Tag Archives: credit cards

Credit Card debt hits record high of $1.13 Trillion

Visa-Credit-Cards

Important Takeaways:

  • Americans are increasingly turning to their credit cards to cover everyday expenses, with debt hitting a new record high at the end of December, according to a New York Federal Reserve report published Tuesday.
  • In the three-month period from October to December, total credit card debt surged to $1.13 trillion, an increase of $50 billion, or 4.6% from the previous quarter, according to the report. It marks the highest level on record in Fed data dating back to 2003 and the ninth consecutive annual increase.
  • There was also an uptick in borrowers who are struggling with credit card, student and auto loan payments

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50% increase in Banks closing business and personal accounts: If you get red flagged they don’t have to tell you

Why-Banks-Are-Suddenly-Closing-Down-Customer-Accounts

Important Takeaways:

  • Bank customers get a letter in the mail saying their institution is closing all of their checking and savings accounts. Their debit and credit cards are shuttered, too. The explanation, if there is one, usually lacks any useful detail.
  • Or maybe the customers don’t see the letter, or never get one at all. Instead, they discover that their accounts no longer work while they’re at the grocery store, rental car counter or A.T.M. When they call their bank, frantic, representatives show concern at first. “Oh, no, so sorry,” they say. “We’ll do whatever we can to fix this.”
  • But then comes the telltale pause and shift in tone. “Per your account agreement, we can close your account for any reason at any time,” the script often goes.
  • These situations are what banks refer to as “exiting” or “de-risking.” This isn’t your standard boot for people who have bounced too many checks. Instead, a vast security apparatus has kicked into gear, starting with regulators in Washington and trickling down to bank security managers and branch staff eyeballing customers. The goal is to crack down on fraud, terrorism, money laundering, human trafficking and other crimes.
  • In the process, banks are evicting what appear to be an increasing number of individuals, families and small-business owners. Often, they don’t have the faintest idea why their banks turned against them.
  • Banks generally won’t say how often they are closing accounts this way, and they’re not tracking how often they get it wrong.
  • By law, banks must file a “suspicious activity report” when they see transactions or behavior that might violate the law
  • According to Thomson Reuters, banks filed over 1.8 million SARs in 2022, a 50 percent increase in just two years. This year, the figure is on track to hit nearly two million.
  • Federal data on the types of SARs that banks file show what they worry about most. Last year, banks filing SARs tagged categories like suspicious checks, concern over the source of the funds and “transaction with no apparent economic, business or lawful purpose” most often, according to Thomson Reuters.
  • To former bank employees, the bloodless data belie the havoc that banks wreak. “There is no humanization to any of this, and it’s all just numbers on a screen,” said Aaron Ansari, who used to program the algorithms that flag suspicious activity. “It’s not ‘No, that is a single mom running a babysitting business.’ “It’s ‘Hey, you’ve checked these boxes for a red flag — you’re out.’”
  • What follow are profiles of customers who lost their accounts and an analysis of what behavior may have spurred their banks to shun them.

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New survey shows 70% of Americans are financially stressed including those making six figures

Revelations 13:16-18 “Also it causes all, both small and great, both rich and poor, both free and slave, to be marked on the right hand or the forehead, so that no one can buy or sell unless he has the mark, that is, the name of the beast or the number of its name. This calls for wisdom: let the one who has understanding calculate the number of the beast, for it is the number of a man, and his number is 666.”

Important Takeaways:

  • Inflation, economic instability and a lack of savings have an increasing number of Americans feeling financially stressed.
  • Some 70% of Americans admit to being stressed about their personal finances these days and a majority — 52% — of U.S. adults said their financial stress has increased since before the Covid-19 pandemic began in March 2020, according to a new CNBC Your Money Financial Confidence Survey conducted in partnership with Momentive.
  • “People are worried that the money they’ve saved won’t last and are worried they’re going to have to lean more on their credit cards and other sources of debt just to get by,” said Bruce McClary, a senior vice president at the National Foundation for Credit Counseling.
  • Bank failures weaken confidence
  • About a third of people earning six figures said they are living paycheck to paycheck and more than a quarter said they have no emergency fund.

