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AFSPA's 'Consumer Financial Education Newsletter'

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Bank groups sue the Consumer Financial Protection Bureau over a proposed cap on overdraft fees

Some banks and banking trade groups are suing the Consumer Financial Protection Bureau over a finalized rule that limits overdraft fees banks can charge.

The rule is part of President Joe Biden administration's campaign to reduce junk fees that hit consumers on everyday purchases, including banking services.

But banks argue that without overdraft protection, desperate consumers will instead lean on worse, unregulated services to ease their crunch.

Under the finalized rule from the Consumer Financial Protection Bureau that was announced on Thursday, banks will be able to choose from three options: they may charge a flat overdraft fee of $5, they may charge a fee that covers their costs and losses, or they may charge any fee so long as they disclose the terms of the overdraft loan the way they would for any other loan, typically expressed as an annual percentage rate, or APR.

Read more at The Associated Press

AI Hype in Banking Cools as Skepticism Grows

Bankers are starting to approach AI tools with a healthy dose of skepticism — with some experts suggesting the hype surrounding the technology is cooling. But AI tools still hold immense potential to shape the industry in the future.

Corporate leaders are placing big bets on AI. An overwhelming 99% of executives plan to invest in the technology within the next year, and 97% report feeling a strong sense of urgency to incorporate AI in business operations, according to a recent Slack survey.

AI has been a hot topic in banking for years. High-profile executives like JPMorgan’s Jamie Dimon and Goldman Sachs’ David Solomon have been outspoken about the technology’s potential for financial services. Many banks are already leveraging AI — or actively developing their own tools — to enhance everything from fraud detection to customer service.

Read more at The Financial Brand

Have a tax law question?

Our #IRS Interactive Tax Assistant has answers.

Watch this short video to learn more:

https://youtu.be/y6HkaBkdKdU

IRS warns of holiday scams

• Avoiding clicking on unknown links in emails or texts.
• Verifying the source of any unexpected messages.
• Using strong, unique passwords for your accounts.

IR-2024-300: IRS warns of holiday scams, encourages protecting sensitive

personal information as 9th annual National Tax Security Awareness Week starts

Jose L. Santiago

Public Affairs Specialist

Tax Outreach, Partnership and Education

Email: jose.l.santiago@irs.gov

Here's the median net worth of homeowners vs. renters

The Brief

Homeowners' median net worth is about $400,000, compared to just $10,400 for renters, according to a new study.

Homeownership is often viewed as a primary way to build wealth in the U.S., particularly for low- to moderate-income households.

However, the pathway to owning a home is becoming narrower with home prices near record highs.

U.S. renters have less than 3% of the wealth of homeowners, according to a new report that compares the financial well-being between the two. 

Buying vs renting: How the net worth compares

Homeowners' median net worth is about $400,000, compared to just $10,400 for renters, the report said. 

Read more at FOX5

CFPB Takes Action on Bait-and-Switch Credit Card Rewards Tactics: CFPB

Agency warns companies against illegal devaluation of rewards and other unlawful practices, highlights issues with retail credit cards, and launches a tool to help find cards with lower rates

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) announced major actions today to protect consumers from illegal credit card practices and help people save money on interest and fees. In a circular to other law enforcement agencies, the CFPB warned that some credit card companies operating rewards programs may be breaking the law, including by illegally devaluing rewards points and airline miles. The CFPB also published new research finding that retail credit cards—which typically offer store-specific rewards and loyalty programs—charge significantly higher interest rates than traditional cards. The CFPB further launched a new tool, Explore Credit Cards, to help consumers find the best credit card rates across both rewards cards and traditional cards. This first-of-its-kind tool enables consumers to compare more than 500 credit cards using unbiased, comprehensive data.

Read more at The Consumer Financial Protection Bureau (CFPB)

US cities with cheap housing that'll pay you to move there

With the cost of living at an all time high, certain US cities have decided to appeal to homeowners by offering a cash incentive to move there. 

And now that the election has concluded, more than 20 percent of Americans say they are more likely to move now than ever before, according to a recent Redfin study. 

Kansas, Oklahoma, Georgia, Alabama, and West Virginia are all taking part in the new trend, as some have directly focused on specific demographics. 

Cities like Tulsa, Columbus, multiple communities in West Virginia, and The Shoals - a group of cities in Alabama - are attempting to attract people who work from home, while offering them thousands of dollars for relocating there. 

Meanwhile, Kansas has launched its own initiative, the Choose Topeka program, which allows residents to receive up to $15,000 for simply relocating there, even if they don't work remotely. 

Read more at Daily Mail

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What 2024 Taught Us: Key Communication Trends for Banks and Fintechs in the New Year

As 2025 approaches, banks, fintech and finance firms must adapt their communication strategies to face new trends and challenges. Transparent, proactive communication across diverse channels will be key for building trust and thriving in the evolving market.

The world of banking, finance and fintech is highly dynamic, and as we come closer to crossing into the year 2025, the trends that shape these markets are on the minds of many. This year alone, we’ve seen plenty of shake-ups, both positive and not so much: regulatory crackdowns, surging AI innovations, cybercriminals stepping up their game and so on.

These developments have brought both opportunities and challenges for companies in this field, especially in how they present themselves, communicate with their audiences, and build trust. When money is involved, earning people’s confidence is of paramount importance, and modern market realities demand modern approaches to public relations, because the stakes are high. How you communicate can make or break your brand’s reputation.

Read more at The Financial Brand

'Rent-to-Own': A Bumpy Path to Homeownership

Can Lease-Purchase Arrangements Provide Another Pathway to Homeownership?

Maybe, but prospective buyers often navigate significant risks—and an unclear path—while renting

As policymakers look for ways to expand homeownership and help more homebuyers access credit, lease-purchase arrangements have received renewed attention not only from legislators, but from investors, prospective homebuyers, and nonprofit organizations. Proper use of these arrangements may help buyers who can’t quite qualify for a traditional mortgage or pull together the money they need for a down payment—but the approach can still pose risks for many potential purchasers.

A lease-purchase, also known as “rent-to-own” or “lease with option to purchase,” is a form of alternative home financing—a mechanism that potential homebuyers might consider when traditional credit is not immediately available to them.

Read more at Pew Research Center

What It Takes for Financial Websites to Punch Above Their Weight

The traditional banking website, focused merely on providing product information and digital services, is becoming obsolete in today's digital landscape. This article explores how banks and credit unions can revolutionize their online presence by embracing e-commerce principles, AI-driven discovery, and hyper-personalization. Through case studies like One Nevada Credit Union, which saw significant increases in deposits and mortgage applications after a website overhaul, the piece demonstrates how strategic digital transformation can drive substantial business growth while remaining accessible to institutions of all sizes.

If you’re a community bank or credit union leader, you might be forgiven for believing that your institution’s website is getting the job done — a spiffy, well-branded workhorse that gives customers and members efficient access to digital banking services and product information.

On the other hand, if you want to remain competitive, maybe you shouldn’t let yourself off the hook too easily.

Read more at The Financial Brand

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