Investment – Sun National Bank Center http://sunnationalbankcenter.com/ Fri, 17 Sep 2021 03:15:46 +0000 en-US hourly 1 https://wordpress.org/?v=5.8 https://sunnationalbankcenter.com/wp-content/uploads/2021/05/sun-national-bank-center-icon-150x150.png Investment – Sun National Bank Center http://sunnationalbankcenter.com/ 32 32 Coronavirus hits European banks as they still face post-crisis issues https://sunnationalbankcenter.com/coronavirus-hits-european-banks-as-they-still-face-post-crisis-issues/ https://sunnationalbankcenter.com/coronavirus-hits-european-banks-as-they-still-face-post-crisis-issues/#respond Mon, 22 Mar 2021 09:38:42 +0000 https://sunnationalbankcenter.com/coronavirus-hits-european-banks-as-they-still-face-post-crisis-issues/

A waiter stands near empty tables outside a restaurant in St Mark’s Square after the Italian government imposed a virtual lockdown on northern Italy, including Venice, in an attempt to contain an outbreak virus, in Venice, Italy, on March 9, 2020.

Manuel Silvestri | Reuters

European banks are under intense pressure as the coronavirus shuts down all major economies, at a time when these institutions were still grappling with problems inherited from the 2008 financial crash.

Lenders in the region have undergone a massive transformation since 2008 by increasing capital positions and complying with more stringent regulations. They nevertheless struggled to regain their pre-crisis market levels. The European banking index was still down more than 50% from March 2008 to the start of this year. Virus-fueled sales in global markets mean the same index is now down 70% from March 2008.

“European banks remain vulnerable and fragile in the face of financial and debt crises and the coronavirus crisis is once again hitting the financial sector, exacerbating investor uncertainty,” Athanasia Kokkinogeni, senior analyst for Europe at the DuckerFrontier research firm.

One of the main problems inherited from the crisis is the level of bad debts, which includes loans for which the borrower is in default. The latest figures from the European Banking Authority (EBA) show that in June 2019, the weighted average bad debt ratio stood at 3%, compared to 6% in 2015.

However, the coronavirus outbreak is expected to exacerbate this level of bad loans on bank balance sheets, as many small and medium-sized businesses have been forced to close and will struggle to repay their debts.

“The banking sector appears to be better equipped to deal with shocks than in 2008 if we look at capital ratios,” Maartje Wijffelaars, economist at Rabobank, told CNBC by email.

“That said, in most euro area member states, non-performing loan ratios are still higher than in 2008, even though they have fallen considerably since their peak,” she added.

German Bank, the struggling German lender said on Friday the coronavirus outbreak is likely to hurt its financial targets for the year.

“We could be seriously affected by a prolonged downturn in the local, regional or global economic situation,” German Bank said in a report. The bank also said it was difficult to predict the full extent of the impact at this point.

Credit Suisse also said this week “the impact of the pandemic on our financial results going forward remains difficult to assess,” but it is monitoring its “credit exposures” as the virus spreads further.

We believe that the risks of a credit crisis remain high in the euro area.

Davide Oneglia

Economist at TS Lombard

Low rates

Another legacy problem that banks face is low interest rates. The European Central Bank (ECB) has kept interest rates at record levels since the height of the sovereign debt crisis in 2011. European lenders have repeatedly complained that this continues to squeeze profits.

In addition to their long-standing problems, the virus is also creating new challenges.

Italy, Spain, France and Belgium are just a few of the countries in Europe that are in total containment. This means that the business activity is significantly lower. People don’t go out, schools are closed, and the self-employed may have less income. Airlines have shut down most of their activities and the entire tourism industry, from hotels to museums, is at a standstill.

“With most of Europe stranded, declines in trade activity and demand in the euro area are expected to prove to be at least as sharp as those seen during the global financial crisis,” Davide Oneglia told CNBC , economist at the TS Lombard research firm.

“We believe the risks of a credit crisis remain high in the euro area. That would not let the banks get away with it,” he said, despite recent ECB stimulus measures.

The the central bank buys public and private bonds totaling 750 billion euros ($ 802 billion) this year to reduce the economic impact of the virus. Eurozone governments have also stepped up support for households and businesses.