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Americans hurting from inflation and resorting to credit cards

Revelations 18:23:’For the merchants were the great men of the earth; for by thy sorceries were all nations deceived.’

Important Takeaways:

  • Credit card balances reach record $866B as consumers battle economic headwinds
  • According to TransUnion’s Quarterly Credit Industry Insights Report (CIIR), bankcard balances rose 19% during the third quarter from a year ago, reaching a record $866 billion.
  • This was driven heavily by a growth in Gen Z and Millennial borrowers whose balances increased 72% and 32%, respectively, according to the report.
  • This increase is caused by the myriad of economic challenges facing consumers from “this environment of high inflation, and secondarily by the higher interest rates
  • Overall, number of credit cards issued over the third quarter rose to 510.9 million
  • Meanwhile, the average credit card debt per borrower rose from $4,857 to $5,474.

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More Americans now rely on credit cards with record inflation

Rev 6:6 NAS “And I heard something like a voice in the center of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not damage the oil and the wine.”

Important Takeaways:

  • To cope with record inflation, Americans have opened up a record number of credit cards
  • This number is an all-time high, breaking the pre-COVID-19 record of $1.092 trillion in 2019. Credit card debt dropped to $974.6 billion in 2020 but that number has been increasing steadily as inflation began to eat up more and more of Americans’ paychecks.
  • A survey by Equifax, Americans received 11.5 million new bank credit cards through February 2022. This is a 31.4% increase from the previous year. The total limits for these credit cards were $55.5 billion, a 59.2% increase from the previous year. Total credit limits now stand at $4.12 trillion, $224 billion above the pre-pandemic level.

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More Americans rely on credit cards during emergencies, living paycheck to paycheck

Rev 6:6 NAS And I heard something like a voice in the center of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not damage the oil and the wine.”

Important Takeaways:

  • Inflation Woes: 64% of Americans Are Living Paycheck to Paycheck
  • As inflation continues its relentless trek upward, the number of Americans living paycheck to paycheck is on the rise.
  • The data also pointed to the fact that even among individuals with six-figure salaries, 48 percent of respondents also noted that they are living paycheck to paycheck. In December, that percentage was sitting at 42 percent.
  • As for those who earn between $50,000 and $100,000, 67 percent admitted that they are living paycheck to paycheck.
  • Adding to the concerns is that more Americans are relying on credit cards to pay off their bills
  • Per CNBC, citing a separate report from the financial services website Personal Capital, Americans now believe that they need to make approximately $122,000 annually—more than double the current national average salary—to feel financially secure

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The Federal Reserve is prodding Americans to buy more on credit

FILE PHOTO: A sign advertises homes for sale in a new housing development in Dickinson, North Dakota January 21, 2016. REUTERS/Andrew Cullen

By Jason Lange

WASHINGTON (Reuters) – The Federal Reserve’s decisive statement this week that interest rates are unlikely to rise this year sends a signal to U.S. households: keep buying stuff.

The Fed tries to guide the U.S. economy by controlling the interest rate banks charge one another for overnight loans. Moving this rate up lifts other rates in the economy, making it costlier for people to use their credit cards or to buy homes and cars. Higher rates also make companies rethink investments.

A solid majority of Fed policymakers on Wednesday said higher rates are unlikely this year, leading investors to bet the economy might slowing enough for the Fed to actually cut rates.

The following are some possible consequences for American households:

EASY CREDIT

The Fed’s signal on its interest rate outlook led key market rates to fall, including the yield on 10-year Treasury bonds. That is a sign that rates are also falling for loans used to buy houses and cars. Interest rates for credit cards may also drift lower. Mortgage rates have been falling since November when Fed policymakers made clear they would be patient about rate decisions.

