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News roundup September 23, 2023

Weekly Personal Finance News Recap - SEPTEMBER 23, 2023

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Credit Sesame’s personal finance weekly news roundup September 23, 2023. Stories, news, politics and events impacting the personal finance sector during the last week.

  1. FTC says watch out for student loan scams as payments restart
  2. New study suggests pandemic credit score gains may be short-lived
  3. UAW strike carries new inflation threat
  4. Study determines financial cost of onset of dementia
  5. Mastercard projects holiday spending will keep pace with inflation
  6. Fed signals high-interest rates will last longer than initially thought
  7. Free credit reports to continue indefinitely
  8. Report on credit use reveals growing risk

1. FTC says watch out for student loan scams as payments restart

With payments on federal student loans scheduled to begin in October, the Federal Trade Commission warns that scammers are already trying to take advantage. Borrowers receive calls and texts offering assistance in lowering payments or getting loans forgiven. The real goal is often to get money for services of questionable value or obtain confidential financial information about the borrower. The FTC advises borrowers to 1) get information about their federal student loans directly from the government website at www.studentaid.gov; 2) never give out the log-in ID for your federal student loan account; 3) don’t trust people claiming to be from the Department of Education who contact you claiming to offer special access to repayment options or loan forgiveness. See article at CNBC.com.

2. New study suggests pandemic credit score gains may be short-lived

Average credit scores received a boost during the pandemic. This was especially true among poorer consumers. However, a new study by the Federal Reserve Bank of St. Louis found that the positive impact is short-lived. The study found that credit card delinquencies are rising, especially among people who received a credit score bump during the pandemic. This may be because that improvement was due to temporary government programs and social restrictions specific to the pandemic. Those conditions have changed, so poor credit habits are recurring. See synopsis at StLouisFed.org.

3. UAW strike carries new inflation threat

The United Auto Workers (UAW) union went on strike against the three major Detroit-based vehicle manufacturers. The UAW is seeking a generous package of wage hikes and benefits. Whatever the outcome, the strike may add to inflation pressures in the economy. The terms sought would drive up manufacturing costs for the automakers targeted by the strike. It could also carry over to other automakers and manufacturers. In addition, a prolonged strike could create supply shortages that drive up vehicle prices. See article at Yahoo.com.

4. Study determines financial cost of onset of dementia

A University of Washington Study found that net worth typically declines drastically in the years leading up to a person’s diagnosis of dementia. In the eight years before an eventual diagnosis of dementia, net worth declined by 52% among study participants. This contrasts with a decline in net worth of about 11% over the same period for people whose mental health remained stable. Researchers speculate that difficulty managing finances and susceptibility to scammers might have contributed to the more significant losses among the group diagnosed with dementia. However, they also concede that more significant healthcare costs may have also been a factor. See story at UPI.com.

5. Mastercard projects holiday spending will keep pace with inflation

The latest SpendingPulse report from Mastercard projects that retail spending this holiday season will be 3.7% higher than last year. Since that matches the inflation rate over the past year, it suggests no real growth in holiday spending. E-commerce is expected to grow by 6.7%, compared with just 2.9% for in-store sales. Electronic sales, with a 6.0% gain over last year, and restaurant spending, at a 5.4% increase, are expected to be the biggest gainers this year. See article at BusinessWire.com.

6. Fed signals high-interest rates will last longer than initially thought

The Federal Reserve had a mixed message for interest rate watchers after its meeting on September 20. On the one hand, the Fed held rates steady and projected where rates would be by the end of this year at 5.6%. That rate level suggests one more rate hike is in store for this year, with two more Fed meetings scheduled. However, the Fed’s latest set of economic projections indicates that it may take longer than previously thought for rates to come down. The previous forecast showed rates falling to 4.6% by the end of 2024 and 3.4% by the end of 2025. The latest set revises those forecasts upwards to 5.1% and 3.9%, respectively. See FOMC statement at FederalReserve.gov.

7. Free weekly credit reports to continue indefinitely

The three major credit bureaus, Equifax, Experian and TransUnion, announced they will continue providing weekly access to free credit reports. Before the pandemic, consumers were entitled to one free credit report per year from each of the three. During the pandemic, more frequent free access was granted so consumers could more closely monitor the impact of the pandemic on their finances. Now, the credit bureaus have extended that more regular access indefinitely. However, consumers should be aware that those credit reports do not include credit scores. See article at USAToday.com.

8. Report on credit use reveals growing risk

TransUnion’s Credit Industry Snapshot showed that the risk of consumer borrowing continued to grow in August. Delinquency rates, which measure the percentage of customers who are significantly late on their debt payments, rose across all major categories – credit cards, auto loans, mortgages and personal loans. Average balances also rose across those same categories. Disturbingly, average balances on credit cards and personal loans grew fastest among subprime borrowers with the highest delinquency rates. See report at TransUnion.com.

Weekly News Headlines from Credit Sesame

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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