Guide to Credit Card Processing and "High-Risk" Industr -

Guide to Credit Card Processing and "High-Risk" Industr -

Guide to Credit Card Processing and "High-Risk" Industr -

Posted: 07 Jan 2020 06:03 AM PST

[unable to retrieve full-text content]Guide to Credit Card Processing and "High-Risk" Industr

After Broad-Based 2019 Rally, Financials Sector Prepares To Open Books - Forbes

Posted: 07 Jan 2020 07:49 AM PST

Key Takeaways:

  • Big banks set to report earnings Tuesday and Wednesday, January 14 and 15
  • Three rate cuts by the Fed in 2019 helped banks' credit card businesses, as well as home and auto loan units
  • Conference calls may feature executives' views on trade policy, the state of the consumer, and the upcoming elections

For a few years there, it didn't seem possible that the Financial sector would catch up with the broader S&P 500 Index (SPX). As anyone trading big banks probably remembers, it could be a frustrating experience at times during 2017 and 2018 as they often lagged the market.

That changed in 2019, though it didn't seem like it would at first. As late as the end of May, Financials had gained 7% year-to-date vs. 12% for the SPX. Investors who held on to Financial stocks ultimately earned a reward for their patience, however, as the sector gained ground in the second half and finished the year up about 30%, a little ahead of the SPX. That's quite a turnaround from 2018, when Financial stocks fell more than 14% vs. a 6% decline for the SPX.

Now it's a new year and banks lead off the Q4 earnings reporting season starting January 14. Before we start talking about what those earnings could deliver, let's look at a few factors that might have helped the sector bounce back in the last six months of 2019.

Second Chance in Second Half

What made the difference in the second half? Consumer strength appeared to play a big role. That—along with lower rates that might have had borrowers more eager to take out loans—probably brought some new spark to the sector.

Also, executives at some of the largest U.S. banks continued to do an impressive job of managing the books, and that was one factor contributing to sector earnings growth of about 5.4% in Q3, compared with a 0.6% loss for overall S&P 500 companies, according to S&P Capital IQ.

Healthier finances in the Financial sector might be evident in one trend recently: Buybacks rose 26.4% in Q3 for the sector to $47.8 billion, research firm CFRA said, up from $37.8 billion in the prior quarter. They represented 27.2% of all Q3 buybacks, vs. 22.9% in Q2. Companies don't tend to buy back stock when times are tough, nor when the outlook might be sketchy.

One thing that might have helped jump-start Financial stocks last year was fading worries of a possible recession, according to market analysis firm With Financials at that time looking like a value play to some investors after the sector trailed the broader market much of the last two years, fund managers appeared to add some exposure.

Lower Rates? No Problem!

Strength in Financials might seem a little puzzling if you think about how it happened at the same time the Fed lowered interest rates by 75 basis points between July and October. Typically, higher rates tend to help profit margins at banks. Higher rates can also put pressure on the U.S. dollar, which means a bigger market for U.S. products and perhaps some of that strength filtering through to the major Wall Street financial firms.

There was some sign of rates coming back a bit late in Q4, with the benchmark U.S. 10-year Treasury yield climbing above 1.9% from lows below 1.5% last summer. Also, the dollar index gave up a little ground, falling to six-month lows by the end of the year.

Another thing potentially helping banks was the Fed deciding in September to begin injecting more liquidity into the overnight money markets after a sudden spike in rates. Since the Fed's announcement, the yield curve—which tracks yields on various bonds of varying expiration dates—has moved from being inverted (when long-term yields fall below short-term ones), back to a more historically normal situation. Typically, a stronger yield curve is considered a healthier environment for banks, and might be helping their balance sheets.

Earlier in the year, there was much hand-wringing—and a good bit of market concern—over a yield curve that continued to narrow. At one point last summer, the spread between the 2-year and 10-year Treasury notes (the "2/10 spread") flipped negative—a phenomenon which has in the past been a sign of a coming recession. Since then, however, the yield curve has been quietly steepening. Last week, the 2/10 spread widened to 0.32%, its highest level since the fall of 2018.

Another factor that could potentially continue to help balance sheets for many large banks is the credit card business. Americans have accumulated near-record levels of credit card debt over the past year as card companies have increased interest rates and fees, the Washington Post reported recently. That's helping drive record banking industry profits, but could become increasingly costly for consumers who don't pay off their bill every month or miss a payment, industry experts say.

Some of the banks reporting big gains in credit card revenue in Q3 included JP Morgan (JPM) and Citigroup (C). The Q4 numbers should include most of the holiday shopping season, which by many accounts went pretty well for retailers. That could get reflected in both the big banks' credit card businesses and in the business of credit card companies like Visa (V) and MasterCard (MA).

