August 26, 2021
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Debit Cards Dethrone Credit Cards (And Why That’s Likely to Stick)

While debit card transactions went down slightly, total dollar volume was up to record highs. Credit cards are far from out, especially reward cards, yet demographic preferences, altered spending patterns and new digital payment habits are bolstering the humble debit card.

It’s hard to deny that the pandemic era has proven to be the debit card’s big moment in the sun.

Debit card usage skyrocketed to unforeseen heights over the year and a half since the start of the Covid pandemic. Whether this is a permanent shift or merely a passing phased remains to be seen. Credit cards have been written off many times, but remain highly popular. Yet there are some clear signs that the balance has shifted, including rapid growth of mobile wallet use and person-to-person payment apps, both involving debit cards to a certain extent.

According to the 2021 Debit Issuer Study from PULSE, total debit card spending outstripped credit card spending for the first time ever in 2020. While debit card transactions went down slightly, total dollar volume was up. According to the report, based on research conducted by Oliver Wyman, this was most likely due to consumer habits during the lockdowns of the early pandemic, when people made less trips to stores but stocked up when they did go.

Paving the Payments Future
Can regulators pursue lenders for subprime auto defaults?

August 12, 2021 - Unlike mortgages, which under Dodd-Frank, now require an "ability-to-pay" assessment by lenders, there is no such standard for subprime auto loans. But with the political winds changing in Washington, will the Consumer Financial Protection Bureau (CFPB) or Congress try to craft something similar for auto loans? If this happens, will it entirely transform the landscape of subprime auto lending?

It would be an extreme shift for sure. But with a 2020 lawsuit against Credit Acceptance Corporation filed by the Massachusetts Attorney General which at its core focuses on issues surrounding borrowers' ability to repay their loans, it's not out of the question for "ability-to-pay" to become a new risk to consider in subprime auto lending.

Of course, auto loans and mortgages have different attributes, price points and risks. A key difference is in collateral recoveries and the ability to curtail loss severities. When mortgage lenders pursue remedies, the costs related to foreclosure can act as a deterrent. In contrast in auto lending, defaults can often be cured by quick non-judicial repossessions. It's a process that has short-cuts and cost-saving measures (starter interrupt devices, GPS tracking), and it can even be revenue generating for lenders who also operate as debt collectors. Even investors in subprime auto securitizations are well insulated by the deal structures.

Families are now receiving August #ChildTaxCredit payments. #IRS reminds families who don’t need to file tax returns to use the Non-filer Sign-up tool to register now.

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Topic No. 651 Notices – What to Do
New map: Is your state shrinking?

Fiscal 50: State Trends and Analysis

Population Growth Sputters in Midwestern, Eastern States
Over the past decade, population nationally grew at its slowest rate since the Great Depression, though only three states—Illinois, Mississippi, and West Virginia—lost residents. The slowdown was especially pronounced in the Northeast and Midwest, while the South and West were home to the fastest-growing states. Population trends are tied to states’ economies and government finances and are therefore useful for understanding both.

Results from the once-a-decade official count released this year show that growth was slower in the 2010s than in the 2000s in 38 states—and eight states experienced their most sluggish decade of growth ever.

Regional patterns followed historical trends. Nine of the 15 states with the slowest population growth were in the Northeast and Midwest, while 13 of the 15 states with the fastest population growth were in the South and West. For a half-century, people have gravitated toward Sun Belt states because of employment opportunities, lower costs of living, and warmer climates.

Young People Saved More for Retirement Because of the Pandemic

According to a new survey from Voya Financial, 72% of Voya retirement plan participants who made changes to their savings rate in the second quarter of 2021 upped their savings. These findings suggest that the economic woes of 2020 motivated people to focus more on saving.

And younger people are leading the way. Of those who altered their savings in April 2021, the vast majority of Gen Z (82%) and millennials (73%) boosted their savings rates. Though inspired by tremendous loss and economic upheaval, this more rigorous approach to retirement planning by saving is good news.

