March 22, 2022
Paving the Payments Future
Most medical debt will be wiped from consumer credit reports

  • A large number of U.S. consumers will have their medical debt wiped from their credit reports, the nation’s largest credit reporting agencies announced Friday.
  • Equifax, Experian and TransUnion said in a joint statement they would remove nearly 70% of medical collection debt accounts from consumer credit reports after conducting months of market research.
  • The changes will start to take place this summer.

A large number of U.S. consumers will have their medical debt wiped from their credit reports, the nation’s largest credit reporting agencies announced Friday.

Equifax, Experian and TransUnion said in a joint statement they would remove nearly 70% of medical collection debt accounts from consumer credit reports after conducting months of market research. The changes will start to take place this summer.

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The Fed is raising interest rates. What does that mean for borrowers and savers?

As the economy recovers from the global pandemic, American families and businesses are experiencing higher prices.

The Federal Reserve’s Federal Open Market Committee announced that it would seek to adjust interest rates higher to address inflation. The Committee also indicated that it will likely continue to raise interest rates in the future, based on market conditions. These interest rate adjustments by the Fed tend to flow through the economy in ways that may impact borrowers and savers.

The Consumer Financial Protection Bureau is the arm of the Federal Reserve System that is fully focused on consumers, ensuring that markets are fair, transparent, and competitive. Here’s what consumers should know:

1. The cost of some loans will go up.
The interest rate on existing credit products may go up if you have a variable rate. For example, many credit cards have variable rates. That means you’ll pay more on your card balances. In addition, banks frequently hike rates for new loans, as well, after the Fed raises rates.

Would-be home buyers may be forced to rent the American dream, rather than buy it

Every American is feeling the bite of inflation. Groceries cost more, gas costs more, everything seems to cost more. This past week, the Federal Reserve raised interest rates in an effort to tame the highest inflation in 40 years.

The cost of rent is really through the roof. Residential rents across the country went up an average of 15% last year – nearly twice the overall inflation rate. That's particularly painful for tenants, because according to Census Bureau data, they now often have to spend as much as half their total income on rent. 

Why are rents rising so much? Well, it turns out that big Wall Street firms are playing a role, but we found the fundamental problem was years in the making…and will take years to fix.

3 ways banking and finance could blur in 2022

Relationships have taken root where there was once overlap between banks and other financial service providers, writes Fabrizio Burlando, executive vice president of consulting at Mastercard.

The distinction between the terms banking and finance has never been clear cut. It needn’t be.

Banking services are specific kinds of financial services. Yet even the relatively safe definition of a bank is now evolving.

Take a bank as a licensed deposit-holding institution. Central bank digital currencies (CBDCs) are redefining the notion of a bank account. Definitions of banks as providers of payment services or credit aren’t much help, either. Regulations like the European Union’s Payment Services Directive (PSD) formally shook up the payments space a while ago, and many buy-now-pay-later (BNPL) providers now offer credit in all but name.

See How Tax Revenue Compares With Pre-COVID Trends

Tax Revenue in 21 States Outperformed Pre-Pandemic Growth

In a remarkably fast recession turnaround, tax revenue in nearly half of states has not only recouped its initial losses from the downturn, but also outperformed its pre-pandemic growth trends when receipts from the past two fiscal years are combined. Temporary factors played a major role in these unexpected gains, but they don’t fully explain a surge of budget surpluses.

During the eight quarters ending June 30, 2021—the past two budget years for most states—38 states accumulated as much or more tax revenue as they would have raised had collections held steady at pre-pandemic levels over the same period, after adjusting for inflation. This means that three-quarters of states took in enough tax dollars to offset their early 2020 pandemic losses by the start of this budget year.

On top of that, 21 of those states collected even higher tax receipts over the combined past two fiscal years than they would have raised if their pre-pandemic growth trends had continued, after adjusting for inflation, despite fallout from the coronavirus and a two-month recession. According to Pew estimates, Idaho led all states with 9.5% more cumulative tax revenue than it would have collected under its pre-pandemic growth rate. Illinois was second, at 4.7% above trend.

82% of Workers Say Employee Financial Wellness Programs Have Positive Impact — Why Don’t More Companies Offer Them?

More than eight in 10 U.S. employees say they’ve had a positive experience with financial wellness programs offered by their employers, yet only one in four employees currently have access to such programs, according to a new study.

The “2022 SmartDollar Employee Benefits Study from Ramsey Solutions,” based on a survey of 3,090 full-time employees conducted in January with Dynata, found that more than half of employees feel they can’t get ahead financially. A similar percentage worry about their finances daily, and about 70% are living paycheck to paycheck, according to Ramsey Solutions.

Financial wellness programs designed to teach employees about saving money, reducing debt and sticking to budgets have proven effective in helping pull workers out of the financial doldrums, the study said.

CFPB expands enforcement of unfair discrimination

The agency on Wednesday unveiled an updated exam manual for evaluating unfair practices in the world of consumer finance.

  • The Consumer Financial Protection Bureau (CFPB) is making changes to its supervisory operations surrounding fair lending laws and unfair, deceptive and abusive acts and practices (UDAAPs), in an effort to better combat discrimination in consumer finance, it announced in a press release Wednesday.
  • The CFPB will scrutinize banks’ and other companies' compliance with consumer protection rules to identify and root out discriminatory conduct that violates federal prohibitions against unfair practices, even in situations where fair lending laws may not apply. 
  • The agency on Wednesday published an updated exam manual, which spells out how discriminatory conduct by financial institutions can infringe upon the CFPB’s obligation to prevent unfair practices, without expressly violating fair lending laws. 

Women Have An Advantage In Savings And Investments, Author Says

Over the next eight years, an estimated $30 trillion will be amassed by women or passed to women through generational or spousal transfer. That whopping amount creates huge opportunities for financial planners but raises a plethora of issues for women who need to navigate their financial futures.

Suzanne Norman, financial literacy expert and fellow at the Alliance for Lifetime Income, recently authored a paper on women’s financial wellness that gives a largely, and perhaps surprisingly, upbeat assessment of the current state of the economic wherewithal of women. In a presentation on the paper before the National Association for Fixed Annuities, Norman highlighted how connecting traditional values such as a sense of purpose and maintaining strong relationships offers the best way to maintain physical health and emotional well-being. Maintaining physical and emotional health go a long way toward helping women achieve solid financial goals.

“Research tells us that women have a distinct advantage when it comes to savings and their investments,” she told the NAFA webinar attendees. “They tend to use a values approach, and they have their sense of life purpose, and an orientation of their goals and what the money is there for, versus having a lot of interest or focus on what is in the portfolio.”

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