Who Experiences Default? PEW CHARITABLE TRUSTS

Pew survey shows the incidence of default over a span of 20 years by borrowers’ personal, financial, and academic characteristics

Overview

According to findings from a 2021 nationally representative survey from The Pew Charitable Trusts, student loan default is quite common. Approximately one-third of federal student loan borrowers surveyed reported experiencing default over the past two decades. Knowing which characteristics or experiences make some borrowers more vulnerable to repayment challenges is crucial to mitigating future repayment struggles. Pew’s survey finds that a range of circumstances were more likely to be linked to some borrowers with a loan default than others over the past two decades. The descriptive data presented here provides new insight into the prevalence of default across borrowers’ demographic, financial, and academic characteristics. This analysis estimates only the likelihood and not the cause of default. Identifying such contributing factors is the first step in understanding the intersections and contextual factors that lead to default.

Borrowers in Certain Demographics More Likely to Experience Default

Borrowers who reported their marital status as widowed, divorced, or separated were almost twice as likely to experience default than borrowers who reported being married or living with a partner, or having never married. Divorce can have major financial impacts, particularly on women.

Read more at The Pew Charitable Trusts

Fewer Illinois residents using payday lenders after state capped interest rates: NPR

High-cost consumer loans with interest as high as 200% have plummeted since a state law passed in March 2021 put a ceiling on interest rates at 36%. During the pandemic, Kesha Thompson-Warren took out a high-cost loan to keep her landscaping and janitorial services company going. As clients closed their doors, work at her South Holland business, ShadeTree, had dried up.

Thompson-Warren, 42, has accounts with Bank of America but couldn’t get a small business loan there in 2020 nor from other banks and credit unions because she had nearly $100,000 in student-loan debt.

She also couldn’t get a loan from the federal Paycheck Protection Program, the $800 billion program launched in 2020 to provide relief to business owners during the COVID-19 pandemic.

Read more at NPR ILLINOIS

Accelerate Payments & Lower Processing Costs

Banks and Credit Unions Rethinking Priorities Amid Economic Uncertainty

New digital banking platforms, the rise of embedded finance, the advent of composable solutions and the expansion of third-party collaborations are creating new horizons for growth, while the current economy is posing significant challenges for customer acquisition, asset liability management, brand differentiation and profitability.

As we progress through 2023, the financial services industry finds itself on the cusp of a new era of digital banking transformation. It is being powered by rapid technological innovation, evolving customer expectations, a shifting economic landscape and the emergence of new business models.

The digitalization of finance has created opportunities for banks and credit unions to scale their operations and reach a wider customer base almost instantly. The emergence of new artificial intelligence tools has accelerated these trends.

The path ahead is not without challenges, however. Increasing interest rates and recent financial institution failures continue to pressure both the ability to generate loans and retain customer deposits.

Read more at The Financial Brand

Customized Payment Processing and

Merchant Service Provider for Your Business

Radical income tax simplification: Can we do it? BROOKINGS

Tax filing may well be America’s least favorite indoor sport. Each year, new forms and rules can overwhelm even seasoned tax experts.

It does not have to be this way. In a new paper and project, I propose and analyze several major revenue-neutral sets of federal income tax reforms, each of which would create a simpler and more progressive system. A new interactive tool on the Urban-Brookings Tax Policy Center website allows anyone to compare their filing requirements and tax burdens under the alternatives and the current system. A more detailed paper provides additional background and context.

There is massive potential for simplification. The tax code is riddled with special provisions that are difficult to interpret and enforce. It also requires taxpayers to collect information that the IRS already has, while allowing some forms of income to go untaxed or lightly taxed and imposing heavy burdens on others.

Together, those provisions place an enormous burden—in time, money, and mental energy—on honest taxpayers trying to legally minimize their tax liability. The provisions also create both incentives and opportunities for people to cheat.

Read more at The Brookings Institution

MONEYTRENDS 2024

Securely Taking Credit Card Payments Over the Phone: A Step-by-Step Guide: E-Complish

As businesses strive to provide seamless and convenient payment options, accepting payments over the phone with technology like E-Complish’s Call Sentry and secured custom ePayment Link utilized via SMS, chat, and email has become common practice.

With touch-tone tech, Interactive Voice Response Payments (IVR payments), and secured payment links, customers enter their card or banking information and complete transactions 24/7 without assistance from customer service representatives.

As with most card-not-present transactions, there is always a risk of data breaches, identity theft, and fraud if you accept credit card payments or debit card payments over the phone.

So, let’s discuss the state of call center security and the steps needed to safeguard your customer’s data and business’s reputation when using IVR payments.

Read more at E-Complish

The Most Advanced Self-Service Check Cashing ATM

Check Cashing, Money Transfer, Bill Payment, Mobile Reload, ATM and more.

QUOTE OF NOTE

"The housing shortage is a major driver of both inflation and homelessness, placing a heavy financial burden on Americans from all walks of life." Pew’s Alex Horowitz

FACT OF THE MATTER

25% The rise in the national median sale price for a single-family home from 2019 to 2022

QUOTE OF NOTE

"[Automatic IRAs] are the most exciting thing we've seen happen in [the retirement] space in a long time. It has the potential to really change the game." Jean-Pierre Aubry, associate director of state and local research, 'Center for Retirement Research' at Boston College

PROVIDING SERVICES TO THE

FINANCIAL SERVICES INDUSTRY NATIONWIDE

Want a better credit card interest rate? Try smaller banks or credit unions

With average credit card interest rates at an all-time high, snagging a lower rate could help reduce the interest you pay and enable you to get out of debt more quickly.

The 49 percent of cardholders who carry a credit card balance (according to a Bankrate survey) are currently paying an average interest rate of 22.75 percent for the privilege of using their cards. And if your credit card is issued by a large bank, your interest rate is likely to be higher than if a smaller bank or credit union issued your card, according to a recent report from the Consumer Financial Protection Bureau (CFPB).

Large banks charge higher interest rates, irrespective of credit score

According to the consumer protection agency, the 25 largest credit card issuers charged interest rates that were 8 to 10 percentage points higher than those offered by smaller banks and credit unions.

Read more at BANKRATE

ADVERTISE

Green Dot to Enable Cash Transactions for 3 More FinTechs

FinTech companies Repay, Facebank and Pana have joined the Green Dot Network to enable cash transactions and services for their customers.

By becoming partners of the network, the three FinTechs can offer these services via Green Dot’s network of thousands of retail locations, Green Dot said in a Tuesday (March 12) press release.

“As the demand for cash and cash transactions persists in the U.S., more companies are looking to power their customers with simple, accessible and affordable cash services,” Crystal Bryant-Minter, senior vice president of money movement at Green Dot, said in the release.

The Green Dot Network’s retail locations offer cash-in and cash-out services, according to the release. They also enable customers to move funds digitally between bank accounts.

The network includes more than 90,000 retail locations, including Walmart, Walgreens, 7-Eleven and CVS, the release said.

Read more at PYMNTS.COM