“As horrible as the pandemic has been for us all, it is refreshing to see the results of the survey that Americans are more disciplined when it comes to retirement savings and financial planning,” said Todd Bryant, partner and financial planner at Signature Wealth Advisors. “A lot of planning involves planning for the unknown [and] one of the greatest unknowns in our history is the Covid pandemic. As quickly as it came into our lives, our money can just as quickly leave our lives.”

Credit card limits are rising for most groups after stagnating during the pandemic

This post is the fourth in a series documenting trends in consumer credit outcomes during the COVID-19 pandemic. Last August, we published a report on early trends in consumer credit outcomes through June 2020, which found largely positive trends in those outcomes despite widespread economic hardship due to the pandemic.

In this post we examine whether credit has tightened on existing credit card accounts. Due to the large unemployment and income shocks that occurred as a result of the pandemic, households may have been less likely to repay their debt, and in turn, financial institutions may have begun limiting households’ access to credit as occurred during the Great Recession. In this post, we examine whether financial institutions cut limits or closed accounts during to the pandemic.

As in the other posts of this series, we use the Bureau’s Consumer Credit Panel (CCP), a de-identified sample of records from one of the three nationwide consumer reporting agencies. See the August report for more details on the methodology in this post.

Despite Increased Financial Awareness Due to Covid-19, Saving Continues to be a Major Challenge for Americans, TD Bank Survey Finds

More than 50% of the underbanked and unbanked communities are still saving less than $50 per month.

CHERRY HILL, N.J., Aug. 19, 2021 /PRNewswire/ -- TD Bank, America's Most Convenient Bank®, today released the results of its annual Money Matters survey, revealing a systemic savings issue among the underbanked and unbanked communities.

This year's survey, which targeted the underbanked and unbanked, found that despite a recovering economy, Americans are still struggling to save or maintain a strong financial standing, with only 11% of underbanked respondents having a savings account. The term unbanked describes individuals who do not use banks or credit unions for their financial transactions and do not have a checking nor savings account. Underbanked consumers have either a checking or savings account, but also rely heavily on alternative financial services.

More than half of underbanked and unbanked respondents (54% and 52%, respectively) said that they save/put aside less than $50 a month. Among this segment, one-half of the underbanked (48%) and unbanked (53%) do not have enough savings to cover three weeks of living expenses, with just one in five (21%) of those consumers able to fund $1,000 or more on short notice.

SBA forgiveness portal accepts more than 340K submissions, but many lenders opt out

The Small Business Administration’s new Paycheck Protection Program (PPP) loan forgiveness portal has seen more than 340,000 submissions in the first two weeks since its launch, the agency announced last week.

The SBA said it has received more than triple the number of submissions as the top 10 PPP lenders who are not participating in direct forgiveness. The agency said it is on pace to close out forgiveness for the 3.4 million direct forgiveness borrowers by the end of the year.

Lenders must opt in so borrowers can use the platform. But not all banks have. Bank of America, JPMorgan Chase and PNC, for example, have decided to stick with their own internal portals to process loan forgiveness, some have announced on their websites.

Why employers should sponsor financial benefits for hourly workers

Recruiting and retention have become do or die for many businesses in the wake of covid-19. Manufacturers may lose $1 trillion by 2030 due to labor shortfalls according to CNN. NPR reports that hospitality is losing workers as travel recovers. Restaurant employees are leaving at a record rate, citing low pay, lack of benefits, and rude customers.

Smart businesses hear what employees are really saying: They need more than a paycheck. Employees need help building and protecting their financial health in a world that keeps becoming more unpredictable—but predictably keeps asking them for more.

So, what’s the incentive for employers to pay for the financial benefits hourly workers need? A lot, it turns out. When employers help employees become financially resilient, it translates to a happier, more engaged workforce that sticks around longer and works harder. That’s exactly the competitive advantage employers need in the labor crunch.

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