Cheap credit also came to the housing market's benefit last year. That's often a boon for banks, which can make big money on those mortgage loans. Housing starts in 2019 were on track to have their best year since 2007, forecasting firm FactSet reported.

What to Listen For

Though it might not have been planned, it can be helpful that banks report early in the earnings season. Few other industries have larger megaphones or the ability to set the tone like the biggest financial institutions can. The other sectors are important, too, but they often see things from their own silos.

Combined, the big banks have a view of the entire economy and all the industries, as well as what consumers and investors have been doing. The last two quarters featured positive comments on bank earnings calls that helped soothe investors as they digested the CEOs' views on the state of the U.S. and global economies.

As JPM CEO Jamie Dimon said in October when the company last reported, lower rates pushed down in part by the Fed's rate-cutting moves helped propel volume in the bank's mortgage, auto loan, and credit card business. One thing to potentially look for as banks step to the plate for their Q4 at-bats is whether executives saw this trend of lower rates raising demand for banks' products and services continuing last quarter.

Another topic that might come up on Financial sector earnings calls is where executives see the U.S. economy headed this year. The Conference Board reported last week that U.S. economic decline is the biggest fear among chief executives surveyed. A slowdown in U.S. gross domestic product growth (GDP) last year might be feeding these concerns.

Do U.S. bank executives see any chance of a recession? Is U.S. growth going to continue to wallow in the 2% range, as many analysts forecast? Can high-volume housing and credit card operations continue to boost banks' bottom lines even as low interest rates might threaten to compress profit? Bank executives are likely to talk about this in the weeks ahead, and the market is likely to follow their comments closely.

Beyond that, it can be helpful to get bank executives' views on recent macroeconomic developments. For instance, do they see easing trade tensions with China possibly leading to U.S. companies beginning to make more investments into their infrastructure or expanding operations? How's the consumer and corporate credit situation? Is Brexit going to be a tough slog this year for Europe?

And what about the election here and its possible impact on the U.S. economy? All of these issues might come up on the big bank calls, so it's probably a good idea to pay close attention and even listen in if you can.

Going into the quarter, Wall Street analysts seem neutral to positive about the Financial sector's stock market prospects for 2020. Forty-three percent of analysts covering the industry rate the sector a buy while 49% have hold ratings, FactSet recently said.

Q4 Financial Sector Earnings

Starting January 14, big banks kick off the Q4 earnings season, and analysts expect Financials to continue outpacing the overall market with Q4 results.

The most recent prediction from FactSet is for Financial earnings growth of 7.4% in Q4, compared with overall S&P 500 earnings falling 1.6%.

If you look around, the same conditions that helped banks late last year are still in place. As FactSet recently noted, "The consumer remains confident and consumer spending continues to buoy economic growth." Consumers also seem to be in good shape to pay back debt and to keep spending, which also helps banks. Credit quality is very good right now, all else being equal, said.

Revenue for the Financial sector is expected to be 0.7% in Q4, FactSet said.

The fact that profits are projected to grow faster than revenue for the Financial sector could be another sign of what a good job the banks are doing managing their expenses, noted.

TD Ameritrade® commentary for educational purposes only. Member SIPC.

Best frequent flyer and rewards credit cards January 2020 - -

Posted: 07 Jan 2020 04:37 AM PST

Young woman shopping at markets in Istanbul.

Start the new year in style and book your next holiday in business class with up to 120,000 bonus points.

If your 2020 goal is to travel more (or even better, in business class), a frequent flyer or rewards credit card with a big bonus points promotion could help you book it sooner. As always, we've highlighted some of the most competitive available through Finder in this month's round-up.

How did we pick this month's line-up?

We've hand-picked this month's line-up based on the cards available through Finder in January 2020 that offer the most competitive bonus points offers.

To help you earn more points, we've narrowed down our top picks by cards that offer at least 50,000 bonus points in the first 12 months. When considering the standard earn rates, we've only included cards that collect 0.5 points or more per $1 spent.

There's no one best rewards credit card for everyone, so you should compare your options before you commit to a new card.

Best credit cards for Qantas Points

ANZ Frequent Flyer Black credit cardANZ Frequent Flyer Black credit card

  • Bonus points. 120,000 bonus Qantas Points
  • Earn rate. Up to 2 Qantas Points per $1 spent
  • Annual fee. $425
  • Purchase rate. 20.24% p.a.

The ANZ Frequent Flyer Black credit card couples a large bonus Qantas Points deal with a $275 cashback offer.

