the terms, and there are a lot of promotional offers that may have deferred interest clauses that are in there," Fingal said. "It's extremely predatory."
CNBC
28-04-2025
- Business
- CNBC
Wealthy consumers upped their spending last quarter, while the rest of America is cutting back
America, at the start of 2025, is a tale of two consumers. Lower-income earners are reining in their transactions to focus on essentials, while the wealthy continue to spend freely on perks including dining out and luxury travel, according to first-quarter results from U.S. credit card lenders. As anxiety from the opening salvos of President Donald Trump's trade policies rippled through the country in recent months, investors and economists have wondered whether declines in consumer sentiment would spill into the real economy. There are some early signs of stress among those who are already more economically vulnerable. For instance, at Synchrony, which provides store cards for retail brands including Lowe's and T.J. Maxx, spending fell 4% in the first three months of the year, the company said last week. That compares to a 6% spending jump at American Express and a similar rise at JPMorgan Chase, both of which cater to wealthier users with higher credit scores than Synchrony. AmEx said its customers spent 7% more on dining and 11% more on first class and business class airfare than a year earlier. While the "consumer is still in pretty good shape" overall, they are "being selective around how they spend," Synchrony CEO Brian Doubles told analysts on April 22. Lower-income card users in particular "started tapering their spend about a year ago," pulling back on discretionary and big ticket expenses as inflation ate into their buying power, Doubles said. More Americans were already falling into debt while using their credit cards in the fourth quarter. The share of credit card users making only minimum monthly payments rose to 11.1%, the highest level in 12 years, according Federal Reserve Bank of Philadelphia data released this month. But so far, credit card lenders catering to wealthier customers have been insulated from concerns about how tariffs, inflation and a possible recession later this year could impact consumer spending. "It's fair to say that the high end has held up better, and the low end has pulled back more," Brian Foran, a Truist analyst covering banks, said in an email. "It's been a common theme both speaking to credit card companies, and hearing from most of my colleagues covering consumer and retail." The split was also visible at Citigroup, a major player in the credit industry. While spending in the division that provides cards for retailers fell 5% in the quarter, plastic that carries the bank's own brand — a cohort with higher credit scores — saw spending rise 3%. Both Citigroup and Bread Financial, another provider of store and co-branded cards like Synchrony, said that consumer behavior shifted toward essentials and away from travel and entertainment on concern that tariffs would raise prices for some goods. The dynamic boosts spending now, but it could mean weaker demand in the future. "Consumers are buying more electronics, home furnishing, auto parts," Bread CFO Perry Beberman said last week. People are "trying to figure out, are they still going to buy that big TV or are they going to make some other choices if inflation comes through at some of the rates they could," Beberman said. "That's the real wildcard here."
Yahoo
28-04-2025
- Business
- Yahoo
Inflation Fear Is Making Some People Spend More—and Others Less
If consumers are expecting higher prices in the future, they might spend more today. But not if they're also worried about losing their jobs. There are conflicting signals coming from the country's largest credit-card lenders. Some are showing more spending, others less. What is clear is that different groups of consumers are responding in their own ways. Americans Are Claiming Social Security Early, Fearful of Its Future Meta's 'Digital Companions' Will Talk Sex With Users—Even Children China's Huawei Develops New AI Chip, Seeking to Match Nvidia Dyspro-What? Why an Obscure Element Has the EV Industry in a Panic A Reckoning for the Magnificent Seven Tests the Market Several lenders have reported an uptick in spending in the first quarter versus a year earlier, with some attributing that partly to a 'pull-forward' of future purchases. In other words, people are defensively buying stuff today that could become more expensive under President Trump's tariff policies. But lenders were also reporting a mix of trends within their customer base. Synchrony Financial told analysts that lower-income consumers started 'tapering' their spending a year ago, while the higher-income consumer is still increasing their spending. March data from the Bank of America Institute, which analyzes anonymized customer data, showed spending growth was slower for lower-income households than middle- and higher-income ones. This is contrary to what you might expect. Although lower-income households may have less flexibility in their budgets, that doesn't seem to stop them from buying ahead when they anticipate higher future prices. In fact, research from the Federal Reserve Bank of Dallas published in 2021, during the bout of inflation following the pandemic, found a stronger effect for these consumers. With higher inflation expectations, lower-income households had stronger increases in their spending on durable goods—that is, physical stuff that lasts long enough to make it worth purchasing for future needs, the study found. Notably, these buyers may be counting on future inflation reducing the burden of their debts. However, the Dallas Fed's researchers also found that if consumers perceive economic risk, like job losses, they might spend less regardless of their expectations for prices. Any 'positive effect that inflation expectations may exert on consumption could be attenuated if accompanied by anticipated higher unemployment,' they wrote. That isn't necessarily a problem for lenders. 