Experian Automotive, a division of Experian (one of the three major credit bureaus), released their fourth quarter 2011 automotive credit analysis. The overall dollar volume of loans at risk dropped to $18.5 billion, which was a $1.862 billion drop from fourth quarter 2010.  Total auto loan volume increased by $23.9 billion in fourth quarter 2011 to $658 billion.  There was continued improvement in this market – interest rates were the lowest since 2008; there was an increase in lending to consumers with lower scores; longer loan terms were offered; repossession rates dropped; and average charge-off rates dropped.

Interest rates, scores and loan amounts
Average interest rates for new vehicle loans were 4.52 percent in fourth quarter 2011, compared to 4.84 percent in fourth quarter 2010. Average interest rates for used vehicle loans were 8.68 percent in fourth quarter 2011, compared to 8.71 percent fourth quarter 2010. read more »

I think I could write about the Consumer Financial Protection Bureau (CFPB) every week.  This agency was set up to protect consumers against unfair practices by banks and nonbanks.  It has been given a nickname of the “consumer watchdog agency”.  It recently was looking at credit payment protection products and is now targeting overdraft fees charged by big banks.

This agency plans to ask the big banks how overdraft fees affect consumers, how overdraft fees are marketed and what information consumers receive.  The purpose is to determine if consumer laws are being violated; new rules and or law suits could result.

If you have overdraft protection on your checking account and you don’t have enough funds to cover the checks you have written, you are charged a fee per check that the bank covered for you. The average overdraft fee per check is $35.00, which is similar to a short term loan.

In 2010, the banks were prohibited from automatically signing up customers for overdraft programs for debit card and ATM transactions. This didn’t apply to checks, online bill payments or recurring debits and didn’t limit how much the banks could charge. As a result, the banks were very aggressive in marketing overdraft protection. read more »

The Consumer Financial Protection Bureau (CFPB) has targeted many industries since Richard Cordray was appointed the bureau’s director, such as banks, credit card issuers, mortgage companies, payday lenders, and private student lenders.   This agency was created to protect consumers. In February 2012, Cordray announced that he is targeting the consumer reporting and debt collection industries next. This was based upon receiving a considerable number of consumer complaints about their practices and the impact they have on millions of Americans.

CRAs

The Consumer Financial Protection Bureau is targeting consumer reporting agencies (CRAs) with at least $7 million in annual revenue, which includes 30 companies, representing 94 percent of the market and 7 percent of the companies.  The 30 include the three major consumer credit bureaus – Equifax, Experian and TransUnion. The main consumer complaints about them are the difficulty in updating reports and in correcting errors. read more »

When lenders review your credit report to make a decision whether to grant you credit, they purchase one credit report from one of the three credit reporting agencies (CRAs) – Equifax, Experian and TransUnion. Mortgage lenders are the exception and purchase reports from all three.  You don’t know which credit bureau they used, unless you are turned down for credit. You don’t have to be concerned about the credit bureau selection – the credit reports at the three bureaus are basically the same.

Same data contributors

The same companies contribute information to all three bureaus. The data contributors include banks, credit card companies, retailers, mortgage lenders, auto lenders, credit unions, personal finance companies, student lenders, collection agencies and public records. Public record data is supplied by one company, PACER, which provides this data to all three bureaus.  There can be slight variations, with data contributed by local or regional companies and in the companies that review your credit report and post an inquiry. read more »

The newly appointed director of the Consumer Financial Protection Bureau (CFPB), Richard Cordray, shared his top three top priorities with CNN Money.  The priorities are: “Know Before You Owe” campaign, policing non-banks and holding financial firms accountable. The U.S. Consumer Financial Protection Bureau was created to regulate consumer protection in the financial services industry.

1. “Know Before You Owe” Campaign

The purpose of the “Know Before You Owe” campaigns is to help consumers understand consumer debt products including all the terms of their mortgage, credit card and student loan agreements. By July 2012, the Consumer Financial Protection Bureau will complete a simplified federal read more »

FICO conducts a quarterly survey of U.S. bank risk professionals and the latest report covers fourth quarter 2011.  FICO conducted it with Professional Risk Managers’ International Association (PRMIA) and the Columbia Business School. The survey asked risk managers about consumer credit supply and demand, credit standards, delinquencies and other issues related to consumer credit.

The bankers expected delinquencies on student loans, mortgage and credit cards to increase and the global economy will put more pressure on the U.S. economy. Student loan delinquencies were the top concern and 67 percent expected them to continue to rise; which was a 40 percent increase from last quarter.   Student loan debt has surpassed credit card debt.  The next category, mortgage delinquencies, trailed behind at 47 percent predicting that delinquencies would continue to increase. read more »

If you live in South Carolina, you will receive your state tax refund this year on a Bank of America issued prepaid debit card, unless you opt out to receive it via a check or direct deposit.  According to this state, the reason was to save money, which could be as much as $1 million a year in printing costs.  Bank of America was selected, because they were the lowest bidder.  Don’t feel bad for Bank of America because they’ll make a great deal of money from this deal from the fees charged to the card users.

Fees charged

To avoid paying fees, you must take out the entire refund at the first visit to a bank or credit union that accepts Visa cards; otherwise, you are charged $10 each time you visit a teller. The ATM fee is $2.50 for machines outside of Bank of America network. The first replacement card is free and after that the cost is $5 each; express delivery is $15 per request. read more »

Consumer litigation lawsuit data is collected by WebRecon for creditor and collection firms.  They track cases on violations of four of the primary consumer credit related statutes: Fair Debt Collection Practices Act (FDCPA), Fair Credit Reporting Act (FCRA), Telephone Consumer Protection Act (TCPA) and Truth in Lending Act (TILA).

During 2011 the upward trend in consumer litigation lawsuits continued and broke records in the numbers of lawsuits filed. The lawsuits haven’t decreased since they were compiled in 2005.   The majority of the lawsuits are violations of the Fair Debt Collection Practices Act, which were 75 percent of the lawsuits in 2011. The total lawsuits filed in 2011 were 15,771,12,955 in 2010, 10,309 in 2009, 7,189 in 2008 and 5,719 in 2007  The increases were 22 percent, 26 percent, 43 percent, 26 percent and 23 percent respectively. read more »

In January 2012, Suze Orman launched a prepaid card that she created and spent $1 million of her own money to develop.  She worked with TransUnion, one of the three national credit reporting agencies, to develop it and the card is issued by Bankcorp Bank. The card is called the Approved Prepaid MasterCard®.

Card Features

The features of the card are:

A monthly fee of $3 includes up to four cards and all benefits when you use the card exactly how Suze tells you. (this is code for “it’ll cost you more if you use it some other way.”)

No activation fee is charged. read more »

Have you received a bill from your credit card company that lets you skip your minimum payment for that month as a gift for being such a good customer? This is the most common during the holiday season or right after.  Don’t fall for this.  You will still have to pay the interest charges on the unpaid balance. This information is usually in the “fine print”.

It may sound great right after you have made all those holiday purchases and have to start paying for them.  Keep in mind, you should not make the minimum payment anyway and this really isn’t a gift to you, but more money for the card issuer. The only benefit is you won’t have to pay the late fees on the amount.  Depending upon the amount you owe, the interest you pay can be high. read more »