Economic growth continued in Q4 2024

The US economy finished 2024 with its 11th consecutive calendar quarter of economic growth. In the fourth quarter, Gross Domestic Product (GDP) grew at an inflation-adjusted annual rate of 2.3%. That’s lower than the third quarter’s growth rate of 3.1%. GDP grew by 2.8% for the year, similar to 2023’s 2.9% growth. See details at BEA.gov.

2024 existing home sales lowest in nearly 30 years

Sales of existing homes totaled 4.06 million last year. This was the lowest annual total in nearly 30 years, according to the National Association of Realtors. The median price of existing homes sold reached $407,500, an all-time high. High prices and elevated mortgage rates slowed the total volume of homes sold. Home sales did improve in December 2024. Existing homes sold at a seasonally-adjusted annual pace of 4.24 million during the same month. That was a 9.3% increase from the previous December, the strongest year-over-year rise since October 2022. See details at NAR.Realtor.

Hiring freeze may slow placement of bank examiners

The Washington Post reported that the federal government’s new hiring freeze would cause the FDIC to rescind 200 job offers to candidates to fill vacancies for bank examiners. These positions inspect the operations and financials of banks to ensure they are within policy guidelines. These efforts are intended to protect the stability of the banking system. See details at WashingtonPost.com.

CFPB finds cash-out mortgage refinance boosting credit scores

The Consumer Financial Protection Bureau released a report showing that people who obtained a cash-out refinance mortgage generally improved their credit scores. This is linked to paying off bills or other debts, the most commonly cited reason for cash-out refinancing. People typically showed dramatic drops in credit card and auto loan balances when they got these mortgages. The average results included a steep, immediate increase in credit scores. Though scores drifted back down later, they were still typically higher than before refinancing. Cash-out refinancing can be used to retire more expensive forms of debt. The CFPB also warns that it can increase the risk of foreclosure. See details at ConsumerFinance.gov.

Fed leaves interest rates unchanged for now

The Federal Reserve announced it will leave the Fed funds rate within a target range of 4.25% to 4.50%. This is the first time since last July that the Fed has met without cutting interest rates. Over its most recent three meetings, the Fed has cut rates by 1%. However, the decision to leave rates unchanged is not a surprise. The Fed is aiming to balance encouraging growth and limiting inflation. With the economy continuing to grow and recent signs that inflation is perking up, the Fed had no compelling reason to hurry the next rate cut. The Fed’s latest economic projections show they expect to cut rates by 0.5% this year, and with seven more meetings on the calendar for 2025, the Fed should be expected to leave rates unchanged more often than not. See details at FederalReserve.gov.

US bank finances improved in Q4 2024

Credit analyst firm Fitch Ratings reported that the financial performance of large banks improved in the final quarter of 2024. Banks benefited from a rise in net interest income. This is the difference between the interest banks earn from loans and the interest they pay on deposits. Banks can quickly lower the rate they pay on deposit accounts when short-term interest rates fall, as they did in late 2024. However, they can lower rates on credit cards more slowly. Also, many long-term loans they make to customers have fixed interest rates, so these don’t change immediately when rates fall. Stronger net interest income is good for the banking system’s stability, though it can represent a bad deal for individual bank customers. See commentary at FitchRatings.com.

AI helps spot fraudulent account applications

Banking security firm Socure recently used artificial intelligence to spot thousands of fraudulent checking and credit card account applications. The applications used real names and personal information of Massachusetts residents to set up the bogus accounts. The AI program flagged the applications based on the unusually high volume and the time of day they were made, which correlated with a foreign time zone rather than typical US business hours. Closer examination found that although the addresses given on the applications were of Massachusetts residents, the IP addresses the applications came from were outside the state. See story at Boston25news.com.

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The Consumer Financial Protection Bureau (CFPB) has approved a rule banning reporting agencies from including medical debt on credit reports. As a result, that debt would no longer directly affect people’s credit scores.

A natural reflex might be to applaud the CFPB’s decision. Nobody likes medical debt, and penalizing people for debt forced on them by unforeseen circumstances, such as a medical emergency, may seem unfair.

However, a closer look suggests that the CFPB’s action may not be the right cure for medical debt. At best, it could be like a medicine that eases a symptom without addressing the underlying illness. At worst, it may prove to be a well-intentioned empty gesture.

What the CFPB rule on medical debt means

By removing medical debt from credit reports and scores, the CFPB hopes to prevent debt collectors from using the threat of damaged credit to coerce consumers into paying. Damage to credit scores can be especially unfair when miscommunication among medical institutions and insurance companies has caused that debt to be reported inaccurately.

According to the CFPB, the new rule will remove $49 billion in medical bills from the credit reports of about 15 million Americans. They estimate that people with medical debt on their credit reports could see their credit scores rise by an average of 20 points.

The issue is that the CFPB does not have a magic wand. It cannot make medical debt disappear. It can be erased from credit reports, but consumers will still owe that debt. As with an illness, ignoring that reality may make the situation worse.

