ATTENTION:

a 'Consumer Financial Education' newsletter

We are excited to announce that starting in the 2nd quarter we will be producing a newsletter dedicated to providing financial education to unbanked and underbanked consumers. Our goal with this product is to empower individuals to take control of their financial future by providing them with the knowledge and tools they need to make informed decisions. The newsletter will cover a range of topics, including budgeting, saving, investing, and more. We believe that presenting this product to your customers will demonstrate your commitment to their financial success. We'll keep you apprised of our progress. We invite you to contact us with any questions.

dan@afspassociation.com

Student loan payments may be to blame for a spike in credit card delinquencies

A growing number of Americans are falling behind on their monthly credit card payments, and student loan repayments could be to blame, according to new data published by the Federal Reserve Bank of New York.

Credit card delinquencies tumbled in the early days of the pandemic as the government sent trillions in stimulus money to American homes and businesses. However, delinquencies have steadily ticked higher as a result of high inflation and interest rates, which have hindered Americans' ability to pay off their credit card balances each month.

As of December, about 3.1% of outstanding credit card debt was in some stage of delinquency, up from the 3% recorded the previous quarter but still down from the average 4.7% rate seen before the COVID-19 pandemic began, findings from the New York Fed show.

Read more at FOX BUSINESS

Have a tax law question?

Our #IRS Interactive Tax Assistant has answers.

Watch this short video to learn more:

https://youtu.be/y6HkaBkdKdU



The #IRS began accepting tax returns last Tuesday. Taxpayer help has expanded this year with more in-person hours, better service and improved tools. Read: https://ow.ly/bb7k50QvqRN

#IRS has kicked off the 2024 tax filing season. This year, the tax deadline is April 15, 2024, for most people. Gather all information you need to prepare a complete and accurate tax return before you file to reduce errors. See: https://ow.ly/bb7k50QvqRN

The 2024 tax filing season is now underway. #IRS reminds taxpayers the deadline to file a 2023 tax return and pay any tax owed is 4/15/24. Taxpayers living in Maine or Massachusetts have until 4/17/24, due to the Patriot’s Day and Emancipation Day holidays. https://ow.ly/bb7k50QvqRN

Jose L. Santiago

Public Affairs Specialist

Tax Outreach, Partnership and Education

Email: jose.l.santiago@irs.gov

Caps on Lending Rates Distort Consumer Credit Availability

On December 14, 2023, Sen. Jack Reed (D-R.I.), along with seventeen other Democrats, introduced the deceptively named Predatory Lending Elimination Act (S. 3549). The bill wrongly expands the 36 percent annual percentage rate (APR) cap that currently applies to active-duty members of the armed forces and their dependents. Under the bill, the rate cap would apply to all consumer lending offered by banks, credit unions, and nonbank financial companies. Products that are not subjected to the bill’s APR cap include residential mortgages, certain auto loans, and loans made by federal credit unions that are already subject to an 18 percent cap and a 28 percent cap for payday loan alternatives. The bill also empowers the Consumer Financial Protection Bureau (CFPB) by giving the agency essentially unlimited authority to draft rules—in consultation with the Department of Defense—to implement the provisions in the bill.  

This legislation is significantly flawed because rate caps limit the availability of credit. According to one paper studying Illinois’s 36 percent APR cap, the rate restriction “decreased the number of loans to subprime borrowers by 38 percent and increased the average loan size to subprime borrowers by 35 percent.” A survey discussed in the paper found that the “interest-rate cap worsened the financial well-being of many of [the small-dollar-credit] borrowers.”  

Read more at atr.org

New York Fed sees trouble in auto borrowing as overall debt level rises

(Reuters) -Overall borrowing levels in the U.S. rose modestly during the final three months of last year as more types of borrowing ran into trouble, especially on the auto front, even as overall difficulties remained below levels seen before the onset of the COVID-19 pandemic.

Total household debt climbed by $212 billion in the fourth quarter of 2023 to $17.5 trillion, the New York Federal Reserve said on Tuesday in its latest quarterly Household Debt and Credit Report.

