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Personal Finance Weekly News Roundup October 1, 2022

Weekly Personal Finance News Recap - OCTOBER 1, 2022

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Credit Sesame’s personal finance weekly news roundup October 1, 2022. Stories, news, politics and events impacting the personal finance sector during the last week.

  1. Inflation is eating into household savings
  2. Debt represents a growing burden for Americans
  3. Peer-to-peer payments represent new fraud concerns
  4. Long-term fraud drains millions from credit card accounts
  5. Credit bureaus extend free access to credit reports
  6. Text messages are a new favorite of scammers
  7. Rent payments may now be reported to credit bureaus

1. Inflation is eating into household savings

A new survey shows that Americans are saving less and spending more of what savings they do have. The Forbes Advisor – Ipsos Consumer Confidence Tracker found that as of late September, 46% of survey respondents said they were saving and investing less than usual. Another 29% said they were drawing down their savings faster than usual. Both these numbers increased significantly in the last month. That is likely to be a reflection of the higher prices people are having to pay due to inflation. See full article at Forbes.com.

2. Debt represents a growing burden for Americans

The latest Federal Reserve figures on debt service ratios show that debt continues to levy an increasing price on household budgets. The debt service ratio represents the percentage of income that that monthly debt payments represent. That ratio has now grown for five straight months. When this ratio increases, it means monthly debt payments are growing faster than income. The steady growth of debt service ratios can be attributed to a combination of higher debt levels and rising interest rates. See full statistical release at FederalReserve.gov.

3. Peer-to-peer payments represent new fraud concerns

Congressional finance hearings questioned major bank CEOs over growing incidents of fraud involving the Zelle peer-to-peer payments system. Zelle is jointly owned by six of the large banks questioned at the hearings. Banking Regulation E requires banks to refund customers who have been defrauded by someone hacking into their account. However, that protection doesn’t extend to cases where the customer has been tricked into consenting to a fraudulent transfer. Some senators claimed that since banks profit from Zelle, they should be responsible for making sure it is safe. The CEO of JPMorgan retorted that if the customer has consented to the transfer, it would be difficult to distinguish fake claims of fraud from genuine ones. See full article at InsiderIntelligence.com.

4. Long-term fraud drains millions from credit card accounts

Cybersecurity firm ReasonLabs says it has uncovered a massive credit card fraud that has been operating since 2019. The scheme operates by buying stolen credit card information online. It then sets up phony subscriptions to repeatedly charge to those credit card accounts. This way, instead of attempting large, one-time raids on accounts that would raise red flags, the scammers can make recurring charges that might be small enough to go unnoticed. Fake dating sites and computer security services are often used as covers for the fake charges. Consumers can detect these charges if they regularly check each transaction on their credit card statements and report any they don’t recognize. See full article at BusinessInsider.com.

5. Credit bureaus extend free access to credit reports

The three major credit bureaus (Equifax, Experian and TransUnion) announced that they would continue to make weekly credit reports available for free through the end of 2023. By law, consumers are entitled to one free credit report per year from each of the three credit bureaus. However, when the pandemic shut down a large portion of the economy, the credit bureaus made free reports available on a weekly basis so consumers could keep a closer eye on their credit. The availability of free weekly reports was supposed to expire at the end of 2022, but now it has been extended for another year. See full announcement at ConsumerReports.org.

6. Text messages are a new favorite of scammers

With more consumers refusing to answer phone calls from unknown numbers, fake text messages have become a more frequent approach for fraud artists. These texts may claim to be from government agencies, cybersecurity companies, delivery services or financial institutions. Their object is to get you to click on infected links and/or disclose sensitive financial information. This approach is known as “smishing,” which is a mash-up of SMS (the technical format of text messages) and phishing (a well established technique for using emails to coax information out of people). According to RoboKiller, a service designed to reduce spam texts, last year U.S. phone users received 87 billion spam texts. That figure was up by 58% over the prior year. See full article on Yahoo.com.

7. Rent payments may now be reported to credit bureaus

In an effort to help more consumers build credit, Fannie Mae has announced a program enabling multifamily property landlords to report rent payment history to the three major credit bureaus. However, it remains to be seen whether the information reported will actually factor into credit scores or credit decisions. Because the program is designed to produce only positive payment histories, it may not include the information lenders need to make informed credit decisions. For example, participation on the part of renters is voluntary. Also, renters who miss a payment are automatically unenrolled from the program. In the absence of any negative history, it’s unclear whether lenders would find any value in the information. See full release at FannieMae.com.

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Richard Barrington
Financial analyst for Credit Sesame, Richard Barrington earned his Chartered Financial Analyst designation and worked for over thirty years in the financial industry. He graduated from St. John Fisher College and joined Manning & Napier Advisors. He worked his way up to become head of marketing and client service, an owner of the firm and a member of its governing executive committee. He left the investment business in 2006 to become a financial analyst and commentator with a focus on the impact of the economy on personal finances. In that role he has appeared on Fox Business News and NPR, and has been quoted by the Wall Street Journal, the New York Times, USA Today, CNBC and many other publications.

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