Treating the symptom, not the cause

The appearance of medical debt on a credit report is just a symptom of the problem. The debt itself is the actual problem. Underlying that, inadequate insurance and the high cost of healthcare are the causes of that problem.

As the CFPB claims, removing medical debt from credit reports might give consumers a quick 20-point bump in their credit scores. However, it does not remove the obligation to pay that debt. Creditors can still sue for payment. In turn, paying that debt may impair a consumer’s ability to pay other bills, which could reverse the short-term boost to their credit scores.

The new rule may face hurdles

Besides being an inadequate solution to the problem of medical debt, the new rule may not survive very long.

The CFPB has recently taken several activist positions. They are trying to get things done before a new administration that is more sympathetic to the financial sector comes to power. However, the problem with changing things through rule-making rather than legislation is that a new administration can easily change those rules.

Also, rules wiping medical debt off credit reports may face legal challenges. After all, they require lenders to make decisions based on incomplete information about potential borrowers’ financial condition. If the new administration replaces the advocates for those rules on the CFPB’s staff, the agency may find it difficult to defend those rules in court.

How the new rule could backfire for consumers

Even if the new rule survives, it may not be good for consumers.

Lenders are bound to respond if the rule artificially raises credit scores by excluding certain negative information. They may raise their lending standards to compensate for that boost in credit scores. The result may be that credit would become more difficult to obtain.

Even for specific borrowers with medical debt, the rule might not help them in the long run. If they are approved for a loan they cannot repay because of their medical debt, it will ultimately hurt their financial situation and credit scores. It would be better to acknowledge the reality of their existing debt obligations in any lending decisions.

Consequences of the CFBP rule on medical debt

The rule removing medical debt from credit reports isn’t a perfect solution. While it can temporarily boost credit scores for those with medical debt, the long-term benefits may be limited. As the rule improves the credit scores of individuals with medical debt, others without such debt may feel pressure to take additional steps to raise their scores to stay competitive. This dynamic creates a scenario where the overall credit landscape adjusts, potentially offsetting the initial advantages.

With or without medical debt, there are some more permanent moves you can make to raise your credit score:

1. Keep balances down. Always try to make more than the minimum payment on your credit card bills.
2. Stay on schedule. Payment history is the number one factor affecting credit scores, so try to keep your payments on time.
3. Know where you stand. Signing up with Credit Sesame lets you stay informed of changes in your credit score. It can also provide you with timely tips about what you could do to raise your score.
4. Limit applications for new credit. Pick your spots. That way, new credit accounts and inquiries won’t keep dinging your credit score.

The new medical debt rule brings opportunities and uncertainties, leaving many questions unanswered. To navigate this shifting landscape, focus on proactive steps to strengthen your credit score. Maintaining good financial habits can build resilience and ensure your credit profile stays strong—no matter how the rules evolve.

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Disclaimer: The article and information provided here are for informational purposes only and are not intended as a substitute for professional advice.

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Job growth strong in December 2024

The US economy added 256,000 jobs in December. This completed the fourth year in a row in which employment grew every month. In total, the economy added 2.2 million jobs in 2024. December’s job growth exceed the monthly average for 2024 of 186,000. Healthcare and retail were leading areas of job growth in December. See details at BLS.gov.

Revolving credit declined in November 2024

Revolving credit owed declined at a seasonally adjusted annual pace of 12% in November. November is usually one of the heaviest months for the use of revolving credit. The way seasonal adjustment works, the actual amount of revolving credit outstanding increased during November, but by much less than would typically be expected at the start of the holiday shopping season. The vast majority of revolving credit is credit card balances. Consumers didn’t completely turn their backs on using credit during November, as nonrevolving credit rose at a seasonally adjusted annual rate of 2.0%. See details at FederalReserve.gov.

Bankers sue government to stop overdraft fee cap

The American Bankers Association (ABA) is suing the Consumer Financial Protection Bureau (CFPB) to block the CFPB’s recently announced limit on overdraft fees. The fee cap was issued on the grounds that overdraft fees are a form of finance charges for credit issued by banks to consumers. The ABA argues that overdrafts are not credit and should not be treated as finance charges. The lawsuit also argues that the CFPB overstepped its legal authority in issuing the fee cap. See the news release at ABA.com.

CFPB makes final push to sideline medical debt

The CFPB has announced a new rule that would exclude information about medical debt from credit reports. This would potentially affect 15 million consumers with $49 billion in unpaid medical debt. However, the measure wouldn’t absolve consumers from that debt. They would still be legally obligated to pay it, but it would not appear on their credit reports. Critics of the move say it could restrict lending because it would make credit information less reliable. In any case, it’s questionable whether the measure will survive when the new presidential administration comes in. See report at Reuters.com.