Amid the rise in debt, delinquency rates and the transition into troubled status were both higher. The New York Fed said 3.1% of outstanding debt was in some type of delinquency, up one-tenth of a percentage point from the third quarter. But overall delinquency rates were 1.6 percentage points lower than in the last quarter of 2019 before the pandemic struck.

Read more at YAHOO FINANCE

Debanking a serious problem for marginalized people

NBC’s “Saturday Night Live” has justifiably taken heat after one of the show’s comedians asserted that “debanking” is not a real word and that former president Donald Trump made up the word in a recent campaign speech. The comedian, Colin Jost, aimed to undermine confidence in Trump’s mental acuity by using the term. Instead, Jost demonstrated his own ignorance.

Of course, anyone familiar with the financial services industry knows debanking is not a new term. It refers to the process of a bank closing all of a customer’s accounts. Hence, the customer is no longer able to conduct financial operations as part of the normal community of credit and banking consumers.

In general, debanking is a way that financial institutions can marginalize consumers and businesses. There are two broad reasons that financial institutions have debanked people and businesses.

Read more at BostonHerald

Chase Targets the Underbanked with New Branches

To boost financial inclusion and economic growth in underserved communities, Chase is opening 500 new branches, renovating roughly 1,700 existing ones, and hiring 3,500 employees over the next three years.

Chase is specifically targeting new markets that lack traditional banking services, such as rural and low-to-moderate income communities. It will also expand its presence in Boston, MA, Charlotte, NC, the greater Washington region, Minneapolis, MN, and Philadelphia, PA.

“We work with government and community leaders to help drive sustainable impact,” said Marianne Lake, CEO of Consumer & Community Banking, in a prepared statement. “We provide local expertise and support through our branches; we lend to local businesses of all sizes, create jobs and long-term careers, and finance vital amenities that are the cornerstone of healthy neighborhoods such as hospitals, schools, transportation and grocery stores.”

Read more at PaymentsJournal

Big banks have drastically cut overdraft fees, but customers still paid $2.2 billion last year

KEY POINTS

• The three biggest American retail banks collected 25% less overdraft revenue last year as the companies created new ways for customers to avoid the penalties.
• JPMorgan Chase, Wells Fargo and Bank of America reported a combined $2.2 billion in overdraft fees in 2023, roughly $700 million less than in 2022, according to regulatory filings.
• The industry is girding itself for a battle over overdraft fees after the Consumer Financial Protection Bureau proposed to limit charges to as little as $3 per transaction.

The three biggest American retail banks collected 25% less overdraft revenue last year as the companies, under pressure from regulators to cap the fees, created new ways for customers to avoid the penalties.

Read more at CNBC

Instant Debit Payments: The Next Phase of Real-Time Payments

Faster payment methods are experiencing a surge in popularity as more consumers want to send and receive payments in a faster way. Real-time and faster payment networks such as FedNow, RTP, Same Day ACH, and Zelle, a peer-to-peer payment platform, are seeing rises in transaction volume and value as consumers demand more speed and convenience with their payments.

FedNow, the long-awaited instant payment service built by the Federal Reserve Bank, was launched on July 20, 2023, to facilitate the sending and receiving of funds within seconds. You could say that this launch completes the missing puzzle to establish a nationwide real-time payments solution.

In a recent report, 2024 Trends & Predictions: Debit Payments, Elisa Tavilla, Director of Debit Payments at Javelin Strategy & Research, describes how merchants are navigating card fees, the future of debit payments, and what customers and merchants want.

Read more at PaymentsJournal

The human cost of cashless transactions

When it comes to poverty in Rochester, many of the available statistics are grim. One study shows that Rochester has the highest rate of extreme poverty of any comparably sized city in the United States. Extreme poverty is defined as below 50 percent of the poverty level. This same study also points out that Rochester is the fifth-poorest city among the top 75 metro areas nationwide. A 2022 report contends that nearly one-half of all children in Rochester live in poverty and that this number is the second-highest rate in the nation.

Given the unfortunate fact that many in the city we call home are poor, it is worth considering how poverty in Rochester and elsewhere is impacted by the move by increasing numbers of businesses to not accept cash for transactions, but instead to become cashless environments. Businesses, of course, have their reasons for not wanting to accept cash, but assisting poor people with transactions is typically not one of them.

Read more at ROCHESTER BEACON