However, without a clear end in sight, the ECB and individual governments may have to open the taps even further to deal with the outbreak.

A man rides a bicycle in front of the Altare della Patria – Vittorio Emanuele II monument in Piazza Venezia in downtown Rome on March 10, 2020.

VINCENZO PINTO

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Credit Suisse increases loan provisions sevenfold as coronavirus hits clients https://sunnationalbankcenter.com/credit-suisse-increases-loan-provisions-sevenfold-as-coronavirus-hits-clients/ https://sunnationalbankcenter.com/credit-suisse-increases-loan-provisions-sevenfold-as-coronavirus-hits-clients/#respond Mon, 22 Mar 2021 09:38:42 +0000 https://sunnationalbankcenter.com/credit-suisse-increases-loan-provisions-sevenfold-as-coronavirus-hits-clients/

Updates from Credit Suisse Group AG

Credit Suisse reported a seven-fold increase in bad debt reserves in the first quarter as the Swiss bank became the latest global lender to prepare for a wave of potential bankruptcies and defaults amid the coronavirus pandemic.

Provisions for loans climbed 600% to 568 million Swiss francs (583 million Swiss francs) from 81 million Swiss francs in the same period last year, the Zurich-based company said Thursday. The initial estimated blow from the global foreclosure rises to over $ 1 billion when hundreds of millions of write-downs of its investment bank’s assets are included.

“We assume deep recessions in Switzerland, the euro area and the United States and have made appropriate assumptions about taking provisions on a macroeconomic basis,” said Thomas Gottstein, new CEO of Credit Suisse. There could be “a significant build-up of reserves in the coming quarters, especially in the non-Swiss portfolio and asset management,” he added.

Despite these headwinds, Credit Suisse posted its highest quarterly net profit since 2015, up 75% to 1.3 billion Swiss francs. Trading income surged at the investment bank, which benefited from regulatory and government actions to ease the blow of Covid-19 on the financial system, and one-off gains from asset disposals.

Profits for Switzerland’s second-largest bank follow turbulent times and are the first round of quarterly results for Mr Gottstein, 56, who was promoted two months ago after his predecessor Tidjane Thiam was kicked out in a bitter battle to the board of directors.

Thomas Gottstein, Director of Credit Suisse: “The first three weeks have been precious and useful for me. . .[but]then the world changed with the pandemic becoming our reality ‘

“The first three weeks have been precious and useful for me. . .[but]then the world changed with the pandemic becoming our reality, ”he said.

CFO David Mathers said the bank was taking a cautious approach to loan losses as it entered the “worst economic crisis the world has seen since the 1920s.” There is potential for future capital releases if the arrangements were too pessimistic, but predicting this was “dangerous” in the current environment, he added.

The stock fell 2.3%, extending its decline to around 40% this year. Executives said the 1.5 billion Swiss franc share buyback plan was on hold until at least the third quarter.

Credit Suisse’s approach echoes that of Italian UniCredit, which announced this week that it would set aside an additional 900 million euros to cover the impact of the coronavirus on its loan portfolio. Earlier in the month, the six largest U.S. lenders increased their loan provisions by $ 25.4 billion, a 350% year-over-year increase.

The Swiss bank is one of the largest wealth managers in the world. Assets under management fell 9% in the quarter to 1.37 billion Swiss francs due to asset write-downs and the strengthening of the Swiss franc, despite 5.8 billion Swiss francs in net customer inflows.

“All good work in the wealth business is overshadowed by markdowns as well as provisions,” JPMorgan analyst Kian Abouhossein said. “There could be more to come, creating uncertainty around its valuation.”

Overall quarterly revenue for the Credit Suisse group was strong at 5.8 billion Swiss francs, up 7% year-on-year, as trading activity in financial markets increased. This was motivated by the repositioning of ultra-rich and institutional clients to overcome market turmoil.

However, the lender has failed to keep pace with its US peers in investment banking. Revenue rose only 3% to $ 2.4 billion in dollars, from an average jump of more than a fifth on Wall Street, according to analysts at Redburn.

While income from the sale and trading of fixed income securities increased by 26% and equities by 24%, income from capital markets and M&A advisory plunged 38% as transactions declined. evaporated due to the global lockdown.