When you spend at least $4,000 on eligible purchases within the first 3 months from approval, you'll score 120,000 bonus Qantas Points. You'll also get $275 back to your new account after you meet this spend requirement.

To give you an idea of what the bonus points are worth, you could fly return from Sydney to Instanbul in economy or Sydney to Tokyo in premium economy (both 123,000 points). It's also enough points for a return trip from Melbourne to Denpasar (Bali) in business class (114,000 points).

The standard earn rate is relatively competitive too. Your eligible purchases will earn 1 Qantas Point per $1 up to $7,500 per statement period. You'll pocket 0.5 Qantas Points per $1 spent on eligible purchases after that. You can also earn 1 additional point per $1 spent on selected Qantas products and services.

Each year you can indulge in complimentary dining, drinks and exclusive airport lounge perks with two complimentary Qantas Club passes. The complimentary travel insurance and purchase protection covers can also help you fly and spend with peace of mind.

The ANZ Frequent Flyer Black credit card offers a personal concierge service, that can help you with requests including travel recommendations to securing last-minute concert tickets.

The rewards and benefits come at the cost of a $425 annual fee ($370 annual account fee and $55 rewards program service fee).

Runner up: Qantas Premier Platinum Mastercard

The Qantas Premier Platinum Mastercard is also awarding up to 120,000 bonus Qantas Points to new cardholders until 26 February 2020. Each month for the first 6 months, you'll earn 20,000 bonus Qantas Points when you spend at least $1,500 on eligible purchases. You'll also save with a reduced annual fee of $199 in the first year (which reverts to $299 p.a. after that) when you apply by this date.

This card also offers competitive earn rates. You'll collect 2 points per $1 spent on eligible Qantas transactions, 1.5 points per $1 spent overseas and 1 Qantas Point per $1 spent on eligible purchases in Australia up to $10,000 per month (0.5 points per $1 spent after that).

The Qantas Premier Platinum is packed with features to benefit loyal Qantas customers. Each year you'll receive two single-entry complimentary lounge invitations. These can be used to relax before your flight at eligible domestic Qantas Club lounges or Qantas-operated International Business Lounges.

When you book eligible flights using your Qantas Premier Concierge service, you can save with up to 20% off selected domestic companion flights once each year.

Best credit cards for Velocity Points

American Express Velocity Platinum American Express Velocity Platinum credit card

  • Bonus points. 100,000 Velocity Points
  • Earn rate. Up to 2.25 Velocity Points per $1
  • Annual fee. $375
  • Purchase rate. 20.74% p.a.

The American Express Velocity Platinum credit card has one of the biggest bonus points offers for Velocity Frequent Flyers right now. New cardholders will receive 100,000 bonus Velocity Points when they apply by 12 February 2020 and spend at least $3,000 on eligible purchases in the first 3 months.

Wondering where 100,000 Velocity Points could take you? You could fly from Sydney to Honolulu in business class (71,500 Velocity Points) or return from Melbourne to Singapore in premium economy (44,700 Velocity Points each way) with your bonus points.

You'll earn 1.25 Velocity Points per $1 spent on everyday purchases. If you're using your card to make transactions with government bodies in Australia, you will earn 0.5 points per $1 spent. As if you needed another reason to book a holiday, you'll also earn 1 additional Velocity Point per $1 spent on selected Virgin Australia purchases.

The American Express Velocity Platinum credit card offers a bunch of extra perks to suit regular Virgin Australia flyers. After your first card spend each year, you can explore Australia with a complimentary domestic return Virgin Australia flight between selected cities.

Cardholders can make use of four airport lounge passes each year. This includes two single-entry passes to Virgin Australia lounges in Australia and two complimentary entries to the American Express Lounge at Sydney and Melbourne's international airports.

The American Express Velocity Platinum card is one of the few that rewards cardholders with status credits. You'll receive 100 Velocity Frequent Flyer Status Credits when you spend at least $50,000 on eligible purchases within the membership year. You can use these credits to move up the Velocity tiers to earn bonus points and enjoy travel perks like extra baggage and priority check-in.

This card also offers complimentary travel insurance and purchase protection covers. You'll enjoy these rewards and perks at the cost of a $375 annual fee.

Runner up: Virgin Australia Velocity Flyer card – Bonus points offer

The Virgin Australia Velocity Flyer card pairs a competitive bonus points offer with a low annual fee. When you apply for the Virgin Australia Velocity Flyer credit card by 24 February 2020, you can treat yourself to up to 70,000 bonus Velocity Points.

You can collect 20,000 bonus Velocity Points each month that you spend $1,500 or more on eligible transactions for the first 3 months. You'll then receive 10,000 additional points after your card's first anniversary, bringing your bonus points total to 70,000.

