| Quote of the Month:
"As of the end of the 51st week of 2001 (December 22) 1,436,813 personal bankruptcies had been filed in the U.S. since the beginning of the year, eclipsing the previous annual record of 1,378,000 personal filings set in 1998."
|
January 2002
 |
| Small Business Optimism Rises for New Year |
| Judging from the opinions of small business owners, this recession will be short. A November survey of members of the National Federation of Independent Business (NFIB) found that, net of pessimists, 30 percent of the owners expected the economy to be stronger in 6 months, the highest reading on this question since 1992.
|
| Bankruptcies Accelerate Through End of 2001
|
| As of the end of the 51st week of 2001 (December 22) 1,436,813 personal bankruptcies had been filed in the U.S. since the beginning of the year, eclipsing the previous annual record of 1,378,000 personal filings set in 1998. The 2001 year-to-date total through week 51 was 20.5 percent above the same period in 2000, according to Visa's Bankruptcy Notification Service. |
| Credit Card Chargeoffs Continue to Rise
|
| The year-over-year deterioration in credit card performance continues to worsen. According to Standard and Poor's Credit Card Quality Indexes, the chargeoff rate on its pool of $373 billion in credit card receivables in October 2001 was 6.8 percent, up 140 basis points from a year earlier. |
| Home Mortgage Delinquencies Continue to Rise |
| The Mortgage Bankers Association reported that the percentage of homeowners delinquent on their mortgages rose in the third quarter of 2001 to 4.87 percent, up 24 basis points from the second quarter, and the highest level since the fourth quarter of 1991. |
 |
| Smart Card for Pretax Travel |
| Millions of Americans use mass transportation to commute to work. In 1998, Congress decided to help those Americans pay for their commute—and thereby support mass transportation and possibly win a few votes as well—by allowing employees to set aside pre-tax dollars for commuting costs. |
| Citi Smart Card |
| Citibank and MasterCard have joined to issue the Citi Smart Card. According to CardTrak, consumers will be offered a free smart card reader and a free electronic wallet. |
| Checkless Bank Accounts |
| The First Tennessee bank offers its employees check-less bank accounts that may be accessed by either a VISA debit card or the bank's Money Belt ATM card. The arrangement enables employers to avoid cutting payroll checks or making other arrangements for employees without bank accounts. |
| Debit Card Use Grows vs. Credit Card Use |
| According to an article in the Wall Street Journal by Calmetta Coleman, consumers are increasing their use of debit cards relative to credit cards. A recent survey by the American Bankers Association and Dove Consulting show the distribution of in-store transactions in 1999 and the first half of 2001. |
| Reduced Check Volume |
| The Federal Reserve has released a study showing that electronic-payments, such as debit cards and credit cards, have grown significantly over the past two decades. CardLine reports that check payments fell from 85 percent of all noncash payments in 1979 to about 60 percent today. |
| Password Please |
| In his article in a recent New York Times, Saul Hansell explains why Visa is proposing to require that consumers ultimately use their passwords when using their debit cards to order goods and services online. Presently, somebody who obtains your credit card number from a discarded receipt can use that number to order items on line without providing a password. |
| Check Your Credit Report |
| Equifax is offering a "credit watch" service to consumers. Each evening it will check your credit report to see if there has been any unauthorized activity. |
|
|
 |
| Delinquencies at Commercial Banks |
| The Federal Deposit Insurance Corporation has released data on delinquencies on various types of consumer credit at insured commercial banks for the third quarter of 2001, classified by size of bank. We compare the current delinquency rates to those previously published in Spotlight on Finance for the first quarter of 2001. |
| Those Bad Bankers |
| It is useful to know what critics of banks are saying these days. The latest press release from the Public Interest Research Group (PIRG) in Washington, D.C. has the report headed: "Big Banks, Bigger Fees." |
| So, You Think You Have Problems |
| National Pawnbroker reports a problem that most of our readers don't face. Southern Pawn in Largo, FL took a computer in pawn and later sold it when the loan was not paid. Later, it received a letter from Microsoft: "Microsoft has received a report that you may have distributed illegal and/or unlicensed Microsoft software." |
| Fannie and Freddie Raise Mortgage Limits |
| Effective January 1, 2002, Fannie Mae and Freddie Mac increased the size of home mortgages that they will buy by 9.3 percent, up to $300,700 from the previous limit of $275,000. In Alaska and Hawaii the limit will increase to $451,050 from $412,599. |
 |
| Federal Reserve Broadens HOEPA Coverage of Mortgage Loans |
| In a long-anticipated move, the Federal Reserve Board voted unanimously in mid December to expand the number of loans covered by the Home Ownership and Equity Protection Act (HOEPA) of 1994. HOEPA is intended to reduce the incidence of predatory mortgage lending in which homeowners are victimized by mortgage contracts that contain excessive rates and fees or onerous contractual features. |
| Restrict Refinancing of Home Mortgages? |
| A few years ago, the government and some private organizations initiated programs to enable low-income consumers to finance their purchases of homes. To make the homes affordable, mortgage interest rates were fixed as low as zero or two percent. Now, these same consumers are refinancing their mortgages at current rates, which are low historically, but certainly above two percent. |
|