SAVING DISCOURAGED

Lower rates also encourage spending by taking the shine off some common ways to save money. Low yields reduce the return on money in savings accounts as well as in funds made up of safe-haven government bonds. This poses a problem for retirees who depend more on their income from savings and who take a hit from lower rates on Treasury bonds. The Fed has argued that retirees benefit from actions taken to support the broader economy.

RETIREMENT BOOST

Rising stock prices comprise the flip side of lower bond yields. That boosts the value of private retirement accounts, such as 401(k)s, particularly those of young people whose accounts tend to be weighted toward stocks.

The benchmark S&P 500 stock index surged after the Fed’s decision, reflecting the view that cheaper borrowing costs would help company profits. It is possible that stock market gains could boost consumer spending because people sometimes loosen their purse strings after a rise in perceived wealth.

BUOYANT LABOR MARKET

The U.S. jobless rate is near its lowest level in 50 years although lately there have been signs of softening in the labor market. Hiring slowed sharply in February and the number of new jobless claims every week has also been ticking higher. The Fed’s action aims to keep the labor market solid. That could help encourage more people to rekindle job searches they had given up when the economy was still weak following the 2007-09 financial crisis.

 

(Reporting by Jason Lange, editing by G Crosse)

Your Money: What another U.S. interest rate rise means for you

A woman shows U.S. dollar bills at her home in Buenos Aires, Argentina August 28, 2018. REUTERS/Marcos Brindicci

By Beth Pinsker

NEW YORK (Reuters) – If you have credit card debt, take the next U.S. Federal Reserve move to raise interest rates as a big, flashing warning sign.

Short-term rates are the most affected when the government nudges up the federal funds rate, which the Fed is expected to do on Wednesday, likely raising it a quarter point. That will be the third move in 2018 and the eighth since the Fed started inching rates up from effectively zero in December 2015. One more hike is expected before the end of the year.

“That means your 15 percent interest rate on a credit card is now a 17 percent rate,” said Greg McBride, chief economist for Bankrate.com. “If you haven’t already, it’s important to take steps to insulate yourself.”

The message to get out of debt is a hard sell to the American households holding nearly a trillion dollars in credit card debt, according to Nerdwallet.com’s 2017 survey.

Many pay only the monthly minimum payments, incurring interest charges that balloon their balances.

It is a “treadmill to nowhere,” McBride said.

On a card with a $10,000 balance, paying the minimum (interest plus 1 percent of the balance) will cost you $12,000 in interest and take 27 years to pay off at a 15 percent rate. Bump that up to a 17 percent interest rate, and you pay $13,600 in interest – plus, it would take an extra year to be out of debt, according to Bankrate.com’s calculator (https://bit.ly/2v4vaMm).

Experts say you should push your credit card debt to a zero-percent balance transfer card. You can still get offers for as long as 21 months, with fees, according to Nick Clements, co-founder of the money advice site MagnifyMoney.com. Then pay down as much money as you can to reduce the debt in that time period.

It is also a good idea to explore the personal loan market, where rates are rising but not as fast because of competition, Clements said. These loans have short repayment periods, typically under five years.

AVOID HOME EQUITY LOANS

If you are in debt and own a home, now is not necessarily the best time to be tempted with a home equity loan to pay off debt, said Tendayi Kapfidze, chief economist of housing site LendingTree.com.

The variable interest rates of a home equity loan are also affected by the Fed raising interest rates, although not as highly correlated.

The biggest risk? Cashing out home equity to pay down debt, but then as soon as you are even, digging another financial hole and not having anything left to tap.

“You need a broader plan to control your spending,” said Kapfidze.

For those looking to buy a house or refinance, the latest Fed move will have a slower impact. Other things influence mortgage rates along with the Fed funds rate, but those factors are heading in the same direction.