Mortgage rates continue to trend upward

30-year mortgage rates continued to surge toward 7%, rising by two basis points last week to 6.93%. This was the fourth consecutive week mortgage rates rose, with 30-year rates rising by 33 basis points. Overall, 30-year rates are up by 85 basis points since bottoming out at the end of September 2024 and are 27 basis points higher than a year ago. 15-year rates also rose for a fourth straight week, increasing by one basis point to reach 6.14%. See mortgage rate detail at FreddieMac.com.

Mortgage credit standards loosened in December 2024

Mortgage credit availability rose by 0.7% in December, reaching 96.6 on the Mortgage Credit Availability Index (MCAI), per the Mortgage Bankers Association. A higher index reflects looser credit standards. The Conventional MCAI increased by 1.3%, driven by more adjustable-rate mortgage (ARM) and cash-out refinance options for borrowers with strong credit, while the Government MCAI remained unchanged. The Jumbo MCAI climbed 2.3% to its highest level since August 2024, offsetting a 0.7% drop in the Conforming MCAI. Joel Kan, MBA’s Deputy Chief Economist, attributed the rebound in conventional credit to these expanded offerings for creditworthy borrowers. See news release at MBA.org.

Bond prices plunge as interest rates rise

Yields on bonds around the globe have been falling sharply as inflation concerns have mounted. The rate on 10-year US bonds rose to 4.7%, its highest since April 2024. Bonds are traditionally a haven in uncertain times, but not when the uncertainty involves a return of inflation. Experts say investors are selling bonds out of concern that plans for new trade tariffs and tax cuts could lead to higher inflation and an expanding deficit. Both would drive down the value of US bonds. This would affect consumers because loan rates, such as on mortgages, often respond more closely to moves in the bond market than to Fed rate changes. See article at Reuters.com.

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Wall Street completes best 2 years since the late 1990s

The S&P finished 2024 with a gain of over 20% for the second consecutive year. This is the first time that has happened since 1997-1998. Investment analysts expect the stock market to continue to rise in 2025 but at a more moderate pace. The median forecast among strategists tracked by Yahoo Finance is a 12% gain in the S&P 500 in 2025. Among the concerns that may weigh on the market are the high valuations of stock prices and a renewed threat of inflation. See article at Yahoo.com.

Holiday spending up modestly in 2024

Mastercard’s SpendingPulse report showed that non-automotive retail sales from November 1 through December 24 were up by 3.8% from the same period a year earlier. That period captures activity during the holiday shopping season. A 3.8% increase represents only a slight improvement after adjustment for the 2.7% inflation rate over the past year. Restaurant spending was up 6.3% from a year ago, showing consumers demand more experiences than merchandise. Online shopping grew by 6.7% year-over-year, compared with 2.9% growth for in-store sales. See report highlights at Mastercard.com.

Credit card write-offs rose sharply in first 9 months of 2024

Credit card companies wrote off $46 billion in bad debts in the first three calendar quarters of 2024. That was a 50% increase over the same period in 2023. Credit card companies write off seriously delinquent payments when they conclude that the cost of trying to collect on them is likely to exceed the money they’d be able to recoup. The level of credit card write-offs is the highest since 2010. That was when the economy was still struggling to recover from the Great Recession. See article at PYMNTS.com.

Mortgage rates rise for third straight week

30-year mortgage rates rose by six basis points at the end of December 2024 to 6.91%. This was the third consecutive weekly increase, during which time 30-year rates have risen by a total of 31 basis points. 30-year rates are now higher than they’ve been since early July 2024 and 83 basis points higher than at the end of September. 15-year mortgage rates also rose for a third straight week, climbing by 13 basis points to re13%. See rate details at FreddieMac.com.

Improvement in consumer confidence proves short-lived

After rising in October and November 2024, the Conference Board’s Consumer Confidence Index took a sharp downturn in December. The overall index fell by 7.2% during the month. The index component that considers current conditions was barely affected, falling by less than 1%. However, the part of the index which looks forward to near-term conditions plunged by 13.4%. This left the Expectations Index at 81.1. As a result, the Expectations Index may be close to falling below 80, a level traditionally associated with recessions. See details at Conference-Board.org.

Government sues Rocket Mortgage over alleged kickbacks

The Consumer Financial Protection Bureau (CFPB) has sued Rocket Mortgage and The Jason Mitchell Group for allegedly rewarding real estate agents and brokers for steering clients towards Rocket Mortgage. The Mitchell Group is a network of real estate companies operating across 41 states. The CFPB alleges that Rocket Mortgage would refer prospective home buyers to the Mitchell Group’s agents and brokers in return for influencing their clients to obtain their mortgages through Rocket Mortgage. As part of the plan, Rocket discouraged agents and brokers from providing their clients with information about mortgage products not offered by Rocket. This included information about down payment assistance programs. See details at ConsumerFinance.gov.