This card earns 0.66 Velocity Points per $1 spent up to $1,500 per statement period. You'll pick up 0.5 Velocity Points per $1 spent after that.

Save on travel every year with complimentary travel insurance and a $129 Virgin Australia gift voucher. The Virgin Australia Velocity Flyer card charges a reduced annual fee of $64 in the first year. The annual fee reverts to $129 p.a. after that.

Best credit card for other reward points

Coles Rewards MastercardColes Rewards Mastercard

  • Bonus points. Up to 120,000 bonus flybuys points
  • Earn rate. 2 flybuys point per $1
  • Annual fee. $99
  • Purchase rate. 19.99% p.a.

Boost your points balance with up to 120,000 bonus flybuys points with the Coles Rewards Mastercard. When you apply by 31 January 2020 and spend at least $3,000 in the first 90 days, you'll get 100,000 bonus flybuys points. You'll receive an additional 20,000 bonus points within 3 weeks of the card's first anniversary.

To give you some ideas, you could redeem 120,000 flybuys points for $600 flybuys Dollars to save at the checkout or exchange them for 52,200 Velocity Points. You'll also earn 2 flybuys points per $1 spent and one additional point per $1 when you scan your flybuys barcode at partnered retailers including Coles, Kmart and Target. If you use the card overseas or to shop online with an international merchant, you won't be charged any foreign transaction fees.

The Coles Rewards Mastercard charges a $99 annual fee, which is relatively competitive compared to other rewards cards.

Runner up: Citi Rewards Platinum credit card

The Citi Rewards Platinum credit card currently offers new cardholders up to 120,000 bonus points. When you apply by 31 January 2020 and spend $3,000 or more on eligible transactions in the first 90 days, you will receive 80,000 bonus Citi rewards Points. On top of that, you'll collect 40,000 bonus points on your first card anniversary.

You can redeem your Citi rewards Points for travel, merchandise, gift cards, cashback and frequent flyer points with partnered programs. For example, you could exchange 120,000 rewards Points for $550 worth of David Jones gift vouchers or 48,000 Velocity Points.

You'll earn 1 Citi reward Point per $1 spent on eligible domestic and international transactions. There is a cap of $10,000 on domestic purchases per statement period, but your points won't be capped on eligible international spend. You can also shop and travel safely with international travel insurance and purchase protection cover.

The Citi Rewards Platinum credit card charges a low annual fee of $49 in the first year (which reverts to $149 p.a. after that).

Compare these credit cards side by side

Updated January 8th, 2020

Name Product
ANZ Frequent Flyer Black

120,000 bonus points

Qantas Frequent Flyer

20.24% p.a.

$425 p.a.

Earn 120,000 bonus Qantas Points & $275 back when you spend $4,000 in the first 3 months. Plus, airport lounge passes.

Qantas Premier Platinum

120,000 bonus points

Qantas Frequent Flyer

19.99% p.a.

$199 p.a. annual fee for the first year ($299 p.a. thereafter)

Get 20,000 bonus Qantas Points per month for the first 6 months when you spend $1,500/month. Total of up to 120,000 bonus Qantas Points.

American Express Velocity Platinum Card

100,000 bonus points

Velocity Frequent Flyer

20.74% p.a.

$375 p.a.

Get 100,000 bonus Velocity Points when you spend $3,000 for the first 3 months. Plus, 100 Status Credits and luxury travel perks.

Virgin Australia Velocity Flyer Card - Bonus Points Offer

70,000 bonus points

Velocity Frequent Flyer



20.74% p.a.

$64 p.a. annual fee for the first year ($129 p.a. thereafter)

Earn up to 70,000 bonus Velocity Points (60,000 in 3 months and 10,000 after first year). Plus, save with 0% p.a. for 18 months on balance transfers.

Coles Rewards Mastercard

120,000 bonus points


19.99% p.a.

$99 p.a.

Get 100,000 bonus points when you spend $3,000 in the first 90 days and 20,000 more after your first anniversary - total worth $600 flybuys Dollars.

Citi Rewards Platinum Credit Card

120,000 bonus points

Citi Rewards Program

21.49% p.a.

$49 p.a. annual fee for the first year ($149 p.a. thereafter)

80k bonus Citi reward Points when you spend $3,000 in 90 days and 40k the second year, up to 120,000 total. 120k Points = 48k Velocity Points.

These are just some of the competitive frequent flyer and rewards credit cards on the market right now. There's no one best card for every type of points collector, so make sure to compare more frequent flyer and rewards credit cards to find the right one for you.

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