Overall, Credit Suisse traders recorded a loss of $ 392 million in the quarter as they helped sustain $ 459 million in mark-to-market losses as asset values ​​declined. , especially leveraged loans.

Mr Gottstein said there had been “a certain turnaround in April. . . but it is too early to say more until we see how the markets move in the second quarter ”.

He stressed that a conservative stance in risky areas of corporate lending such as structured finance and energy meant he was well positioned relative to his peers.

In particular, exposure to oil and gas has been reduced by 16% since the last oil shock at the end of 2015 and totals only $ 7.7 billion, the majority of these loans being investment grade.

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4 Things Borrowers Don’t Always Know About Parent PLUS Loans Ranger student loan https://sunnationalbankcenter.com/4-things-borrowers-dont-always-know-about-parent-plus-loans-ranger-student-loan/ https://sunnationalbankcenter.com/4-things-borrowers-dont-always-know-about-parent-plus-loans-ranger-student-loan/#respond Mon, 22 Mar 2021 09:38:42 +0000 https://sunnationalbankcenter.com/4-things-borrowers-dont-always-know-about-parent-plus-loans-ranger-student-loan/

Parent PLUS borrowers often struggle to manage not only the parent loan PLUS while trying to save for retirement, but they may still be trying to pay off their own student loans. If you consider that these loans qualify for limited access to income-based repayment plans, no debt-income component to their eligibility, and no loan limit, you have a recipe for financial disaster for some families.

As award letters start coming and your family thinking about how to close the financial aid tuition gap, understand that while Parent PLUS Loans can be a smart option for some families, like all debt in the home. consumption, use them with caution and thoughtfulness.

For many families, reviewing the school’s award letter, which explains what grants, loans, scholarships, and other aids the student is entitled to, can be an overwhelming experience, especially if that particular student is the first to attend university in the family. While it makes sense to first accept “free” money from grants, scholarships and work-study programs, then to consider loans, it is not always easy to tell the difference.

Parents can be caught off guard when they start receiving bills for PLUS parent loans, when these loans are listed next to grants and bursaries – leading less experienced families to assume that a PLUS loan is just fine. is just another kind of grant that doesn’t have to be repaid.

Just because you’re approved doesn’t mean you can afford it

Many families also assume that because there is a credit check requirement to receive a Parent PLUS loan, if they are approved, they must be able to pay the payments. Not necessarily.

Only someone with big enough hits to their credit will be turned down in the first place. This means that a family that has an estimated family contribution, the amount that your free application for federal student aid has calculated that the family can afford to pay, from zero, can also be approved for tens of thousands of dollars. in Parent PLUS loans.

If you are trying to determine if your household budget can handle Parent PLUS payments, a good rule of thumb is to assume about $ 120 per month for every $ 10,000 borrowed. Multiply that by the number of years the degree should take and the number of children expected to pursue a college education. If you only borrow $ 10,000 per year and have two children who pursue a bachelor’s degree in four years, you can expect a payment of almost $ 1,000 per month for the next 10 years.

Parent PLUS loans cannot be transferred to the student

Often, families make an agreement with the student in which the parent agrees to take out the PLUS loan to fill the tuition gap, but the student agrees to pay it back.

The problem is that these loans will always be on behalf of the parents. The only way to transfer them is through a personal and, in rare cases, private student loan consolidation. This is generally not a good idea for several reasons – first and foremost, taking the loan out of the federal program means losing all federal protections and relief options. This includes release options, lower payment options, utility loan forgiveness, and postponements.

A recent graduate will also likely need a co-signer to be approved for a personal or private loan – and often parents are the only option for that. Co-signing makes the parent responsible for the debt as well, so now you still have the financial responsibility – but none of the alternatives a federal loan offers.

And under the Parent PLUS program, any lower payment, discount, or deferral option will be based exclusively on the borrowing parent’s circumstances – even if the student is making the payments.

Having said that, choose one private loan on behalf of the student is not always a good alternative. Not only are private loans less generous in terms and options for relief, there must almost always be a co-signer. As a co-signer, the debt will affect the debt-to-income ratio of your credit report in the same way as if you were the borrower of a PLUS parent loan.

There are lower payment and discount options for Parent PLUS loans.

