Smart Borrower Blog

Archive for the ‘Personal Borrowing’ Category

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 »

US Consumers Borrow More In February

According to an article in the Wall Street Journal, a Federal Reserve report states for the fifth month in a row US consumer borrowing was up, rising a total of 3.8 percent to 7.62 billion during the month of February. Economists had predicted a rise but, only of about 5 billion. February’s gain was the largest seen since the economic downfall in 2008. While the gain is definitely promising, not all the gain is necessarily positive. A good chunk of the lending came in the form of federally funded college student loans, which is not an area that necessarily contributes to... more »

New Debit Card Fee Regulations Spur Lawsuit

Federal Reserve Chairman Ben Bernanke and the Fed’s Board of Governors are being sued over new debit card fee regulations passed by Congress. TCF National Bank, backed in Minnesota, filed the suit claiming the rules, which limit the amount of money banks can charge for card transactions, are unconstitutional. “The purpose of sound regulation is to introduce or advance competition, not to destroy it,” TCF’s lawyers wrote in a court filing, as quoted in an article on Businessweek.com. The rule, called the Durbin Amendment, is part of the Frank-Dodd financial overhaul law. It dramatically reduces the fee a bank can charge... more »

Controversial Car-Title Lending Bill Moves Forward in VA

The Virginia House passed a bill Monday that has tweaked many noses, including those of neighboring states. The bill, which now must go back to the state Senate for a vote, would allow car-title lenders to make loans to out-of-state drivers. The problem is that many of the surrounding states have banned this type of lending, because of its so-called predatory nature. Car-title lenders operate by lending quick money to individuals who use their cars as collateral. Virginia itself has had a ban on these loans to out of state residents for the past 6-months, but this bill, which is... 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 »

Personal Loans: Regaining Popularity

Up until last year, personal loans were all but dead. Banks just weren’t promoting them when money was so easy to come by with home refinances, credit cards, or small business loans. Now that most of those sources have dried up for many people, personal loans are becoming an important source of funds for consumers. According to CBS’ MoneyWatch, many of the big banks are now advertising the personal loan again. Wells Fargo is offering $3,000 to $100,000 with a loan term of up to five years, while Citibank allows loans from $300 to $7,500. Discover Financial and CapitalOne are... more »

The Banking Crisis – Two Years Later

As we wind down September, 2010, I am reminded of the second anniversary of the darkest days of modern commercial banking. It is still painful for me to recall going to my bank job each day in September and October 2008 wondering what else in the world could go wrong. Just recount what happened over the course of roughly forty-five days: US Treasury placed Fannie Mae and Freddie Mac into receivership Lehman Bros. filed the largest bankruptcy in history for $639 billion Merrill Lynch was acquired by Bank of America in a controversial transaction Federal Reserve paid $122 billion for... more »

Consumers Choose Cash Again

For the sixth straight month, the amount of consumer credit debt decreased in July. Credit, including things like credit cards and auto loans, fell 1.8 percent or $1.02 billion, down to a total of $3.63 billion in outstanding debt, according to the Federal Reserve. This also marks the 17th decrease in 18 months. The same old issues seem to be responsible for the drop. “On the demand side, households continue to show signs of caution as they face high unemployment, minimal wage increases and poor housing conditions,” said Gregory Daco, senior U.S. economist at IHS Global Insight as quoted in... more »

Consumer Credit Drops Again in June

According to the Feds Credit report, borrowing once again dropped in the month of June. This will mark the 16th drop over the last 17 months. While this is bleak news for the struggling economy the drop is actually much lower than earlier predicted at 1.3 billion. In comparison, May’s drop was much higher coming in at 5.3 billion. This does however mark the 21st straight month of less credit card use by Americans. It is clear from looking at the figures that Americans are being cautious. While many are still out of work others fear that the economy has... more »