Credit Sesame’s personal finance news roundup March 9, 2024. Stories, news, politics and events impacting personal finance during the past week.

  1. Job growth continues, with some question marks
  2. Credit card delinquencies and net losses close to pre-pandemic levels
  3. Government finalizes plan to cap credit card late fees at $8
  4. American Express sounds alarm about third-party data breach
  5. Job openings now lowest since 2021
  6. FICO scores declined in late 2023
  7. Bank profits take a hit in the aftermath of last year’s failures
  8. Mortgage rates dip for the first time in five weeks

Job growth continues, with some question marks

The US economy added 275,000 new jobs in February 2024. That was the 38th consecutive month of job growth and is above the average monthly job gain of 230,000 over the past year. However, there were significant negative revisions in initial estimates for job growth in December and January. IJobgrowth for those two months was 167,000 lower than initially thought. See Employment Situation Summary at BLS.gov.  

Credit card delinquencies and net losses close to pre-pandemic levels

An S&P Global report on six major credit card issuers found that late payment rates are close to their pre-pandemic level, and net loss rates are now above that level. Net loss rates measure the portion of money owed that credit card companies have been unable to collect. 30-day delinquency rates rose to 1.41% in January. This is up from 1.05% a year ago and is approaching its pre-pandemic rate of 1.50%. Capital One has the highest delinquency rate among the major credit card issuers, at 2.03%. Net loss rates are now at 2.07%, up from 1.30% a year ago. This rate is now higher than the pre-pandemic level of 2.05%. Consumer credit generally improved in the early stages of the pandemic due to government assistance and reduced spending. However, this improvement has been largely erased over the past few years. See report at SPGlobal.com.

Government finalizes plan to cap credit card late fees at $8

The Consumer Financial Protection Bureau (CFPB) has announced that it will limit credit card late fees to $8 per occurrence. Currently, the average is around $32. The CFPB cites the rise in the total amount of late fees charged as evidence that credit card companies are using these fees as a revenue source rather than to cover the cost of late payments. Companies will be able to charge more than $8 if a credit card company can demonstrate that late payments cost them more. According to the CFPB, 45 million people incur late fees annually. Some of these late payers may lose access to credit cards if issuers find that chronic late payers are no longer financially attractive. See news release at ConsumerFinance.gov.

American Express sounds alarm about third-party data breach

Credit card giant American Express has informed customers and regulators that some sensitive information has been compromised. American Express specified that its data systems were not breached. Instead, it had become aware that a third-party vendor used by many merchants to process credit card transactions had suffered a data breach. As a result, details about American Express accounts may have been exposed. The information that may be at risk includes customer names, account numbers, and expiration dates. See story at PYMNTS.com.

Job openings now lowest since 2021

The Bureau of Labor Statistics reported fewer job openings in January 2024 than at any time since March of 2021. There were 8.86 million jobs available as of January 31. That was a slight decrease from 8.89 million jobs available at the end of December. The total number of job openings has generally declined for nearly two years. However, there are still more jobs available than there are people looking for work. That’s a departure from the historical norm. A decline in job openings is good news for the battle against inflation. In recent years, a tight labor market has fueled wage inflation. On the other hand, it does add to recent concerns that the economic expansion may be losing steam. See article at Yahoo.com.

FICO scores declined in late 2023

The average FICO score for US consumers fell slightly in the most recent measurement. As of October 2023, the average FICO score was 717. This was down by 1 point from the previous measurement as of July 2023. This marked the first time in a decade that the average US FICO score declined. On a positive note, FICO scores are still 27 points higher than ten years ago. Reasons given for the decline in the average FICO score were the rising number of missed payments and higher debt levels. See details at FICO.com.

Bank profits take a hit in the aftermath of last year’s failures

The FDIC reported that profits in the banking sector were down by 43.9% in the fourth quarter of last year. Most of the decline was due to non-recurring expenses incurred by banks. To a large extent, these non-recurring expenses consisted of special fees to replenish the FDIC’s deposit insurance fund. That fund was depleted by a spate of sizable bank failures last year. See article at Yahoo.com.

Mortgage rates dip for the first time in five weeks

30-year mortgage rates fell by 0.06% last week to 6.88%. This was their first weekly decline since February 1, 2024. Even with last week’s decline, 30-year rates are still 0.17% higher than when the year began. 15-year rates also fell last week, dropping 0.04% to 6.22%. 15-year rates have risen even more than 30-year rates so far this year, with a 0.29% year-to-date increase. See rate details at FreddieMac.com.

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