Fortunately, there are lower payment options for PLUS parent borrowers. Consolidation, phased repayment and extended repayment are all available for these loans. While not eligible for the revised Income-Based or Pay as You Ear repayment plans, Parent PLUS loans which are consolidated under the federal direct loan program may become eligible for the income-based reimbursement option.

This plan bases the payments on the borrower’s income and family size. After 25 years on this plan, any remaining balance is written off and taxed as income. Parent PLUS borrowers who hold a qualifying job or employer in the public service may qualify for the rebate and be tax-exempt after only 10 years. Eligibility for this program is based on the actual borrowing parent, so if only one parent works in a qualifying job and you think this program could be of benefit to you, make sure the parent is listed as a borrower for PLUS loans. .

Parent PLUS loans can be a great financial tool to fill the tuition fee gap once all other available aids have been used up. As with any other consumer debt, however, it’s important to fully understand the terms and financial impact before making what could be a very large commitment.

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Ohio gas rate cases threaten efficiency programs for low-income families https://sunnationalbankcenter.com/ohio-gas-rate-cases-threaten-efficiency-programs-for-low-income-families/ https://sunnationalbankcenter.com/ohio-gas-rate-cases-threaten-efficiency-programs-for-low-income-families/#respond Mon, 22 Mar 2021 09:38:41 +0000 https://sunnationalbankcenter.com/ohio-gas-rate-cases-threaten-efficiency-programs-for-low-income-families/


The state’s consumer advocate says the COVID-19 pandemic justifies the diversion of funds to bill payment programs.

The Ohio Consumer Advocate is asking state regulators to divert funding for two utility energy efficiency programs to help with bill payments due to the COVID-19 crisis.

The Ohio Office of the Consumer Lawyer made the point in the pending natural gas utility cases Columbia Gas and Vectren Energy, who are looking to extend their weatherization programs for low-income people by two years.

While most work has been put on hold due to the pandemic, supporters of the programs say the move would be shortsighted, potentially cost Ohio hundreds of jobs, and rob families of a chance to cut back. energy bills.

“Low-income households often have to choose between keeping their homes cool and comfortable temperatures or purchasing basic necessities like food and medicine,” said Dan Sawmiller, Ohio director of energy policy for the Natural Resources Defense Council. “Efficiency can help reduce the burden of energy costs. “

Families who benefit from Ohio utility weather protection programs are typically among the poorest in the state, said Dave Rinebolt, executive director and legal counsel for Ohio Partners for Affordable Energy, which manages the programs. .

“Our typical household is a family of three with an elderly or disabled person in the house, as they are priority customers for us,” said Rinebolt. “And their income is generally less than 120% of the poverty line. Eligibility is technically up to twice the poverty level, but most clients are well below this threshold.

About 30% of the work is also done in multi-family dwellings. “This is where you get the poorest of the poor,” Rinebolt said. And while the energy savings in a small apartment are usually less, “we usually save between one and two months in electricity bills. And it is not negligible. “

“Efficiency doesn’t just save energy. It can also help with other health and comfort issues, ”Sawmiller said. Poorly sealed homes let in moisture, for example, which can lead to mold. This in turn can trigger health problems like asthma, “which, as we have recently seen, makes these already vulnerable communities even more vulnerable to respiratory disease.”

“It’s an important program that they have, and they have to keep it,” said a woman who asked that her name not be released for confidentiality reasons. Initially, a leaky roof prevented an accurate energy audit of the house in the Five Oaks neighborhood of Dayton where she lives with her husband, a partially disabled veteran. “They put a new roof on the house,” which the family would not have otherwise been able to afford.

After the energy audit, it turned out that the full weatherization of the first floor was not practical because the house is over 100 years old. The workers were, however, able to install insulation in the attic. The program also provided energy efficient lighting.

“They have done everything they can to reduce the energy costs in our house,” she said. “The program is a great program, and I highly recommend it. “

Ohio Consumers Council spokesperson JP Blackwood said in an emailed statement that the idea of ​​”reallocating” energy efficiency program funds is appropriate “given the urgency of the coronavirus and its impact on consumer finances “. With the exception of emergencies, most work on the programs is currently on hold due to emergency orders from the Public Utilities Commission of Ohio. However, added Blackwood, the agency would recommend embezzling the funds “even under the usual circumstances.”

