Credit Sesame’s personal finance weekly news roundup October 15, 2022. Stories, news, politics and events impacting the personal finance sector during the last week.
- New cryptocurrency theft nets $566 million
- New Fed report shows soaring credit card debt and cost
- Americans still on a post-pandemic spending spree
- Mortgage rates jump to highest level since 2002
- Mortgage approval is getting tougher
- Stolen credit card data leaked online
- Inflation bounced back in September
- Survey shows consumers expect inflation to ease
- Attempt to backdoor credit card fee legislation fails
1. New cryptocurrency theft nets $566 million
The largest cryptocurrency exchange platform has been victimized by a hack that resulted in the theft of $566 million worth of digital tokens in the currency. The theft occurred on the widely-used Binance platform. The currency affected was Binance Coin, though the theft sent shock waves through the entire cryptocurrency industry. Those currencies were already experiencing a rough year. Bitcoin, the largest cryptocurrency is down by 72% from its all-time high. Ether, the second-largest cryptocurrency is down by 73% from its high-water mark. The latest hack is disturbing for an industry that has lost an estimated $2.5 billion to hackers this year. These high-profile thefts are putting a spotlight on the vulnerability of the technology behind cryptocurrency. See full article at TheStreet.com.
2. New Fed report shows soaring credit card debt and cost
The Federal Reserve’s latest update to its Consumer Credit report show credit card debt and its cost have reached new highs. Total credit card debt has reached an all-time high of $1.15 trillion. Consumers are picking the wrong time to take on this record credit card debt because interest rates charged to credit card accounts jumped by 1.78% in the latest quarter. That’s the biggest-ever quarterly increase in credit card rates. It brings the average rate to 18.43% – also an all-time high. As a consequence of the record-setting amount of debt and level of interest rates, Americans are now paying more than $200 billion a year in credit card interest for the first time. See data at FederalReserve.gov.
3. Americans still on a post-pandemic spending spree
The spending habits of Americans show how people making up for lost time by getting out of the house. According to the latest MasterCard SpendingPulse report, in-store sales grew by 11.1% over the past year. That exceeds the growth rate on eCommerce sales. Travel has shown even stronger growth. Air travel purchases are up by 56.4% over the past year. Lodging is up by 38.1%. Spending on both air travel and lodging has now surpassed its pre-pandemic level. See article at Pyments.com.
4. Mortgage rates jump to highest level since 2002
After a slight decline the previous week, mortgage rates resumed their steep climb. 30-year mortgage rates rose by about a quarter of a percent, to 6.92%. That’s the highest level for 30-year rates since April of 2002. 30-year rates have now risen by a total of 3.81% so far this year. Rates on adjustable-rate-mortgages, which have been growing in popularity this year, jumped by nearly half a percentage point last week. See details at FreddieMac.com.
5. Mortgage approval is getting tougher
Not only are mortgages getting more expensive, but it’s getting harder to get approved for one. The Mortgage Bankers Association’s Mortgage Credit Availability Index (MCAI) measures lending standards for mortgages. When the index falls, it means mortgages are becoming less available due to tightening credit standards. The index fell by 5.4% in September, indicating that lenders are applying stricter standards to mortgage applications. The latest decline in this index is part of a longer-term trend that has brought mortgage availability to its lowest level since March of 2013. See full release at MBA.org.
6. Stolen credit card details leaked online
Stolen information on over one million credit cards was recently leaked online. That makes the information freely available to thieves who want to attempt to use those credit cards illegally. Most of the card details were stolen from credit card skimmers and malware on point-of-sale terminals. With so much credit card information being made especially vulnerable, consumers should consider taking steps to protect themselves such as checking each individual credit card transaction and signing up for credit monitoring. See full article at MSN.com.
7. Inflation bounced back in September
After being relatively tame in July and August, the inflation rate rose in September, according to the latest Consumer Price Index (CPI) report. The CPI rose by 0.4% last month. Previously, it had risen by just 0.1% in August and was virtually unchanged in July. Core inflation, which includes items other than food and energy, was 0.6% in September. Core inflation is considered to be an indication of how widely inflation has spread throughout the economy. See full report at BLS.gov.
8. Survey shows consumers expect inflation to ease
Despite persistent inflation, a new government survey shows consumers expect inflation to ease in the year ahead. The Federal Reserve Bank of New York’s September, 2022 Survey of Consumer Expectations showed that people expect a lower inflation rate over the next year. The average inflation expectation for the next 12 months was 5.4%. The survey also found that consumers expect their earnings growth to slow over the next year. See full release at NewYorkFed.org.
9. Attempt to backdoor credit card fee legislation fails
An attempt to slip the Credit Card Competition Act in through the backdoor failed this week. That leaves the future of the Act uncertain. This law has been the subject of an intense tug of war between retail and banking lobbyists. Retail lobbyists claim that by potentially reducing the fees charged to retailers for credit card transactions, the law could reduce the prices paid by consumers. Bank lobbyists point out that only a negligible amount of savings from an earlier bill limiting debit card transaction fees have been passed along to consumers by retailers. Two senators supporting the legislation tried to tack it on to a defense appropriations bill, but this attempt was denied. See full article at PYMNTS.com.