Pending home sales continued to rise in November

The National Association of Realtors’ Pending Home Sales Index (PHSI) rose 2% in November 2024. This was the fourth straight monthly increase for the PHSI. The PHSI is based on signed purchase contracts (not closed sales) and is considered a leading indicator of home-buying activity. The volume of signed contracts increased in the South, Midwest, and West in November, with the Northeast being the only region that showed a monthly decline. All four regions showed a rise in home-buying activity over the past 12 months. The West had the most significant increase over the past year, with an 11.8% rise in signed purchase contracts. Notably, this pick-up in home buying began before mortgage rates started rising in December. See details at NAR.Realtor.

Home prices show modest progress in late 2024

The latest monthly data from the Federal Housing Finance Agency’s seasonally adjusted House Price Index show that home prices rose in the US by 0.4% in October 2024 and by 4.5% from the previous year. However, that rate of year-over-year growth was slower than the previous year. Prices rose in all nine geographic regions tracked by the index over the past 12 months. The Middle Atlantic region showed the most substantial price growth over the past year, with a 7% increase. See details at ABA.com.

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2024 Q3 GDP growth strong in final estimate

The Bureau of Economic Analysis issued its final estimate of US Gross Domestic Product for the third quarter with a positive surprise. The US economy grew at an inflation-adjusted annual pace of 3.1%, an improvement over the prior estimate of 2.8% and an uptick from the second quarter’s 3.0% growth rate. Upward revisions to exports and consumer spending figures were the leading reasons for the improved growth rate. See GDP report at BEA.gov.

Key inflation measure eased in November 2024

The Personal Consumption Expenditures (PCE) price index slowed in November. The PCE price index is the Federal Reserve’s preferred measure of inflation. The index rose by just 0.1% in November, after a 0.2% increase in the two previous months. The year-over-year increase was up slightly, from 2.3% to 2.4%. However, this increase was due to activity in prior months and not to the most recent trend. Core inflation, which excludes the energy and food sectors, also eased in November. The core PCE price index was up by 0.1% after rising by 0.3% in each of the prior two months. See personal income report at BEA.gov.

Mixed consumer debt performance in November 2024

Consumer debt mix showed signs of strain but with some improvement last month. Rates of serious delinquency declined slightly. The rate of serious delinquency on unsecured personal loans increased, while it remained unchanged for credit cards. However, serious delinquency rates for subprime customers increased for auto loans, personal loans, and credit cards. Consumers continued to show an appetite for additional debt. The average balance on credit cards and personal loans increased, as did the average amount of new auto loans. See details at TransUnion.com.

Government sues banks over failure to protect customers

Three of America’s biggest banks are being sued by the Consumer Financial Protection Bureau (CFPB) for failing to protect customers from fraud adequately. The three banks are JPMorgan Chase, Bank of America, and Wells Fargo. Those banks are co-owners of Zelle, a peer-to-peer payment network. The CFPB alleges that Zelle’s identity verification methods were so weak that scammers could easily open fraudulent accounts and divert payments meant for legitimate users. Despite receiving hundreds of thousands of complaints about fraudulent activity on Zelle, the banks did not use the information to prevent continued fraud. Because the banks did not share information about scammers, those criminals could move from one bank to another, repeating the same crimes. See news release at ConsumerFinance.gov.

Holiday credit spending off to a slow start

The November 2024 VantageScore CreditGuage showed modest credit activity for the month. This muted credit at the traditional start of the holiday shopping season could spell trouble for retail spending. Overall, consumer credit balances shrank in November 2024, and credit card balances increased only slightly. New credit card account originations rose somewhat in the month but are down year-over-year. See report at VantageScore.com.

CFPB sues Walmart over opening bank accounts for drivers

The CFPB is suing Walmart for forcing delivery drivers to pay more than $10 million in fees to access their pay. The suit alleges that Walmart used the drivers’ personal information to open accounts in their names at Branch Messenger, a fintech company. Walmart then deposited their pay into those accounts without the drivers’ consent. Drivers were threatened with termination if they didn’t want to use Branch accounts. This resulted in the drivers having to pay fees to transfer the money to accounts of their choice. See news release at ConsumerFinance.gov.

Mortgage rates continue to climb

30-year mortgage rates rose by 13 basis points last week to 6.85%. It was the second consecutive week in which mortgage rates rose, for a total increase of 25 basis points. The recent surge has wiped out the benefit of three straight weeks of falling mortgage rates that preceded it. 30-year rates are now the highest since mid-July 2024 and 24 basis points higher than when the year began. Fears that inflation may be more persistent than once thought have contributed to the climb in mortgage rates. These fears were bolstered when the Fed revised its inflation estimates for the next two years upward after last week’s meeting. See rate details at FreddieMac.com.

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U.S. household wealth rises in Q3 2024

The total net worth of American households posted its fourth consecutive quarterly increase in the third quarter of 2024. Household wealth grew by $4.77 trillion in the quarter, to reach $168.8 trillion. U.S. household wealth has increased by $17.27 trillion over the past year and nearly $26 trillion over the past two years. Gains in stock prices, fueled by falling interest rates and continued economic growth, were the primary reason for the rise in net worth. Both assets and debt rose for households, with asset growth rising more quickly to create a net increase in wealth. See data release at FederalReserve.gov.

