Smart Borrower Blog

Archive for May, 2011

Spending is On the Rise while Credit Card Defaults Continue to Fall

All but one major credit card issuer reported decreases in their customer default rates for April. This, coupled with a rise in credit card spending, indicates an improvement in overall financial health of the average consumer. Here’s the how the numbers fleshed out, according to the Associated Press: American Express had the lowest late payments rate at 1.7 percent, down from 1.8 percent in March. It’s charge-off rate (a measure of uncollectible card balances) fell to 3.5 percent from 3.7 percent. CitiGroup’s delinquency rate fell to 3.87 percent in April, down from 4.21 percent the month before. The bank’s charge-off... more »

Auto Loan Delinquencies Fall To Record Levels

While some areas of the economy are still on shaky ground, it appears that the auto loan industry is looking good. According to a recent report by TransUnion, auto loan delinquencies have plummeted to the lowest levels seen since reporting began 12 years ago back in 1999. Loans 60 days or more delinquent dropped to a rate of just .49% where a year ago the delinquency rate came in at .66%. An article on marketwire.com analyzed the TransUnion data and also found that auto loan originations were up 22% and the increase in auto loan demand had also risen 14%... more »

Will We See Higher Interest Rates This Year?

The minutes from the Federal Open Market Committee April 26 – 27 meeting were released today, revealing that Federal Reserve officials have started talking about an exit policy for its aggressive market support measures. That means interest rates are bound to rise, but how soon can we expect a jump in rates? “While the Fed said they’re tussling internally, they’re certainly not ready to step on the accelerator,” with regards to raising interest rates, said Jim Meyer, chief investment officer at Tower Bridge Advisors in a Wall Street Journal article. “They didn’t really accelerate any timetable. When the Fed says... more »

Sallie Mae Slashes Interest Rates

According to an article on businesswire.com Sallie Mae, the largest private student loan lender recently announced that they will be lowering their interest rates for next school year’s loans. The Smart Option Student loan will carry a lower interest rate and have a flexible pay back plan which will give students the option of paying back some of their loan while they are still in school. With higher tuition fees and less federal aid available, it gives students a means to come out of school with less debt. According to the article on businesswire.com, Sallie Mae’s Smart Option Student loan... more »

Big Banks Say $5 Billion Should Be Punishment Enough

After seven months of trying to work out a settlement for their “robo-signing” foreclosure scandals, the nation’s big banks are now offering $5 billion to the state attorneys general to close the matter. Last fall it was discovered that many banks were trying to fast-track the foreclosure process by skipping some of the necessary legal protocol and paperwork. This has led in some cases to wrongful evictions and all 50 states banded together to go after these banks, including Bank of American, JPMorgan Chase, Wells Fargo, and Citigroup. The states joined up with several government oversight agencies, among whom are... more »

Chrysler to Repay Government Loans in Full

Chrysler, the auto dealer many thought might not make it out of the recession, seems to finally be standing on near solid ground. During the first quarter of this year, Chrysler finally saw the first quarterly profit since 2006. Chrysler is the last of the three big auto makers to reach the profit margin. During the first quarter, profits came in at 116 million where last year during the same quarter, they lost 197 million. In light of the first quarter profits coupled with the fact that the company is on track for selling their goal of 2 million vehicles... more »

Big Banks are (Slowly) Opening the Lending Spigots

The latest survey from the Federal Reserve found that some banks are in fact starting to loosen their almost impossibly high lending standards as the economy starts to pick up. “The April survey indicated that, on net, bank lending standards and terms generally had eased somewhat further during the first quarter of this year,” the Fed wrote in its quarterly survey of senior loan officers. The impetus for this easing may have been an improvement in borrower credit-worthiness. The report found that 55 percent of domestic banks saw better credit quality among their large and middle-sized loan applicants. Thirty-five percent... more »

Student Loans in Crisis

The federal government is being faced with an increasingly high numbers of student loan defaults. Just last year student loan debt passed credit card debt, and recent reports indicate student loan debt could hit a trillion dollars by year’s end. Students today are graduating with more debt than ever and just last year the average graduate exited college with a bill of $24,000, up 6 percent from the year before. The increase of student loan debt is sparring higher default rates. With the sluggish economy and many college grads having difficulty finding gainful employment, debt is not being paid back.... more »