Credit Sesame’s personal finance news roundup January 18, 2025. Stories, news, politics and events impacting personal finance during the past week.
Mortgage rates surge past 7%
30-year mortgage rates rose by 11 basis points last week to 7.04%. This marks the first time they’ve been above 7% since May 2024. Both 30-year and 15-year mortgage rates have now risen for five consecutive weeks. Rates have been rising generally since the end of September 2024 due to growing inflation concerns. 30-year rates are now 0.96% higher than at the end of September. See details at FreddieMac.com.
Inflation continues to accelerate
The Consumer Price Index (CPI) rose by 0.4% in December. This is an increase over the 0.3% increase in November and the 0.2% increase in October. The inflation rate over the past 12 months was just 2.9%. In the final quarter of 2024, the CPI rose at an annual pace of nearly 3.9%. The one favorable aspect of the latest CPI report was that the core inflation was just 0.2% in December. Core inflation excludes the erratic food and energy sectors, thus capturing how broadly inflation has spread across the economy. See Consumer Price Index Summary at BLS.gov.
Retail sales showed solid growth in December 2024
US retail sales ended 2024 by continuing to grow, though slower than in November 2024. After seasonal adjustment, retail sales grew by 0.4%. That’s a solid growth rate, though lower than economists had predicted and slower than November’s surprisingly strong 0.8% growth. Overall, retail sales grew by 3.9% for the year. Continued economic growth combined with recent signs of rising inflation will likely discourage the Fed from making another rate cut at its next meeting later this month. See details at Reuters.com.
52% of Americans dissatisfied with savings
A new Yahoo Finance/Marist poll found that just 22% of respondents said they are completely satisfied with their savings. Another 26% say they are somewhat satisfied. In contrast, 35% report that they are very or completely dissatisfied with their savings, and another 17% say they are somewhat dissatisfied. Women are more dissatisfied with their savings than men, with 40% describing themselves as very or completely dissatisfied compared to 28% of men. 48% of survey respondents say they saved less in 2024 than the year before, compared with 21% who said they saved more. Even so, 44% say they expect to save more in 2025, with younger respondents being especially optimistic about this. See article at Yahoo.com.
PPI small rise in December contrasts with large rise for 2024
The Producer Price Index (PPI) rose by 0.2% in December. That’s a fairly mild increase, especially after a 0.4% increase in November. However, the 3.3% increase for 2024 was triple 2023’s figure. Core PPI, which excludes food and energy, was unchanged in December. However, a 3.5% increase in energy prices for the month drove the overall rise in PPI. See Producer Price Index Summary at BLS.gov.
CFPB highlights BNPL use and bad credit
The Consumer Financial Protection Bureau (CFPB) has released a report that finds the rapid growth of buy-now-pay-later (BNPL) purchases has been especially heavy among people with credit problems. From 2021 to 2022, BNPL usage increased from 17% of people with credit records to 21%. 63% of those who used BNPL had multiple loans of that type simultaneously. Two-thirds of BNPL loans went to people with poor credit scores. BNPL borrowers tended to have higher-than-average balances on other forms of unsecured debt, such as credit cards, personal loans, and student loans. See details at ConsumerFinance.gov.
Capital One accusation over $2 billion in interest
The CFPB has sued Capital One over what it claims are deceptive practices regarding high-yield savings accounts. According to the CFPB, Capital One described its 360 Savings account as having one of the “best” and “highest” interest rates available. However, Capital One kept rates on that account low even while rates generally rose considerably in 2022 and 2023. Meanwhile, Capital One launched a similarly-named 360 Performance Savings Account with much higher interest rates. The CFPB alleges that while Capital One featured the 360 Performance account more prominently in its marketing efforts, it discouraged its representatives from presenting information about the 360 Performance account to customers of the older 360 Savings account. This allowed Capital One to avoid paying those customers $2 billion in additional interest. See details at ConsumerFinance.gov.
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