“Ohioans should not be forced to subsidize gas energy efficiency programs run by utilities, for reasons such as they can buy energy efficiency measures at the store if they wish,” said Blackwood. “And given that natural gas prices are at historically low levels, energy efficiency measures are not that effective in saving money for natural gas consumers.”

The OCC also proposed to eliminate all energy efficiency programs for non-low income customers, on the grounds that Bill 6 gutted the energy efficiency standard in 2019.

“Myopic” sandbags?

“In fact, the price of gas doesn’t really matter in the grand scheme of things, because we’re always taking profitable action,” Rinebolt said. On the contrary, “when gas prices are low, this is the time to invest in efficiency”.

“Energy efficiency remains the cheapest and cleanest option for Ohioans,” said attorney Rob Kelter of the Environmental Law & Policy Center, who is familiar with the Columbia Gas case. “We can find other ways to help customers today, while also moving forward with programs that improve customer comfort, lower their bills, and help Ohioans breathe more air. pure. “

“When you look at the minimal cost of energy efficiency programs and their long-term benefits that help customers save on their bills over a period of years, we think OCC’s position is shortsighted,” he said. Kelter said.

The network of nonprofits that make up Ohio Partners for Affordable Energy also administer bill payment assistance programs, Rinebolt said. Ohio will already secure additional funding for bill payment assistance as part of a federal stimulus bill passed in response to the COVID-19 pandemic. Further relief could also come from other bills, he added.

In contrast, getting rid of energy efficiency programs from low-income utilities would not only reduce the ability of low-income families to continuously reduce their bills, but would also cost around 500 jobs, Rinebolt said. The loss of these skilled workers would be a big blow to the organization.

The proposal to prematurely end all energy efficiency programs for gas companies could also have broader impacts for Ohio’s energy efficiency sector, according to Sawmiller. Before the pandemic hit, Ohio’s energy efficiency sector supported more than 80,000 jobs, he noted. “It is increasingly crucial to preserve these employment opportunities in this time of increasing unemployment,” he said. “Cutting funding – and therefore the ability to work – will only make it harder for Ohioans to recover from this horrific pandemic. “

And after?

The Ohio Consumers Council’s proposals in the affairs of the two gas companies may also raise legal issues that have yet to be informed by opponents.

“Ohio has a long and rich history of low income programs,” said Rinebolt. Energy saving programs continue to be authorized under Ohio Law even after HB 6, he noted.

On April 9, his organization and Vectren Energy jointly asked the Ohio Utilities Commission to either reverse the OCC’s proposals in this case or allow other parties to file responses. In their view, the OCC’s proposals are “textbook sandbag” and procedurally inappropriate.

Other parties have yet to respond to the Columbia Gas proposal, which is at an early stage in the disclosure process.

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Big US banks are bracing for a wave of bad loans. they are still waiting https://sunnationalbankcenter.com/big-us-banks-are-bracing-for-a-wave-of-bad-loans-they-are-still-waiting/ https://sunnationalbankcenter.com/big-us-banks-are-bracing-for-a-wave-of-bad-loans-they-are-still-waiting/#respond Mon, 22 Mar 2021 09:38:41 +0000 https://sunnationalbankcenter.com/big-us-banks-are-bracing-for-a-wave-of-bad-loans-they-are-still-waiting/

JPMorgan Chase & Co. posted record quarterly profit while Citigroup Inc. and Wells Fargo & Co. both posted higher-than-expected profits in the last three months of the year, boosted by reserve releases and Wall Street’s record-breaking race.

The period ended a tumultuous 2020, when a sharp drop in economic activity in the spring gave way to an uneven recovery that lifted some consumers and businesses while many others continue to struggle.

Executives said they had become more confident that vaccines would get people back to work and that new stimulus – and the potential for more under President-elect Joe Biden – would help consumers and businesses this year. . But they refrained from saying that the economy is out of whack and that their balance sheets continue to reflect deep concern about the health of their clients.

Bankers have warned that losses on credit cards, home loans and other types of debt are expected to increase further when government aid programs eventually wane, especially affecting their lower-income clients.

