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Personal Finance Weekly News Roundup June 4, 2022

news roundup June 4

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Credit Sesame’s personal finance weekly news roundup June 4, 2022. Stories, news, politics and events impacting the personal finance sector during the last week.

  1. Equifax reports error affected some credit scores
  2. Fed finds access to banking still limited in some communities
  3. U.S. savings rate lowest since Great Recession
  4. Buy now pay later use doubled last year
  5. Homebuyer costs soared in April
  6. Job growth continues to be steady
  7. Visa study identifies common signs of fraudulent messages
  8. Euro zone inflation reaches record high
  9. Survey finds many older workers risking retirements on crypto
  10. Job openings ease in latest report

1. Equifax Reports Error Affected Some Credit Scores

Equifax has notified lenders that a calculation error may have affected some credit scores for mortgage borrowers. The credit bureau blamed the problem on a change to the computer program used to calculate the scores. Equifax estimates that the problem affected roughly 12% of credit scores, most by 10 points or less. The error was limited to the calculation of credit scores, and did not affect the underlying credit histories of consumers. The glitch would have affected credit scores calculated between March 16 and April 6 of this year. See full story at NationalMortgageProfessional.com.

2. Fed Finds Access to Banking Still Limited in Some Communities

A new study by the Federal Reserve Bank of Cleveland found that 5.4% of U.S. households were unbanked. That means no member of the household had a savings or checking account at a bank or credit union. The percentage of unbanked households has declined over time, but is still more of a problem than in most other developed countries. Lack of access to banking is especially common in low income households and those comprised of racial or ethnic minorities. Inability to meet the minimum balance requirement is the most commonly-cited reason for households lacking a bank account. See full report at ClevelandFed.org.

3. U.S. Savings Rate Lowest Since Great Recession

A Commerce Department report found that the U.S. personal savings rate is at its lowest level since 2008. The 4.4% personal savings rate is the lowest since the country was in the midst of the financial crisis. Since this low savings rate echoes the drop in personal savings rates seen in the Great Recession, it raises concern that the economy may be slipping into a new recession. Although the net worth of households has grown in recent years, much of that cushion has been wiped out be stock market declines so far in 2022. See article at Yahoo.com.

4. Buy Now Pay Later Use Doubled Last Year

The dollar volume of transactions in Buy Now Pay Later (BNPL) programs doubled in 2021. That volume increased from $60 billion worldwide to $120 billion. This rapid growth has attracted increased regulatory attention. Regulators have forced some BNPL providers to amend their terms and conditions. Also, critics have suggested that ads fail to adequately disclose the potential drawbacks of these programs. Those potential problems include high late fees and potential harm to credit scores. Recently, there’s been evidence that rising interest rates might pose another obstacle to this sector’s growth. See full article at GlobalData.com. 

5. Homebuyer Costs Soared in April

New data from the Mortgage Bankers Association (MBA) shows how quickly the cost of buying a home is rising. The MBA’s Purchase Applications Payment Index averages the total principal and interest amount of monthly payments for new mortgage applications. The latest release found that the average monthly payment rose by 8.8% in the month of April alone. That brought the average monthly principal and interest total to $1,889. April’s figure is $153 a month higher than March’s, and $569 higher than a year earlier. The rapid increases were attributed to both rising home prices and rising interest rates. See full release at MBA.com.

6. Job Growth Continues to be Steady

The Bureau of Labor Statistics’ Employment Situation summary showed continued solid job growth in May. The U.S. economy added a net total of 390,000 jobs during the month. This is roughly in line with the job gains of 398,000 in March and 436,000 in April. The unemployment rate remained at 3.6%. That’s barely higher than the rate of 3.5% just prior to the start of pandemic shutdowns. See full report at BLS.gov.

7. Visa Study Identifies Common Signs of Fraudulent Messages

Whether sent by e-mail, text or social media, fraudulent communications about credit cards have some common traits. A study by Visa advises consumers to look out for certain tell-tale signs. These include: misspellings, urls that don’t match the name of the firm supposedly sending the message, requests to click on a link, and urgent requests to address a problem. Some of the most frequently-used phrases in fake messages about credit cards are “click here,” “account information” and “gift card.” See full article at DailyRecord.co.uk.

8. Euro Zone Inflation Reaches Record High

The worldwide nature of inflation makes it more difficult for officials in the United States or anywhere else to address effectively. The latest reminder of inflation’s broad impact came from the European Central Bank, representing the 19 countries that use the euro currency. Euro zone inflation jumped from 7.4% in April to 8.1% in May. This heightens concerns that the European Central Bank’s plan for gradual interest rate increases won’t be enough to head off inflation. See full article at Reuters.com.

9. Survey Finds Many Older Workers Risking Retirements on Crypto

Though cryptocurrency investments are often associated with younger adults, a new survey found similar investment rates among older workers. A survey published by a crypto exchange called KuCoin found that 27% of Americans aged 18 to 60 had owned or traded a cryptocurrency within the past six months. The survey found a similar percentage (28%) of survey participants aged 50 and over were banking part of their retirement savings on crypto. This has sobering implications for retirement readiness since bitcoin has lost more than half its value in the past six months. See full article at Reuters.com.

10. Job Openings Ease in Latest Report

The June 1 Bureau of Labor Statistics report on on job openings and labor turnover showed that the number of job openings eased slightly in April. The month closed with 11.4 million jobs open, down from a record high of nearly 11.9 million at the end of March. A very high number of job openings suggests a shortage of available labor that can contribute to inflation. Read full report at BLS.gov.

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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