Credit Sesame’s personal finance weekly news roundup July 22, 2023. Stories, news, politics and events impacting the personal finance sector during the last week.
- Credit burden grows heavier
- Credit applications fall as rejection rates soar
- Credit scores are losing the ground they gained from pandemic assistance
- Debt experiences are becoming widely split
- Survey shows optimism despite inflation concerns
- Retail sales still growing
- Home builders show cautious optimism
- Consumers feel the growing threat of fraud
1. Credit burden grows heavier
According to a report by TransUnion, average credit card balances grew last month. The average balance grew to $5,932, up 12.7% from a year ago. 30 and 60-day delinquency rates increased, though 90-day rates decreased slightly. Subprime customers are having an especially hard time, with 90-day delinquency rates at 18.31%, compared to just 2.02% for customers overall. That subprime delinquency rate is up by 20.4% from a year ago. Delinquency rates are also up for mortgages, auto loans and unsecured personal loans. See report at TransUnion.com.
2. Credit applications fall as rejection rates soar
The Federal Reserve Bank of New York reported that applications for new credit dropped to their lowest rate since October 2020. Meanwhile, the rejection rate for credit applicants rose to 21.8%. That’s up from 17.3% in February. The 21.8% rejection rate is the highest since June 2018. The rejection rate has risen especially fast for applicants with lower credit scores. According to the latest survey data, 53.1% of applicants with credit scores below 680 were rejected. See survey results at NewYorkFed.org.
3. Credit scores are losing the ground they gained from pandemic assistance
Credit scores enjoyed a temporary lift from the special government assistance checks issued during the pandemic. However, now that a couple of years have passed since those checks stopped, a major credit card issuer is seeing credit scores slide back down. Synchrony Bank, the largest provider of store-label credit cards, is seeing significant declines in credit scores, especially in lower credit tiers. The company’s Chief Financial Officer reports many scores that got up to the 680 to 690 range, falling back to around 620. See article at Yahoo.com.
4. Debt experiences are becoming widely split
A recent survey by Northwestern Mutual found Americans are taking their debt loads in two very different directions. The good news is that 4 in 10 Americans say their debt loads are close to the lowest they’ve ever been. However, 3 in 10 say their debt loads have never been higher. This indicates that national averages might not accurately reflect some important trends. While many are not experiencing problems with debt, a significant portion of the population is getting closer to the financial edge. See article at Morningstar.com.
5. Survey shows optimism despite inflation concerns
TransUnion’s quarterly Consumer Pulse survey reveals conflicting sentiments about the economy and personal finances. On the plus side, 57% of Americans are optimistic about the outlook for their personal finances over the next 12 months and 51% expect to get a pay raise within that period. This optimism was much more prevalent in younger respondents than in older ones. 73% of Gen Z and 69% of Millennials expressed optimism about their finances, compared to 51% of Gen Z and 41% of Baby Boomers. Inflation remains a widespread concern. 79% of respondents identified it as one of their top 3 financial worries. 46% of respondents said their incomes had not kept up with inflation. See report at TransUnion.com.
6. Retail sales still growing
The Census Bureau reported that retail and food service sales increased by 0.2% in June. The increase over the past year was 1.5%. These figures are consistent with the general slow but steady economic growth trend. See release at Census.gov.
7. Home builders show cautious optimism
According to the National Association of Home Builders/Wells Fargo Housing Market Index, home builder sentiment improved slightly in July. The index increased by 1 point during the month to 56. This is based on the attitude of home builders towards current and upcoming housing conditions. On the one hand, a lack of inventory of existing homes for sale has helped spur demand for new homes. However, home builders remain concerned about the elevated level of mortgage rates. See release at NAHB.org.
8. Consumers feel the growing threat of fraud
An Experian survey found that over half of consumers felt fraud was more of a threat to them personally now than it was a year ago. Consumer concerns include identity theft, stolen credit card information and online privacy. Consumer perceptions are not off base. Nearly 70% of businesses reported increased fraud losses in recent years. Most businesses plan to increase their fraud budgets by 8% to 19%. See news release at ExperianPLC.com.