And there are signs that the recovery remains fragile. The government said on Friday that U.S. consumers cut retail spending in December, the peak of the holiday season. Coronavirus cases and deaths are increasing rapidly. Unemployment claims jumped to nearly a million last week. Workers in low-paid jobs, especially in restaurants and bars, have been particularly affected.

“You have the next two quarters cloudy, mixed economic information, nearly 4,000 people are dying a day,” JPMorgan chief executive Jamie Dimon said on a call with reporters. “I hope that by the summer you can have a very healthy economy.”

The period continued the year-round divergence of consumer and Wall Street transactions. At JPMorgan and Citigroup, traders and investment bankers have produced stocks and bonds for clients wishing to raise capital and trade securities.

Corporate and investment banking profits jumped 82% at JPMorgan and 27% at Citigroup, their best fourth quarter on record. A flurry of new blank check companies has increased share subscription costs at JPMorgan and Citigroup by more than 80%.

But revenues fell at the three companies’ consumer banks – down 8% at JPMorgan, 14% at Citigroup and 5% at Wells Fargo.

Yet the last quarter reflects a better view of the economy as a whole. Three months ago, Citigroup based its lending outlook on expectations that the US economy would contract 5.1% in 2020 and the unemployment rate would average 6.6% per quarter over the two coming years. Now, the GDP is expected to have fallen 4.0% and the unemployment rate to average 6.1%.

“While we hope the end is in sight, this virus has surprised us and taught us the craziness of the best-laid plans,” said Jane Fraser, who is expected to become CEO of Citigroup next month. “We will therefore remain vigilant and adaptable.”

The banks also did not have to take bad credit losses at about the pace initially feared. In fact, all three said the charges were lower in the fourth quarter compared to the period a year earlier, before the pandemic brought the economy to a halt.

JPMorgan said it removed $ 2.9 billion from its reserves and Citigroup released $ 1.5 billion. Wells Fargo withdrew $ 757 million, although that was largely because it sold a portfolio of student loans. They continued to hold onto the vast majority of their reserves, fearing that some loan losses could be pushed back into the future.

“The performance is significantly better than we would have thought when we looked at this topic,” Wells Fargo CEO Charles Scharf said on a call with analysts. But he added that in order to draw substantially from the reserves, he would like to see a sustained and fairer recovery because there are so many uncertainties. “

Mr Dimon noted the great divergence between those who can navigate the coronavirus economy and those who cannot. For many large companies, 2020 has been a surprisingly good year. Many families are on the verge of running out of money.

One of the reasons banks have resisted the coronavirus economy is because they have been focusing on affluent consumers and large corporations since the financial crisis. Mr. Dimon noted that most of JPMorgan’s clients are blue chip borrowers, who have “a lot more income, a lot more savings, house prices are up, they haven’t lost their jobs.” . . “

All three banks beat analysts’ expectations for fourth quarter earnings per share, but JPMorgan has held up above the rest, in large part thanks to the size of its trading and investment banking operations.

Revenue increased 3% at JPMorgan, exceeding expectations. Revenue fell 10% at both Citigroup and Wells Fargo, falling short of expectations.

JPMorgan’s fourth-quarter profit jumped 42% to a record $ 12.14 billion, while Citigroup profit fell 7% to $ 4.63 billion and Wells Fargo’s rose by 4% to $ 2.99 billion.

Write to David Benoit at david.benoit@wsj.com and to Ben Eisen at ben.eisen@wsj.com

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Martin Lewis warns everyone with an overdraft to reduce their balance NOW before rates rise – The Sun https://sunnationalbankcenter.com/martin-lewis-warns-everyone-with-an-overdraft-to-reduce-their-balance-now-before-rates-rise-the-sun/ https://sunnationalbankcenter.com/martin-lewis-warns-everyone-with-an-overdraft-to-reduce-their-balance-now-before-rates-rise-the-sun/#respond Mon, 22 Mar 2021 09:38:41 +0000 https://sunnationalbankcenter.com/martin-lewis-warns-everyone-with-an-overdraft-to-reduce-their-balance-now-before-rates-rise-the-sun/

MARTIN Lewis is warning anyone overdraft to reduce their balance NOW before rates rise.