CFPB spotlights the high cost of borrowing to gamble

The Consumer Financial Protection Bureau (CFPB) warned that people who use credit cards to gamble may be adding excessive costs to the risk of loss. A CFPB study found that cash advance transactions on credit cards tend to rise in states that have legalized gambling. Credit card companies often treat charges to place bets as cash advances. There is a particular spike in cash advance transactions when gambling is first legalized. This is a problem because cash advances on credit cards are expensive. They typically incur higher interest rates than purchase transactions. There also may be a fee for the cash advance. $10 is the minimum fee, normally. This is a considerable percentage of a small transaction. For example, a $10 fee on a $20 bet would mean the gambler is paying $30 to make that bet. With this added cost, they may lose money even if they win the bet. See announcement from ConsumerFinance.gov.

Bankers attempt to block cap on overdraft fees

Not long after the CFPB announced a new rule that could limit some overdraft fees to $5, an assortment of groups representing banks sued to stop the fee cap. The new rule would apply to banks with over $10 billion in assets. That would cover 80%+ of the bank deposits in the U.S. The bankers groups claim the CFPB exceeded its authority in issuing the new rule. In seeking to block the overdraft fee cap, bankers have argued there could be harmful impacts for consumers. They point out that limiting overdraft fees could reduce the availability of overdraft protection, cause some customers to lose their bank accounts, or force increases in other fees. See article at USNews.com.

Fed cuts rates again but signals fewer cuts in 2025

The Federal Open Market Committee (FOMC), the subgroup of the Federal Reserve that makes monetary policy decisions, announced a rate cut on December 18, 2024, following its latest meeting. The FOMC cut rates by 25 basis points to 4.25% to 4.50%. This is the third consecutive meeting in which the FOMC has cut rates, for a total drop in the Fed funds rate of 1%. However, the FOMC released updated economic projections showing it expects to cut rates by less than anticipated next year. When it issued the previous set of forecasts, it showed the FOMC anticipated another 1% drop in the Fed funds rate next year. The new projections show a total rate cut of 0.5% in 2025. See details at FederalReserve.gov.

Incomes are up but debt still a problem

A study by H&R Block found that most generations beat inflation last year. Younger adults, in particular, showed significant gains, with Gen Z showing incomes growing by 30% last year. Millennials showed 11% income growth, and Gen X 5%. All three exceeded the inflation rate of 3.4% over the same period. Only Baby Boomers, with 2% average income growth, lagged behind inflation. Many in this generation have higher incomes or are already retired, which can limit their income growth. Despite substantial income gains, debt remains a problem. The survey found that 1 out of every 2 Americans has credit card debt. Of those that do, 2 out of 3 say that debt is unmanageable. See details at HRBlock.com.

Mortgage rates increase

After easing for three straight weeks, 30-year mortgage rates increased sharply last week. They rose by 12 basis points to 6.72%, while 15-year mortgage rates rose by 8 basis points to 5.92%. 30-year rates are now 64 basis points above where they were at the end of September 2024 and 11 basis points above when the year began. Signs of stronger inflation in last week’s Consumer Price Index and Producer Price Index reports may have sparked the upturn in mortgage rates. See rate details at FreddieMac.com.

Store-branded credit cards harmful to consumers

The CFPB released new research documenting concerns about how store-branded credit cards may harm consumers. Store-branded cards are those issued by retailers for use specifically in their stores, as opposed to general-purpose credit cards. The study found that 90% of store-branded cards had interest rates of over 30%, compared with just 38% of general-purpose cards. Also, since those cards often have looser approval standards, they may be more likely to extend credit to people who cannot manage it responsibly. See report highlights at ConsumerFinance.gov.

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Nearly 5% Thanksgiving online shopping transactions fraudulent

TransUnion reports that 4.6% of global online shopping transactions from Thanksgiving through Cyber Monday this year were suspected to be fraudulent. There is some good news, though. The proportion of suspected fraudulent transactions globally was down by 6% from last year. Suspected fraud is more common before the holiday shopping season kicks off. Some 7.5% of global e-commerce transactions in 2024 before Thanksgiving were suspected to be fraudulent. Similar trends were seen in the US, though the numbers were generally lower. 4.2% of e-commerce transactions from Thanksgiving through Cyber Monday were suspected to be fraudulent, down by 5.8% from last year. Before Thanksgiving, 7.1% of US e-commerce transactions were suspected of fraud. See details at TransUnion.com.

Five cybersecurity predictions for 2025

Experian’s Data Breach Industry Forecast includes five predictions for the coming year. These predictions highlight threats that consumers and businesses must protect against in 2025. The five predictions are: 1) teens and young adults will increasingly become major perpetrators of online fraud; 2) internal cyber fraud by employees will continue to grow; 3) electrical power will increasingly become a target of attacks, as the growing use of artificial intelligence requires more energy; 4) predators will eat their own, as more and more hackers choose other hackers as their targets; 5) more sophisticated identification methods will come into use, as standard encryption becomes obsolete. See news release at ExperianPLC.com.

