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Overdraft U: Student Bank Accounts Often Loaded With High Overdraft Fees

May 22, 2015 Comments off

Overdraft U: Student Bank Accounts Often Loaded With High Overdraft Fees
Source: Center for Responsible Lending

Some colleges and banks enter into exclusive agreements to offer students checking accounts – usually these accounts come furnished with a debit card that prominently displays the school logo and can sometimes be used as student ID.

For banks, these exclusive agreements mean a captive audience for their bank products (checking accounts, credit card accounts) and usually a customer for life. Studies suggest that banks are a “sticky” product – once a consumer chooses one, they’re unlikely to change.

For colleges, these exclusive agreements mean increased revenue. These partnerships may include revenue sharing (based on the number of accounts opened by their students) and/or in-kind benefits (like the bank offering to manage the school’s financial aid disbursement).

The benefits to students are unclear at best. Some schools negotiate for some reductions in up-front costs (like waiving monthly maintenance fees), but – as this report shows – many of these accounts do not have better terms than what a student could find on their own.

Roundup of Recent CRS Reports About Business, Economics and Trade

May 18, 2015 Comments off

2014 Fair Lending Report

May 6, 2015 Comments off

2014 Fair Lending Report
Source: Consumer Financial Protection Bureau

We’ve taken important strides over the last year in our efforts to protect consumers from credit discrimination and broaden access to credit, as we identify new fair lending risks and monitor institutions for compliance. This report describes our fair lending activities in supervision, enforcement, rulemaking, interagency coordination, outreach, and interagency reporting.

Consumers and Mobile Financial Services 2015

April 2, 2015 Comments off

Consumers and Mobile Financial Services 2015 (PDF)
Source: Federal Reserve Board

Mobile phones have increasingly become tools that consumers use for banking, payments, budgeting, and shopping. Given the rapid pace of developments in the area of mobile finance, the Federal Reserve Board began conducting annual surveys of consumers’ use of mobile financial services in 2011. The survey examines trends in the adoption and use of mobile banking, payments, and shopping behavior and how the emergence of mobile financial services affects consumers’ interaction with financial institutions.

This report presents findings from the 2014 survey, fielded in December, which focused on consumers’ use of mobile technology to access financial services and make financial decisions. Where applicable, the findings from the current survey are also compared with the findings from the 2011, 2012, and 2013 surveys. Topics include consumer access to bank services using mobile phones (“mobile banking”), consumer payment for goods and services using mobile phones (“mobile payments”), and consumer shopping decisions facilitated by use of mobile phones. Details about the survey, its methodology, and limitations can be found in the body of the report and in a methodological appendix.

ABA Report: Farm Banks Well Positioned for 2015

March 26, 2015 Comments off

ABA Report: Farm Banks Well Positioned for 2015
Source: American Bankers Association

Farm banks significantly increased agricultural lending by 13.6 percent in 2014 and held $94.6 billion in farm loans at the end of the year, according to the American Bankers Association’s annual Farm Bank Performance Report.

Asset quality continued to improve at the nation’s 2,036 farm banks as non-performing loans declined to pre-recession levels. ABA defines farm banks as banks whose ratio of domestic farm loans to total domestic loans is greater than or equal to the industry average.

“The agricultural economy may be faced with headwinds in 2015, but farm banks are well positioned to continue serving the needs of farmers and ranchers across the country,” said Brittany Dengler, ABA senior research manager, economic policy and research. “Banks hold nearly half of all farm loans and will remain an important source of ag credit.”

See also: 10 Financial Tips for America’s Young and Beginning Farmers

Can Islamic Banking Increase Financial Inclusion?

March 23, 2015 Comments off

Can Islamic Banking Increase Financial Inclusion?
Source: International Monetary Fund

The paper analyses existing country-level information on the relationship between the development of Islamic banking and financial inclusion. In Muslim countries—members of the Organization for Islamic Cooperation (OIC)—various indicators of financial inclusion tend to be lower, and the share of excluded individuals citing religious reasons for not using bank accounts is noticeably greater than in other countries; Islamic banking would therefore seem to be an effective avenue for financial inclusion. We found, however, that although physical access to financial services has grown more rapidly in the OIC countries, the use of these services has not increased as quickly. Moreover, regression analyis shows evidence of a positive link to credit to households and to firms for financing investment, but this empirical link remains tentative and relatively weak. The paper explores reasons that this might be the case and suggests several recommendations to enhance the ability of Islamic banking to promote financial inclusion.

Complaints data show which credit cards pay refunds most, least often

March 20, 2015 Comments off

Complaints data show which cards pay refunds most, least often
Source: CreditCards.com

Synchrony Financial, the big store-card issuer behind Wal-Mart, Lowe’s and Amazon cards, among others, gets more complaints at the federal government’s complaint window than its peers.

But it also pays refunds more often when customers grumble, 2014 data show.

CreditCards.com looked at the nearly 14,000 complaints people made about credit cards last year to the U.S. Consumer Financial Protection Bureau — up 6 percent from 2013. Rather than look at what causes complaints, we examined how companies dealt with them — an insight that is unavailable from other sources.

Looking at 12 major card issuers, we found big differences in the way they handle beefs:

  • Per dollar of card balances, Synchrony, formerly GE Capital, was about twice as likely to get a complaint than average among 12 large card issuers. However, it also paid refunds most often, issuing “monetary relief” — refunds or waivers — to more than one-third of grouches. The dollar value of companies’ refunds wasn’t available.
  • American Express, a frequent leader in card satisfaction surveys, shined less brightly in the complaint data. About one in four of its customers was still unhappy after AmEx dealt with their gripe. That was the highest rate of disputed solutions among the group, although TD Bank, Chase and Bank of America had dispute rates almost as high.
  • People in some states are substantially more likely to get refunds than others. More than one-third of complainers in Wyoming and South Dakota got credits, double the rate in West Virginia and Mississippi (see state refund rate chart).
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