Americans are falling behind on their payments

America’s relentless spending has kept the economy motoring. But it’s starting to worry some observers.

Chicago Federal Reserve President Austan Goolsbee said Friday that while consumer debt levels aren’t yet “especially” high, the Fed is concerned about the rate of consumer delinquencies, or missed or late payments on expenses such as auto loans, credit card bills and rent.

“If the delinquency rate of consumer loans starts rising, that is often a leading indicator for, ‘things are about to get worse,’” he said at a moderated panel hosted by the Society for Advancing Business Editing and Writing.

Americans are already struggling to keep up with their credit card payments. Credit card debt rose $143 billion during the fourth quarter of 2023 from the year before, according to data from the New York Fed. The rate at which credit cards and auto loans are transitioning into delinquency continued to top pre-pandemic levels. Delinquency transition rates rose for all debt types excluding student loans.

Read more at CNN

What Do Consumers Really Know about Overdraft Fees and Policies?

The small portion of consumers who rely on overdraft protection tend to be generally aware of their banks' policies and fees. However, a recent study from The Federal Reserve Bank of New York suggests most consumers are indifferent.

Despite new regulations and changes to overdraft rules in recent years, there remains debate and concern that consumers may not be fully aware of policies and fees. In January, CFPB proposed a rule that would close a loophole that exempts overdraft lending services from provisions of the Truth in Lending and other consumer financial protection laws. Under the proposal, large banks could extend overdraft loans if they disclose applicable interest rates.

Donald P. Morgan and Wilbert van der Klaauw, economic research advisors at the Federal Reserve Bank of New York’s Research and Statistics Group, recently authored a piece about overdraft experience and salience, whether account holders know how often they overdraft their accounts and how much it costs them.

Read more at The Financial Brand

Fixing low-income Mississippi’s banking access problems. What to know

As a native son of Mississippi, I am very proud of the great Magnolia State. From the Delta with its rich musical traditions to the Gulf Coast and its lush shorelines, there is no doubt we are blessed to call Mississippi our home. 

However, in some important areas, there is still a lot of work to be done, and while we certainly need to put more effort into our own success, we have undoubtedly been negatively affected by policies coming out of Washington, D.C. 

Mississippi, despite its beauty, ranks too low in some important categories. According to a study by U.S. News and World Report, Mississippi ranks 49th in access to health care and economics, 47th in infrastructure, and 41st in education.

In short, Mississippi is at or near the top of all the categories you don’t want to be first in. One of the most tragic numbers, however, is the number of Mississippians who do not have access to the banking system, primarily due to the misguided policies of the federal government. And if the Federal Reserve has its way, the problem will get a lot worse. 

Read more at Clarion Ledger

Many first-time buyers expect to own a home in their 40s

One in five (20%) first-time buyers don’t think they will be able to buy until at least their 40s, research from Nationwide Building Society has found.

Around half (48%) of first-time buyers say their prospects of owning a home are further away than ever due to the ongoing cost-of-living crisis.

Six in 10 (60%) are postponing their homeownership plans by up to three years.

Rachael Sinclair, Nationwide’s director of mortgages and financial wellbeing, said: “Getting that first home is as challenging as it ever has been. We need to solve the first-time buyer conundrum, which is why Nationwide has continually called for government to set up an independent review of the first-time buyer market.

Read more at PROPERTY WIRE

Even Recipients of Government Funds Are Trying to Move Away from Checks

Recipients of government program funds prefer not to receive checks, according to data from Morning Consult on behalf of Visa. Over two-thirds of U.S. adults have received monetary disbursements from the federal government, with the majority opting for direct deposit as their preferred method of payment.

Three-quarters of those surveyed said they currently receive payments via direct deposit, and an even higher percentage (80%) expressed a preference for it. Meanwhile, the use of checks shows the opposite effect. While 23% of recipients have received government benefits through checks or vouchers, only 13% prefer to get their funds that way.

The survey drilled down on the reasons behind this preference, uncovering various challenges associated with receiving payments via checks. A majority of respondents said it took a long time to receive a check. More than half (52%) who received funds through a check or voucher reported waiting four weeks or longer for their payment, with 20% waiting more than eight weeks. 

Read more at PaymentsJournal

CFPB Takes Action to Stop Illegal Junk Fees in Mortgage Servicing: CFPB

Homeowners forced to pay for “services” that were prohibited or unauthorized

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today published an edition of Supervisory Highlights describing the agency’s actions to combat junk fees charged by mortgage servicers, as well as other illegal practices. CFPB examinations found servicers charging illegal junk fees, such as prohibited property inspection fees; sending deceptive notices to homeowners; and violating loss mitigation rules that help struggling borrowers stay in their homes. In response to the CFPB’s findings, financial institutions refunded junk fees to borrowers and stopped their illegal practices.

The mortgage servicing examination work announced today builds on prior CFPB exam work combatting junk fees in the mortgage servicing and other consumer financial markets. In October of last year, the CFPB announced that its examination work from February to August of 2023 resulted in $140 million refunded to consumers for unlawful junk fees in the areas of bank account deposits, auto loan servicing, and international money transfers. Since that time, the CFPB’s supervision junk fee work has resulted in more than $120 million in additional junk fee refunds in the area of bank account deposits.

Read more at Consumer Financial Protection Bureau (CFPB)

A running list of states and localities that require employers to disclose pay or pay ranges

A new front has emerged in state and local governments’ attempts to address pay inequity.

Anew front has emerged in state and local governments’ attempts to address pay inequity. Once an addendum to broader laws restricting the ability of employers to ask about pay during the hiring process, pay disclosure requirements have now become full-fledged, targeted pieces of legislation in a growing number of jurisdictions.

Pay disclosure laws have taken several forms. Some require employers to provide the minimum and maximum pay, or a pay range, for a given job upon the request of an applicant. Others mandate this practice without requiring candidates to ask first. The latest wave of laws now require employers to include this information in all applicable job postings.

Here, we track the states, cities and other jurisdictions that have passed such laws, and offer a brief description of each law’s requirements, its effective date and a link to the original law.

Read more at HRDIVE

Credit card, car loans, and mortgage payments have all been rising in the US—and it's not just because of interest rate hikes

If you're like most borrowers, your monthly loan and credit card payments have increased, even from a few months ago, according to Experian data. As of February 2024, the average amount consumers needed to repay all of their monthly debt obligations climbed to $1,225.

For each major type of loan—credit cards, auto loans and mortgages—payments have increased by at least 8% since 2022. Inflation and rising interest rates have played a big role in rising payments, but still are only part of the story. Depending on the type of loan, there are additional factors behind each of these types of debts.

Balances and Monthly Debt Payments Are Rising in Tandem

As Experian's consumer debt review revealed earlier this year, average balances are increasing for virtually every type of consumer debt. So, naturally, it follows that monthly debt payments have also increased. Since 2020, the average car loan payment has grown by more than $100 to $644, average monthly credit card payments due have increased $50 to $202 and average monthly mortgage payments have increased by $370 to nearly $2,000.

Read more at STACKER