Job creation surged in November 2024

The monthly jobs report from the Bureau of Labor Statistics showed that 227,000 new jobs were created in November 2024. That’s up significantly from the 36,000 new jobs in October 2024, surpassing the 12-month average of 186,000. In addition, previous employment estimates for September and October increased by a combined total of 56,000. The strength of this month’s job report is likely to fuel speculation over whether the Fed will pause its planned rate cut when it meets later this month. The Fed’s previous economic forecast showed that it is expected to lower the Fed funds rate by an additional 0.25% by the end of the year. However, the strength of the job market and recent concerns about the persistence of inflation may mean the Fed can afford to slow its rate-cutting. See details at BLS.gov.

2025 Black Friday sales up from 2024

Mastercard reported that US non-automotive Black Friday retail sales were up by 3.4% over last year. Considering the 2.6% inflation rate for the past year, this means that sales volume was up by only 0.8%. Online sales showed much more substantial growth than in-person sales. Online sales were up by 14.6% over last year’s Black Friday, while in-store sales were up by just 0.7%. Jewelry, electronics, and apparel were identified as the leading holiday shopping sectors. See news release at Mastercard.com.

Net job openings remained steady in October 2024

The latest Job Opening and Labor Turnover survey showed that total job openings in the US remained essentially unchanged in October. There were 7.7 million job openings as of the last business day of the month. There was also a balance between new hires and people leaving their jobs during October, with 5.3 million people in each category. The total number of job openings still exceeds the number of people looking for work, but the gap has been closing. There are now 7 million job seekers and 7.7 million job openings. See report at BLS.gov.

Mortgage rates drop for second week in a row

30-year mortgage rates dropped by 0.12% last week to reach 6.69%. This is the first substantial drop in rates in more than two months. It breaks 30-year rates out of the narrow range they had fluctuated in during November. 15-year rates also dropped significantly last week, falling by 0.14% to 5.96%. Even so, 30-year rates are still 0.61% above where they were at the end of September. 15-year rates are 0.80% higher than at the end of September 2024. See rate details at FreddieMac.com.

The CFPB helps customers reclaim $1.8 billion

The Consumer Financial Protection Bureau (CFPB) is to distribute $1.8 billion of improperly charged fees to 4.3 million customers of two credit repair schemes. The reclaimed fees result from the CFPB’s legal action against Lexington Law and CreditRepair.com. They represent the largest ever distribution from the CFPB’s victim’s relief fund, which consists of receipts of civil penalties paid by companies that violate consumer protection laws. See news release at ConsumerFinance.gov.

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Credit conditions continue to worsen in September 2024

The latest TransUnion Credit Industry Snapshot showed consumers continued to take on more debt in September, even as they increasingly struggled to make payments. During the month, balances owed rose for credit cards, mortgages, and unsecured personal loans. Meanwhile, delinquency rates rose for all those products. Delinquency rates measure the percentage of borrowers whose payments are overdue. Subprime customers showed an especially steep jump in late credit card payments in September. The percentage of that market segment is at least 90 days late, with late payments rising from 19.07% to 22.38% during the month. See details at TransUnion.com.

IRS warns about scams linked to hurricane relief

Hurricanes Helene and Milton have left more than physical damage in their wake. The IRS has warned consumers that scams disguised as fundraisers for fake hurricane relief charities are prevalent. These scams aim to get sensitive personal and financial information from people, such as Social Security, credit card, and bank account numbers. The IRS advises people to check out any supposed charity before giving money or information. You can do this using an IRS search tool that shows an organization’s tax-exempt status and its eligibility to accept tax-deductible contributions. See details at WRAL.com.

Oklahoma bank becomes second to fail in 2024

The FDIC announced that the Office of the Comptroller of the Currency, a bank regulator, had shut down the First National Bank of Lindsay. The FDIC arranged for the First Bank & Trust Co. of Duncan, OK, to take over the failed bank’s deposits. The First National Bank of Lindsay was a relatively small bank with under $100 million in customer deposits. An alleged fraud was blamed for the failure. It is the second bank to fail in 2024 and the first since April 2024. See details at FDIC.gov.

New rules on handling consumer financial data

The Consumer Financial Protection Bureau (CFPB) has rolled out new rules about how banks and other financial companies must handle consumer data. The rules allow consumers to move their financial data from one institution to another. This should make changing banks and other providers easier. The proposal also makes it easier for consumers to pay vendors directly from their bank accounts rather than relying on third-party payment services. Another provision dictates that financial companies should use data only to provide services the customer has signed up for and not for marketing unrelated products. Because of the complexity, the new rules will be rolled out slowly, beginning in April of 2026. See details at ConsumerFinance.gov.