Kapfidze does not expect any large mortgage rate moves in the near term, but that, he said, is because there had already been a runup in recent weeks.

Savings rates are the last to move because of Fed actions. Banks raise rates on what they are selling before they raise rates on what they are buying, Kapfidze said.

But if savers turn into shoppers, they will find some better deals in the coming months. Online banks are being particularly aggressive about rates for certificates of deposit, with new players like Goldman Sachs’ Marcus, Clements said.

Investors should look at the yield on their fixed income investments, which might be around 3 percent and compare it to a 12-month CD for 2.5 percent.

“If you think about it, low rates mean people take more risk. As rates are rising, people should be able to take less risk,” Clements said.

(Editing by Lauren Young and Bernadette Baum)

Saks, Lord & Taylor hit by payment card data breach

The Lord & Taylor flagship store building is seen along Fifth Avenue in the Manhattan borough of New York City, U.S., October 24, 2017. REUTERS/Shannon Stapleton

By Jim Finkle and David Henry

TORONTO/NEW YORK (Reuters) – Retailer Hudson’s Bay Co on Sunday disclosed that it was the victim of a security breach that compromised data on payment cards used at Saks and Lord & Taylor stores in North America.

One cyber security firm said that it has evidence that millions of cards may have been compromised, which would make the breach one of the largest involving payment cards over the past year, but added that it was too soon to confirm whether that was the case.

Toronto-based Hudson’s Bay said in a statement that it had “taken steps to contain” the breach but did not say it had succeeded in confirming that its network was secure. It also did not say when the breach had begun or how many payment card numbers were taken.

“Once we have more clarity around the facts, we will notify our customers quickly and will offer those impacted free identity protection services, including credit and web monitoring,” the statement said.

A company spokeswoman declined to elaborate.

The breach comes as Hudson’s Bay struggles to improve its financial performance as a tough retail environment has weighed on sales and margins. Last June, it launched a transformation plan to cut costs and is working to monetize the value of its substantial real estate holdings.

Hudson’s Bay disclosed the incident after New York-based cyber security firm Gemini Advisory reported on its blog that Saks and Lord & Taylor had been hacked by a well-known criminal group known as JokerStash.

JokerStash, which sells stolen data on the criminal underground, on Wednesday said that it planned to release more than 5 million stolen credit cards, according to Gemini Chief Technology Officer Dmitry Chorine.

The hacking group has so far released about 125,000 payment cards, about 75 percent of which appear to have been taken from the Hudson’s Bay units, Chorine told Reuters by telephone.

The bulk of the 5 million card numbers that JokerStash said it plans to release are likely from Saks and Lord & Taylor, but it is too early to say for sure, Chorine said.

“It’s hard to assess at the moment, primarily because hackers have not released the entire cards in one batch,” he told Reuters.

Alex Holden, chief information security officer with cyber security firm Hold Security, confirmed that the 125,000 cards had been released by JokerStash but said it was too soon to estimate how many had been taken from Hudson’s Bay.

If in fact millions of records were stolen, the breach would be one of the largest involving payment cards in the past year, but it would still be far smaller than any of the biggest thefts on record, which occurred a decade ago.

Hackers stole more than 130 million credit cards from credit-card processor Heartland Payment Systems, convenience store operator 7-Eleven Inc and grocer Hannaford Brothers Co, from 2006 to 2008, according to U.S. federal investigators.

Cyber criminals stole some 40 million payment cards in a 2013 hack on Target Corp and 56 million from Home Depot Inc in 2014.

Hudson’s Bay said there is no indication its recent breach involved online sales at Saks and Lord &Taylor outlets or its Hudson’s Bay, Home Outfitters and HBC Europe units.

The company said that customers will not be liable for fraudulent charges resulting from the breach.

(Reporting by Jim Finkle in Toronto and David Henry in New York; Editing by Bill Rigby and Steve Orlofsky)