April 5, 2022
Paving the Payments Future
CFPB Report Shows Credit Card Late Fees Declining, Below Set Limits

The Consumer Financial Protection Bureau published on March 29 a report on credit card late fees where the regulator provided data about the amount of late fees charged by type of consumer. The main findings from the report are that credit card late fees have been in decline for the last few years and consumers with lower credit scores incurred more late fees than consumers with better scores. 

The CFPB launched a public consultation in January to analyze the markets for credit card fees and “junk fees” to identify potential distortions that may affect consumers and take action if necessary. This report shows that financial institutions are charging late fees, on average, below the limits established in the law, and the trend in the industry is to reduce or eliminate these fees. 

The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (“CARD Act”) required late fees be “reasonable and proportional” and the implementing regulation (Regulation Z) sets a “safe harbor” for specific fee amounts. As of 2021 the safe harbor values were $30 for a first late payment and $41 for each subsequent violation within the next six billing cycles. 

Have a tax law question?
Our #IRS Interactive Tax Assistant has answers.
Watch this short video to learn more:
Microlending: An Unsung Solution to Boost Engagement in Remote Workplaces?

Employee interaction and engagement can be difficult enough when everyone works in the same building. Factor in the shift to remote work and the challenges of the past two years, and it can feel like connecting with colleagues is a thing of the past — leaving many business leaders looking for new ways to bring everyone together.

BMC Software, for example, launched a set of Employee Resource Groups (ERGs) in 2021 to empower, celebrate, support and advocate for employees, their unique cultures, and their communities. Members of each ERG are united by shared experiences or interests, including: Abilities, Asian & Pacific Islander, Black @ BMC, Caregivers, Interfaith, LatinE, One Earth, Pride, Veterans, and Women in Technology and Business.

When BMC Software’s corporate social responsibility team, led by Wendy Rentschler, created the ERGs, they knew they needed to develop tangible ways for group members to get involved and make meaningful change in their areas of interest. 

WELCOME to the
U.S. Bank pilots real-time payments app for car sales

U.S. Bank is also working on new applications in the broker-dealer and residential real estate title markets, said Mike Jorgensen, head of emerging sales and strategy at the bank.

U.S. Bank is piloting a new real-time payments application, teaming with car sales company Lithia Motors to offer a speedier way for consumers to sell their used cars from the driveway of their homes, the companies said in a press release last month.

It’s the bank’s bid to advance its business of embedding payments processes in transactions in a way that’s simple to use and more efficient.

In the latest application, Medford, Oregon-based Lithia, an online car dealer for new and used vehicles, is working with the bank to allow for real-time payments from customers who sell their used cars to the dealership in an at-home transaction. It's part of Lithia's e-commerce Driveway strategy. 

House panel's overdraft hearing shows partisan divide

  • Lawmakers debated whether or not the government should intervene to curb the charging of overdraft fees, in a House Financial Services Committee hearing Thursday.
  • Legislators were split along partisan lines, with Democrats arguing the fees adversely affect low-income and nonwhite families, and Republicans contending the service poses a valuable alternative to more predatory forms of short-term lending. 
  • The panel's chair, Maxine Waters, D-CA, on Thursday unveiled a draft of legislation requiring banks with assets of $10 billion or more to offer customers and prospective customers accounts without charges for overdrafts or declined transactions, among other stipulations.

As some of the largest banks in the U.S. — Wells Fargo, Bank of America, Citi and Capital One among them — institute sweeping changes to their overdraft policies, lawmakers and advocates are divided as to whether the government should step in to curb the practice among industry holdouts.

Overdraft fees can price people out of banking

In 2019, banks and credit unions collected an estimated $15.5 billion from their customers through overdraft and non-sufficient funds fees. These fees are charged when the financial institution determines that a customer’s checking account does not have the funds to cover an expense. They are often assessed for reasons people do not expect or understand, chip away at needed income including public benefits, and take a heavy toll on families living paycheck to paycheck. And, overdraft fees can ultimately drive people out of banking altogether.

While a number of banks have started to lower these fees—and the total volume of fees has started to go down overall—overdraft practices still penalize customers with limited resources and create financial obstacles for them. CFPB research has found that people who pay more than 10 overdraft fees per year end up paying nearly three-quarters of all overdraft fees, and on average, these frequent overdrafters paid $380 in overdraft fees during the year. Similarly, CFPB interviews with consumers have shown that people were concerned that overdraft fees would make it more difficult to catch up and cover future expenses. In the words of one interview participant , the typical overdraft fee of $35 “is a lot of money for a person that doesn’t have any.”

Saving for retirement is the top financial priority for just 17% of adults, survey shows

Nearly 60% of respondents in a survey said they worry they’ll be unable to retire by age 65.
46% said they have less than $15,000 saved for their golden years.
The main financial goal of survey respondents this year is boosting nonretirement savings.

Saving for retirement appears to be taking a backseat to other financial considerations for many Americans right now.

Just 17% have made saving for their post-working years their top financial priority for 2022, according to First National Bank of Omaha’s latest financial wellness survey. This is despite 59% of respondents worrying that they won’t be able to retire by age 65.

HR leaders aren't aware of employees' financial stress

New report from San Francisco-based firm reveals that HR needs to improve when it comes to supporting financial wellness

More than half of employees (51%) were more stressed about their finances in 2021 than ever before.

With the worst of the COVID-19 pandemic seemingly in the rear view, employees are ready to face their challenges, but they aren’t sure where to begin and they aren’t getting the support they need from their employers. That’s the main takeaway from a new survey by San Francisco-based financial services firm SoFi at Work, which partnered with independent research firm Workplace Intelligence to poll 800 HR leaders and 800 full-time employees.

According to the survey, nearly 29% of employees struggle to afford basic expenses like rent, mortgage and/or food. The mounting stress, especially considering historic inflation and record-breaking gas prices, is taking its toll on morale and wellbeing. More than three quarters (76%) of workers said they think about their financial situation while at work. Even worse, they’re spending at least 14 hours per week actually dealing with financial issues and nine of those hours occur during the workday.

Postal Banking Act focuses on helping low-income families

U.S. Sen. Kirsten Gillibrand spoke Wednesday about the reintroduction of her Postal Banking Act, which would establish postal banking as a way to help low-income families.

It would gave people access to services such as savings and checking accounts, debit cards, low-fee ATMs, and more right at the post office.

Senator Gillibrand says New Yorkers without access to banks often turn to predatory lending companies, costing them more money than working with a bank.

"The best thing about postal banking is that we already know it works," she said. "U.S. Postal Service offered postal banking from 1911 to 1967, and it helped millions of families through the great Depression and two world wars. It was America's most successful experiment in financial inclusion."

Senator Gillibrand says postal banking could also help the USPS by generating billions of dollars in annual revenue.

100,000 student loan borrowers have had their debt forgiven under this policy fix

More than 100,000 borrowers will receive student debt forgiveness thanks to policy fixes to the public service loan forgiveness program.
The relief amounts to more than $6 billion, according to data released by the U.S. Department of Education.
Here’s how to make sure you benefit from the changes.

More than 100,000 borrowers will receive student debt forgiveness thanks to policy fixes made to the public service loan forgiveness program.

The relief amounts to more than $6 billion, according to new data released by the U.S. Department of Education.

Signed into law by then-President George W. Bush in 2007, the forgiveness program allows non-profit and government employees to have their federal student loans canceled after 10 years, or 120 payments. The Consumer Financial Protection Bureau estimates that one-quarter of American workers could be eligible.

Alternative Financial Service Providers Association
315 Tuscarora St., Lewiston, NY 14092