The founder of MoneySavingExpert.com pointed out in his weekly newsletter that almost all banks will soon charge around 40% interest as new rules are introduced by the Financial Conduct Authority (FCA).

Martin Lewis Warns Overdraft Users To Reduce Balance Now Before Rates RiseCredit: Rex Features

From April 6, banks will be prohibited from charging overdraft fees that are not arranged, although they can still charge interest rates.

And while seven in ten – or 18.2 million people – will fare better as a result, according to the FCA, that means about 7.8 million will be in a worse situation.

But some banks are introducing the new rules earlier.

At national scale raised interest rates in November, while HBSC, First Direct and M&S will increase theirs from tomorrow – March 14.

Other major banks will then follow in the coming weeks.

The hardest hit overdraft users will be those with large authorized overdrafts of more than £ 600, which could see their costs double, Martin warned.

Those who only occasionally resort to overdrafts, or only have small ones, will find this new system cheaper if they have a daily fee, he added.

    Here's how much the big banks will charge for their overdrafts
Here’s how much the big banks will charge for their overdrafts

Martin wrote in his newsletter: “Overdrafts are dangerous new debt – double the interest on high street credit cards.

“Last year the regulator, the FCA, decided that from April 6 of this year, all banks should replace daily / monthly fees with a single interest rate to improve transparency.

“It worked – the new rates are transparent and hideous. Almost all banks will now charge around 40 percent.”

What is my bank doing?

Lenders currently charge between £ 2 and £ 30 per month for an arranged overdraft, while non-arranged costs can be much higher – up to £ 6 per day or £ 80 per month, which can add up to hundreds of pounds.

But as shown in the table above, banks must charge a flat rate interest for arranged and unorganized overdrafts.

There are, however, a few exceptions – Lloyds Banking Group, which includes Bank of Scotland, Halifax and Lloyds Bank, as well as Monzo and Starling went even further by introducing so-called “risk-based” pricing.

This will see Lloyds charge 27.5% for most Club account holders, 39.9% for most other customers, while those with poor credit scores will pay 49.9% much more.

As for the Monzo digital bank, it will introduce three interest rates based on your credit score: 19%, 29%, and 39%.

While Starling will do the same, charging 15%, 25%, or 35%.

How to reduce your overdraft balance

Spend less each month

There are several ways to reduce overdraft fees, and which one is right for you will depend on your situation.

Just stopping spending is easier said than done when you have bills to pay.

But it is not impossible to reduce your expenses if your mission is to reduce your overdraft.

Budget well and take a look at what you’re spending.

Are you paying too much on your bills? If you haven’t changed energy, insurance and broadband recently, you could probably save £ 100 or even £ 1000 over a year.

Use comparison sites such as Uswitch, Argent.co.uk Where SilverSuperMarket to find the best deals for you.

Move your bills

Moving bill payment dates can be risky if you’re not disciplined, but if you move them right before payday rather than right after, many will be credited (or less in the red) for less than the month.

This means that you are charged less for the overdraft.

But remember, these bills are coming, so don’t treat them like you have extra money to spend.

Move the bank account to a cheaper overdraft

If you are in your overdraft, you can always change accounts.

But your new bank will likely want to see your statements for the past three to six months to make sure you’ve stayed within the agreed upon overdraft limit during that time.

One option is to get a no-fee account and then use the savings to pay off your debt, if you manage to switch accounts.

If the overdraft is low, you may be able to switch accounts and include the overdraft.

How to change bank account

NOT sure how it works? Here is everything you need to know and what you need to check before:

  • As part of the current account switch service, the bank switch is expected to take seven business days. This includes all of your payments, direct debits and standing orders which are also moved. Simply open your new account, then ask your new provider to close your old account using the switch service.
  • Make sure you are eligible. Most accounts have certain requirements, such as paying a minimum amount of money each month.
  • Watch your overdraft. Check that your new bank will offer you the same limit and not have higher costs to use it.

First Direct grants an overdraft of £ 250 at 0 percent or you may consider switching to an M&S checking account, which has an overdraft of £ 100 for 0 percent.

If you dip more into the red than that, keep in mind that you will be charged 39.9% on both.

People with larger overdrafts could try Nationwide’s FlexDirect account, Martin advises, because it offers 0 percent overdraft for one year.

