Smart Borrower Blog

Archive for the ‘Other Loans’ Category

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 »

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 »

New Credit Card Rule Could Keep Moms From Money

The Federal Reserve has added one more change to the credit card rules in a market already reeling from sweeping shifts mandated by Congress. The addition is this: credit card companies must consider only individual income, not household income, for each applicant. While this rule was most likely designed to target college students, it may inadvertently leave some stay-at-home moms out of the credit loop. Without their own income, many women may be restricted to either using pre-loaded credit cards or their husbands cards as authorized users. This situation may work for some, but could prove very troublesome for others.... more »

Tax Refund Loans Could Be a Thing of the Past

In past years, many nationally known tax preparation companies offered Refund Anticipation Loans, otherwise known as RALs to their customers. RALs allowed those who were receiving a tax return the ability to get an instant loan against their return within just a couple of days. The loans have been criticized and even called predatory by many consumer advocates over the years, since they targeted low income earners who were strapped for cash. While they do allow those who need cash quickly the ability to get it, they come at a very steep price tag, some with interest rates well over... more »

Study: South Claims the Lowest Average Credit Scores

A recent report from credit monitoring company Experian found that the average credit scores have been going down in the South, but have remained strong in the Midwest and West. Based on the VantageScores, the credit ratings created by the three major credit reporting bureaus, 22 of the 25 U.S. cities with the lowest scores during December 2010 were in the South. Texas itself had seven cities on that list including Harlingen, El Paso, Tyler, Waco, San Antonio, Dallas and Houston, in order from lowest to highest. The only non-southern areas to make the bottom 25 list were Las Vegas... more »

Study: New Laws Have Not Diminished Credit Availability

New regulations put in place for credit card companies last year are having a positive impact on consumers, according to a study from research group Center for Responsible Lending, and at the same time credit available has not shrunk as previously feared. The Credit Card Accountability Responsibility and Disclosure (CARD) act passed in 2009 was designed to protect consumers by creating more transparency in credit card company practices. For example, the Act that took effect about a year ago requires that companies give consumers notice 45 days before any big rate changes or penalty fees are added. It also forbids... more »

Americans Are Getting Fiscally Fit, and It Shows

It may have taken the Great Recession to break Americans out of their ‘pay as you go’ mentality, but they are starting to act more financially responsibly now. At least so say the latest reports from the Big Banks, according to a recent BusinessWeek article. Specifically, more American consumers are paying their bills on time, and defaulting less on credit cards and mortgages. Says BusinessWeek, “the reports are a sign that Americans are feeling more comfortable about their finances. Personal spending powers about 70 percent of the U.S. economy, and most economists say a fiscally fit consumer is critical to... more »

Consumer Borrowing Up in November

According to a report by the Federal Reserve released last week, during the month of November consumer credit rose for the second month in a row, up 0.7% from October. Leading the way was a jump in non-revolving credit, which rose by $5.6 billion to $1.61 trillion, mainly in the form of student loans. Another area that jumped was auto financing. Revolving credit was actually down 6.3% during the month of November, which includes mainly credit card debt. In October revolving credit debt totaled $800.7 billion and fell to $796.5 billion in November. Revolving credit has actually been dropping since... more »

Auto Lending Taking Top Priority for Banks

Toronto-Dominion Bank (TD) has agreed to buy car loan company Chrysler Financial Corp. for $6.3 billion in cash as of Tuesday. Why is this pertinent information? Because it signals just how important auto lending has become to bank portfolios these days. Auto loans make up roughly 30 percent of all consumer debt, according to TD. Only mortgage loans and credit card loans have larger market shares, but car loans tend to be much safer than the other two, making them very attractive to banks right now. For example, according to credit bureau TransUnion, auto loans in the third quarter had... more »

More Seniors Start the Golden Years in the Red

Most people probably think of retirement as a period of life when the financial obligations hanging over your head fall away. Unfortunately, that is not a very accurate picture for many seniors today. According to a new survey by nonprofit CESI Debt Solutions, many seniors (54 percent) start their retirement with debt and 96 percent of those with debt at retirement age refused to delay their exodus from the work place. And now, not only are more than half of seniors retiring with outstanding debts, but more and more are getting into so much debt during retirement that they won’t... more »