'Moderation in spending patterns is actually a positive in terms of credit. We actually are encouraged by that pullback because consumers are not overextending. They're being disciplined,' Synchrony Chief Executive Brian Doubles told analysts. In addition to slowing spending, Bank of America Institute's data also showed that after-tax wages and salaries had started growing more slowly among lower-income households—a contrast to the trend for the prior two years. Even consumers who are spending more, though, are hardly partying. Researchers at the Institute wrote recently that card data suggests that 'consumers are easing up on 'nice to have' spending by pulling back across restaurant, travel/tourism and leisure spending in February and March.' By contrast, there was a sharp pickup in durables spending in March after two months of declines. It wasn't clear if that was driven by large, high-cost purchases (like, say, buying an imported television or appliance). But there was a surge in auto-loan applications at the end of March. One place where declining travel demand is clearly visible is at airlines, where executives have dialed back their outlooks for the year. Capital One Chief Executive Richard Fairbank, speaking to analysts, noted easing in recent weeks in travel-and-entertainment spending, or T&E, particularly airfare. At American Express, overall T&E billed business grew 6% in the first quarter year-over-year after adjusting for currency fluctuations, slower than the 7% growth in goods-and-services spending. The company noted that trip bookings remain strong. But airline billings growth slowed from the fourth quarter. Economic anxiety presents differently in different groups. What is clear is that many are now feeling it. Write to Telis Demos at After 15 Years, John Paulson Is Finally Winning Big on Gold Wall Street's New Tariff Safe Haven: High-Tax Biotech Stocks The Future of Gadgets: Fewer Updates, More Subscriptions, Bigger Price Tags Gold Flat But Remains Well Supported Sign in to access your portfolio
Yahoo
22-04-2025
- Business
- Yahoo
Synchrony Reports First Quarter 2025 Results; Company also Announces Quarterly Common Stock Dividend of $0.30 Per Share and Approval of a $2.5 Billion Share Repurchase Program
Company also declares preferred stock dividends STAMFORD, Conn., April 22, 2025 /PRNewswire/ -- Synchrony Financial (NYSE: SYF) today announced first quarter 2025 results for the period ending March 31, 2025. The Earnings Release and presentation can be found on the company's Investor Relations website at Today at 8:00 a.m. Eastern Time, Brian Doubles, President and Chief Executive Officer, and Brian Wenzel Sr., Executive Vice President and Chief Financial Officer, will host a conference call to review the financial results and outlook for certain business drivers. The conference call can be accessed via an audio webcast through the Investor Relations website at under Events and Presentations. A replay will also be available on the website. The Company also announced that its Board of Directors (the "Board") declared a quarterly cash dividend of $0.30 per share of common stock, a 20% increase to the quarterly common stock dividend. The dividend is payable on May 15, 2025 to holders of record at the close of business on May 5, 2025. The Board also declared a quarterly cash dividend on the outstanding shares of its 5.625% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A (the "Series A Preferred Stock") and 8.250% Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series B (the "Series B Preferred Stock"). Each outstanding share of the Series A Preferred Stock and Series B Preferred Stock is represented by depositary shares, each representing a 1/40th interest in a share. The dividends of approximately $14.06 per share on the Series A Preferred Stock (equivalent to $0.351563 per outstanding depositary share) and approximately $20.63 per share on the Series B Preferred Stock (equivalent to $0.515625 per outstanding depositary share) are payable on May 15, 2025 to holders of record at the close of business on May 5, 2025. Additionally, the Company announced that the Board approved a share repurchase program of up to $2.5 billion, commencing in the second quarter of 2025 through June 30, 2026. As of March 31, 2025, the Company had completed its prior share repurchase program. About SynchronySynchrony (NYSE: SYF) is a leading consumer financing company at the heart of American commerce and opportunity. From health to home, auto to retail, our Synchrony products have been serving the needs of people and businesses for nearly 100 years. We provide responsible access to credit and banking products to support healthier financial lives for tens of millions of people, enabling them to access the things that matter to them. Additionally, through our innovative products and experiences, we support the growth and operations of some of the country's most respected brands, as well as more than 400,000 small and midsize businesses and health and wellness providers that Americans rely on. Synchrony is proud to be ranked as the country's #2 Best Company to Work For® by Fortune magazine and Great Place to Work®. For more information, visit ContactInvestor RelationsKathryn Miller(203) Media RelationsTyler Allen(551) View original content to download multimedia: SOURCE Synchrony Financial Sign in to access your portfolio
