Credit Sesame’s personal finance news roundup November 23, 2024. Stories, news, politics and events impacting personal finance during the past week.
Credit is harder to get in 2024
Rejection rates for consumer credit applications have continued their rising trend of recent years. 21.0% of applications for credit overall have been rejected in 2024. That’s up 0.9% from last year, and is considerably higher than the pre-pandemic level of 17.6%. This trend is consistent across various types of credit products. Rejection rates for credit cards, credit limit increases, mortgages and auto loans are all up since last year and higher than their pre-pandemic levels. Rejection levels have been rising particularly fast for people with credit scores below 680. See details at NewYorkFed.org.
Consumer credit delinquency rates rising
The percentage of consumers considered seriously delinquent on their loan and credit card payments continued to rise in October. Delinquency rates for auto loans, credit cards, mortgages and personal loans all rose during the month. Longer-term, serious delinquency rates have risen over the past year for auto loans, credit cards and mortgages, while they have eased for personal loans. In a sign that some consumers may be cutting back on their use of credit, the average credit card balance fell in October, though it’s up over the past year. Also, for subprime customers the average credit card balance rose last month. See details at TransUnion.com.
Over one-quarter of bank customers experienced fraud attempts
A new JD Power survey found that 29% of bank customers had found some type of fraud in their bank accounts within the past year. Consumers appreciate banks that help thwart such attempts. 92% continued to use the same bank if the situation was successfully resolved, and 46% had a higher opinion of their bank after a fraud incident. The study identified fraud prevention methods consumers could take, including transaction alerts, biometric identification and two-factor authentication. See article at Yahoo.com.
Execs claim swipe fees fund cybersecurity innovations
Executives from Visa and Mastercard were grilled in a Senate hearing about credit card swipe fees. These are the fees credit card companies charge for processing transactions. Some Senators claimed that the two companies use their combined 83% market share to charge excessively high fees. Those fees in turn are passed along to consumers and contribute to inflation. The credit card executives countered that besides paying for the cost of processing transactions, these fees also help finance technological advances and consumer fraud protection. Similar reductions in swipe fees previously have mainly been windfalls for merchants rather than providing lower prices to customers. See article at PYMNTS.com.
Millennials most optimistic about household finances
A TransUnion survey found that Millennials have a greater degree of optimism about their household finances than other generations of American adults. 65% of Millennials described themselves as optimistic about their household finances over the next 12 months. This narrowly edged out Gen Z, of whom 64% were optimistic. Baby Boomers were least optimistic, with only 50% expressing optimism. The optimism of Millennials may be traced to the fact that they were also the generation most likely to say they had received a pay raise over the past 12 months. All generations were more likely to say they expect to receive a pay raise over the next year than actually received one over the past year. Millennials are also most likely to be big spenders this holiday season. 33% of Millennials plan to spend more than $500 in the upcoming holiday shopping season. Gen Z has the most modest holiday shopping plans, with just 15% planning to spend more than $500. See details at TransUnion.com.
Access to banking increased significantly over the past decade
A recently-released FDIC study found that just 4.2% of American households are unbanked. That’s the lowest percentage since the FDIC began this study in 2009. Not having enough money to meet minimum balance requirements was the most commonly cited reason for not having a bank account. 23.3% of the unbanked said this is why they did not have an account. Not trusting banks was the second most commonly-cited reason, with 15.7% of the unbanked saying this was why they didn’t have an account. See article at FDIC.gov.
Mortgage rates rising again trend after 1-week pause
30-year mortgage rates rose by 6 basis points last week, to reach 6.84%. Those rates have now risen in 7 out of the last 8 weeks. In total, 30-year rates have climbed by 0.76% over that 8-week period. That puts 30-year rates 0.23% above where they began 2024. 15-year rates also rose last week, by 3 basis points. That was enough to put them back over the 6% mark, at 6.02%. See rate details at FreddieMac.com.
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