Credit card fraud continues to evolve

Visa’s Fall 2024 biannual report on scam threats highlights the prevalence and variety of credit card fraud. One of the threats the report highlights is a revival in the physical theft of credit cards. Today’s thieves try to turn a stolen card into cash as quickly as possible by using it to buy gift cards before the card’s owner has noticed the theft. Another common scam is impersonating government employees to lure victims into making cash payments. The report notes that from 2022 to 2023, there was a 90% increase in losses from cash payments due to this approach. Also, scammers get around multi-factor authentication by infecting user devices with malware to intercept messages and provide temporary authentication codes. Visa reports investing $11 billion in secure technology and infrastructure over the past five years. See report at Visa.com.

Leading economic indicators decline

The Conference Board announced that its Leading Economic Index (LEI) for the US declined by 0.5% in September 2024. The LEI signals potential turning points in the economic cycle. September’s drop in the LEI follows a 0.3% decline in August. Over the past six months, the LEI has fallen bf 2.6%. That marks an accelerating decline compared to the 2.2% decline over the previous six months. Weakness in factory orders was cited as a leading factor in the recent decline. See details at Conference-Board.org.

Home sales fall as home prices rise

Home sales fell by 1% in September 2024 and 3.5% over the past twelve months. Typically, falling sales activity is accompanied by falling prices. However, home prices have risen by 3% over the past year. Home prices rose in all four major regions of the US, while sales volume fell in all regions except the West. The pairing of increasing prices and falling volume has been attributed to a scarcity of homes for sale. That dynamic may change, as unsold inventory has risen from 3.4 months’ supply to 4.3 months over the past year. See home sales report at NAR.Realtor.

Mortgage rates continue to climb in October 2024

30-year mortgage rates rose by 0.10% last week to reach 6.54%. That marked the fourth consecutive weekly increase for 30-year rates. Those rates are now 0.46% higher than when the rising streak started. Even so, 30-year rates are still 0.07% lower than when the year began. See rate details at FreddieMac.com.

Weekly news headlines from Credit Sesame

• Last week’s news roundup October 19, 2024
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Credit card debt declined in August 2024

According to the latest consumer credit data from the Federal Reserve, the total amount of revolving debt declined in August on a seasonally adjusted basis. The vast majority of revolving debt is credit card debt. Revolving debt fell by $16.2 billion during the month, representing a 1.2% annual rate of decline. Despite this drop in revolving debt, overall consumer debt increased in August. Non-revolving debt increased at a 3.3% annual rate, resulting in overall consumer debt rising at a 2.1% yearly rate. See consumer credit details at Federal Reserve.gov. 

Students may face sudden credit score hit

Reported delinquencies on student loan payments may be about to surge. That’s because of a scheduled change in credit reporting requirements. Student loan payments were paused during the pandemic. They resumed in October of 2023, but the Department of Education mandated that late payments couldn’t be reported to credit bureaus for a year to ease the transition. A year has passed, and late student loan payments may start showing up on credit reports. This could cause a spike in reported delinquencies, as borrowers falling behind on their payments suddenly see it reflected in their credit histories and scores. See story at MarketWatch.com.

Mortgage rates rising in reversal of recent trend

30-year mortgage rates climbed by 0.20% last week, following a slight increase the previous week. Before that, mortgage rates had seen an extended decline after peaking at 7.22% in early May. That left 30-year rates at 6.32%. Even with this setback for potential buyers, 30-year mortgage rates are 0.29% lower than when 2024 began. Last week’s sudden rate surge was due to a better-than-expected jobs report, which raised concerns about inflationary wage demands. See rate details at FreddieMac.com.

CFPB highlights auto financing abuses

The Consumer Financial Protection Bureau (CFPB) released a report detailing common abuses by auto loan servicing companies. Car dealers often layer extra products into car loans, such as extended warranties and insurance. Those add to the cost of the loan. In some cases, consumers were unaware they were signing up for these products, and if the loan was terminated early, no refunds for unused portions of those products were given. Some loan servicers also made it unreasonably difficult for consumers to cancel these products. The CFPB also found other abuses, such as failing to cancel a repossession order after payment had been made. See details at ConsumerFinance.gov.

Inflation steady in September 2024

The Consumer Price Index rose by just 0.2% last month. That puts the year-over-year inflation rate at 2.4%, the smallest twelve-month increase since February 2021. Core inflation, which excludes the volatile food and energy sectors, rose by 0.3% last month and by 3.3% over the past year. Among major sectors, transportation services experienced the biggest price increases in September, rising by 1.4%. Meanwhile, fuel oil experienced the steepest decrease last month, with prices falling by 6.0%. See details at BLS.gov.

Inflation has hit poorer Americans hardest

New research shows that inflation has been higher for lower-income Americans. This is partly because purchase patterns differ by income group. From 2005 to 2004, the lowest 20% of earners saw prices on their regular purchases rise by 67%. Prices for the highest 20% of earners rose by 57%. This difference is exacerbated by poorer consumers having less flexibility to adjust to price changes by substituting one item for another. That’s because a greater share of poorer household’s incomes goes to necessities. See details at MinneapolisFed.org.

