February 10, 2022
Paving the Payments Future
America’s Largest Banks Make Major Overdraft Changes That Will Help Consumers

January 2022 turned into a watershed month for boosting consumer protections in the nation’s banking industry and making sure that more Americans can get access to safe and affordable credit. Over the course of just nine days, five of the country’s largest banks—Bank of America, Wells Fargo, U.S. Bank, Truist, and Regions Bank—announced that they are eliminating what are known as nonsufficient funds (NSF) fees and certain overdraft charges while adding some safeguards to their overdraft programs.

Historically, overdraft programs were marketed as helping people who live paycheck to paycheck prevent important transactions from being declined, but this high-cost option does not effectively address the needs of most consumers who need time to repay in installments. This is especially true for the millions who turn to overdraft as a way to borrow small amounts of money.

Encouragingly, U.S. Bank and Bank of America already offer affordable small loans, and the other three banks announced plans to launch such programs with limits of $500, $750, or $1,000, depending on the bank. The total savings to consumers from the overdraft changes at these five banks alone could top $2 billion annually. And borrowers’ annual savings from gaining access to affordable small loans—compared with the payday and other high-cost loans they often use today—could exceed that amount.

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If you can’t pay all your taxes by the April deadline, file a return anyway and pay what you can. Need extra time? Ask for a filing extension. Learn more by watching this video from the #IRS:
Bankruptcy filings continue to decline despite skyrocketing credit balances

Filing a bankruptcy petition is just one way to get out of debt

Bankruptcy filings declined when the coronavirus pandemic began in March 2020 as revolving credit balances sharply dwindled. Although revolving credit balances have abruptly risen in 2021, bankruptcy filings have continued to steadily fall.

Personal bankruptcy filings fell 29.1% for the year ending Sept. 30, according to the Administrative Office of the U.S. Courts. The annual Chapter 7 and Chapter 13 bankruptcy filings totaled 418,400 in 2021, compared with 590,170 in 2020.

There are several reasons why bankruptcy filings have fallen since the pandemic began. For one, consumers have been carrying less revolving credit card debt during this time. Increased government benefits like stimulus checks, foreclosure moratoriums and eviction bans may have also "eased financial pressures in many households," according to the U.S. Courts report. 

Nevada: After fits, starts, & industry pushback, state payday loan database finally operational

A statewide database to track short-term payday loans, which was supposed to be operational July 2020, is finally up and running a year-and-a-half later.

It took until Feb. 1 of this year for that system to go live, a year after lawmakers approved regulations governing the database on Dec. 28, 2020. 

After failing to grant a hearing for legislation in 2019 that proposed capping percentage rates for payday loans, which can be upwards of 600% in Nevada, lawmakers instead passed Senate Bill 201, which authorized a database to ensure loan companies don’t lend to borrowers who lack the means to repay.

In an email, Teri Williams, a spokeswoman for the Department of Business and Industry, said Monday that the long timeframe between the bill’s passage and implementation is due to a mixture of issues including the pandemic. 

Native American-Owned Banks by State

Native American-owned banks make up the smallest single group of minority depository institutions (MDI) in the United States (outside of the one multiracial American-owned bank).1 Even if you include all of the currently active Native American-owned credit unions, they still amount to fewer than all of the Black-owned financial institutions or Asian American-owned banks.2

Although they are small in number, many Native American-owned financial institutions are the result of tribes and tribal members building their own banks and credit unions to serve the needs of their local communities. As such, these institutions provide a critical lifeline to traditionally underbanked Native American communities.3

  • Including credit unions, there are 32 Native American-owned financial institutions in the United States as of today. Collectively, these institutions have approximately $6.96 billion in assets.
  • Of the 19 Native American or Native Alaskan American-owned banks, all have 51% or more of their voting stock owned by Native American and/or Native Alaskan American individuals.
  • Gateway First Bank is the largest Native American-owned bank in the United States, with $1.99 billion in total assets.

Big banks top fintechs in merchant satisfaction survey

  • Big banks are now matching or exceeding fintechs when it comes to small businesses' satisfaction with card payment processors, according to J.D. Power’s U.S. Merchant Services Satisfaction study, released Thursday.
  • Bank of America ranked No. 1 with 894 points on a 1,000-point scale. JPMorgan Chase's Chase Merchant Services came in second with 879 — narrowly edging out third-place Square, the digital payment system owned by Block, which garnered 878.
  • Industrywide efforts "to simplify payment processing fee structures, ramp up customer support and speed up payments have had positive effects on merchant services satisfaction," Paul McAdam, J.D. Power’s senior director of banking and payments intelligence, said in a news release.

Why State Leaders from Both Parties Are Cutting Taxes.

Both Republicans and Democrats are calling for state tax cuts this year, spurred by huge budget surpluses.

State leaders have so much money to spend this year—and are so eager to put dollars into people’s pockets as inflation rises—that even governors who’ve previously backed some tax increases, such as Illinois Democratic Gov. J.B. Pritzker, are now calling for tax breaks.

Pritzker wants to freeze the gas tax for a year, suspend grocery taxes for a year and give property owners a rebate up to $300. He said during his State of the State speech this month that the plan “can’t solve all the challenges of global inflation, but we can do our part to alleviate some pressure on working families.”

But the size and scope of this year’s tax changes will depend on the party in power in each state. Republicans tend to favor bigger, broader cuts, which they claim will turbocharge the economy. Democrats tend to favor more targeted tax cuts and credits aimed at middle-class or low-income people.

Why U.S. minority communities may turn to cryptocurrencies to pay their bills

Recent research finds that 24% of cryptocurrency owners are Hispanic, versus 16% of all U.S. adults.
One explanation for that high adoption is those users may be more likely to turn to cryptocurrencies for payments rather than for investments.
“There are communities out there that need better ways to pay,” one researcher says.

The stereotypical cryptocurrency owner is a high-earning white male. However, research finds that other demographics — particularly minorities — are also turning to bitcoin and other cryptocurrencies.

A recent survey conducted by Morning Consult found that while 69% of all U.S. adults are white, only 62% of cryptocurrency owners are.

FDIC Expands Campaign to Promote Bank Accounts

The FDIC today expanded its public awareness campaign about the benefits of opening a bank account. The campaign now targets the Los Angeles, Dallas and Detroit metro areas, following last year’s campaign launch in the Atlanta and Houston areas.

The FDIC’s #GetBanked campaign encourages consumers to consider opening a checking account through a series of English and Spanish-language digital, audio and video advertisements. The FDIC said it hopes to reach unbanked consumers especially during the tax filing season when they can benefit from early and direct deposit of their refunds. The campaign also includes resources to help consumers choose the best account to meet their needs and how to find low-cost bank accounts.

As the banking industry works to promote financial inclusion, the American Bankers Association continues to call on all banks to consider offering Bank On-certified accounts that offer low costs, no overdraft fees, robust transaction capabilities via a debit or prepaid card and bill pay capabilities.

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