Credit scores stable except for subprime borrowers

According to a new report, the national average FICO score remained 717 as of July 2024. That was the same level the average score has maintained since October, after the first point drop in years. Missed payments and borrower balances continue to rise, but slowly. However, while the average credit score is stable, different credit tiers are experiencing divergent conditions. Scores for prime borrowers have remained steady, while those for subprime ones have fallen by six points. See article at BNNBloomberg.ca.

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A recent Census Bureau survey found that roughly two-thirds of Americans reported having at least some difficulty paying usual household expenses within the past week. Consumers live paycheck to paycheck and have difficulty making their funds last from one payday to the next.

The rising cost of credit has rightfully caused concern, but Americans who regularly use cash find it’s getting more costly to access their money. These costs can be the breaking point for budgets that are already stretched.

Various fees make accessing funds a little more expensive. These fees might seem small individually, but they can take a big bite out of household finances over time. This is especially troubling when the cost burden falls mainly on the poorest families.

You can make your money go further if you understand when these fees are applied and change your habits to avoid them.

Cashback fees take millions from consumers

It’s a common scene at a grocery store or other retailer. A customer goes to pay with a debit card, and the cashier asks, “Do you want any cash back with that?” Customers often ask for a small amount to be added to the charge against the debit card and handed over to them in cash.

This is a widely used way of topping up the cash in people’s wallets. Consumers may be so used to it that they haven’t noticed some retailers have started charging an extra fee for the service.

The Consumer Financial Protection Bureau (CFPB) studied eight major US retailers and found three charge a fee when customers add cash back to their debit card purchases.

At first, these fees may seem relatively harmless–50 cents to a dollar per transaction. However, they add up to significant sums. The three retailers, Dollar General, Dollar Tree/Family Dollar, and Kroger, receive an estimated $90 million yearly from these fees.

For the consumer, the problem is those fees are a fixed dollar amount often applied to a relatively small withdrawal. The fee can represent a significant percentage. For example, if you’re charged a dollar to get $20 in cash back, that’s a 5% cost. To put this in perspective, inflation is currently about 3%. Add a 5% fee when you get cash back, and you more than double the impact of inflation.

Prepaid cards are often inefficient

Prepaid cards are popular because they have many uses. Go to almost any retailer, and you see a rack with a large selection of gift card options. Prepaid cards are also popular as an alternative to cash for people with no bank account or who can’t get credit.

The problem is, prepaid cards can also come with a variety of fees. Here’s a partial list:

• Transaction fees
• Monthly fees
• Cash reload fees
• Inactivity fees
• Online bill payment fees

These are all fees that may seem small individually. But when they ding your account regularly, they can add up. This is especially harmful when applied to relatively small transactions and balance amounts.

ATM fees are no bargain either

There are over half a million ATMs in the United States. That makes them a convenient way to get your hands on your cash. However, they can also be very expensive.

You may pay twice if you use an ATM out of your bank’s network, paying the ATM operator and your own bank.

ATM operators tend to charge especially high fees in locations where they know customers have few other options, such as bars and airports. These high fees can represent an especially high percentage if you grab just a quick $20 bill or two.

Disappearing bank branches leave consumers with fewer options

One reason getting cash back with a debit card purchase or using an ATM is so popular is that, in many places, the neighborhood bank branch is a thing of the past.

According to the FDIC, as of June of 2023, there were 18,569 fewer bank branches in the United States than ten years earlier. Cash-back transactions or ATMs are an alternative for people in areas where bank branches have closed.

The cost of this falls disproportionately on poorer Americans. Impoverished communities are most likely to be underserved by nearby bank branches. Lower-income consumers are most likely to be accessing relatively small amounts of cash. As a result, cash-back and out-of-network ATM transaction fees would represent a higher percentage cost to those customers.

Tips for avoiding fees to access your money

Here are some ways you can reduce, or even eliminate, the impact of these fees on your budget:

• Be aware of who does and doesn’t charge these fees. The good news is that five of the eight retailers the CFPB examined did not charge fees on cash-back transactions.
• Re-examine how you use cash. Retail is becoming more and more cashless. As much as possible, try to find alternatives to using cash. Remember, though, prepaid cards are often not a cost-effective alternative.
• Avoid frequent small transactions. Most fees are a fixed dollar amount and comprise a smaller percentage if you can group some of your smaller transactions into one larger one.
• Plan ahead. Often, people use ATMs or cash-back transactions because they suddenly realize they’re running a little low on cash. Try to plan how much money you need and when you’ll need it, and don’t spend more than you planned.
• Look for banks with more convenient branches or ATM networks. Even if you can’t find a branch in your neighborhood, there are online banks that either have extensive ATM networks or reimburse ATM fees.

The above may all sound like small steps to take. However, as with the various fees discussed in this article, they can quickly add up to a meaningful amount of money. In this case though, that’s money that stays in your pocket.

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Disclaimer: The article and information provided here are for informational purposes only and is not intended as a substitute for professional advice.

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