However, the limit depends on your credit score and the bank will not say the maximum amount you can get.

After a year, the rate also drops to 39.9%, so this is not a permanent solution.

Transfer your overdraft to a money transfer card or loan

If you’re still struggling to get rid of your debt, you may want to consider getting a money transfer credit card to help you pay it off, but keep in mind that you will need to pay a fee to transfer the debt. debt.

It’s similar to a balance transfer card, but instead of transferring a balance from one card to another, the money is transferred to your bank account so you can use it to clear your expensive overdraft.

If your overdraft is £ 1,000 or more, it may be worth considering taking out a personal loan instead that charges a lower rate than your overdraft fee.

You can then choose to write off the debt over 12 months in installments.

Martin Lewis’s top tips for reducing your overdraft

It’s not just about making overdrafts cheaper, you also have to manage your overdraft, says Martin Lewis.

Here’s how:

  1. Aim to repay a fixed amount each month – Treat it like any other debt you have to pay off. For example, if you are overdrawn by £ 500, “paying” £ 100 means that you should aim for an overdraft of £ 400 next month.
  2. Do you have other debts? Prefer reimbursement of the most expensive first – If the overdraft is, as is likely, more expensive than credit cards, pay back the minimum on them and use cash to reduce your overdraft balance.
  3. Consider moving direct debits just before, not after, payday – You will be in the open for less time, so the costs are lower.
  4. Do you have savings? – Do not be afraid to use them to clear your overdraft.
  5. Struggle to control spending – Consider switching to a no overdraft account.
  6. Can you recover past bank charges? – If charges caused you difficulty, you may be able to recover them – contact your bank.
  7. Struggling with multiple debts? Get debt counseling help from Advice to citizens, National debt Where Stage change.

If you decide to go this route, be sure to cancel your overdraft limit on your checking account as you don’t want to be tempted to dip into your overdraft at the same time.

Also, keep in mind that lenders are only required to give top market rates to 51% of applicants, so you are not guaranteed to get it.

Also, be careful when applying for credit, as many applications make you look desperate for lenders and you could end up damaging your credit score.

You can compare money transfer cards and loans on comparison sites like GoCompare, Moneyfacts and MoneySupermarket.

What if I can’t afford the new fees?

Banks have been warned by the FCA of help clients with a large overdraft.

He suggests that banks and mortgage lenders waive or reduce interest or continue overdrafts at the current rate where people are in trouble.

Alternatively, they could set up a repayment plan which could include moving borrowers to more suitable products, such as personal loans which will likely have much lower interest rates.

If you are having difficulty, contact your supplier as soon as possible to discuss your options.

Martin Lewis explains whether or not you should book a vacation due to coronavirus fears
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Not approved for premium credit cards? Here are 3 reasons why https://sunnationalbankcenter.com/not-approved-for-premium-credit-cards-here-are-3-reasons-why/ https://sunnationalbankcenter.com/not-approved-for-premium-credit-cards-here-are-3-reasons-why/#respond Mon, 22 Mar 2021 09:38:40 +0000 https://sunnationalbankcenter.com/not-approved-for-premium-credit-cards-here-are-3-reasons-why/
  • Have you had difficulty obtaining approval for credit card? It may be because your credit is not in the best place, although some credit reporting services can tell you have good credit.
  • If you don’t have a credit history, have more credit card debt as long term debt, or having negative scores on your credit report like bankruptcy, you could be denied the best credit card deals.
  • By understanding how negatives keep you from getting more approvals, you can make changes that will improve your odds over time, earning you more rewards for your daily spending.
  • Visit the Business Insider homepage for more stories.

If you have “good” credit but continue to be refused for big bonus points and miles from credit cards, or if you’ve noticed a drop in the number of “pre-approved” offers mailed to you, it may have everything to do with your credit report.

It is quite possible to believe that your credit is in the right place, but banks and other lenders may see it differently.

Getting your credit score up through one of the many free services can present an optimistic view of your credit history and where you are today. However, even if you pay your balances on time and try to use your available balances responsibly, your reports may not be as stellar as you think. The result is often lower FICO scores and mixed ratings of your standing in all three credit bureaus, resulting in rejections.

What is preventing you from getting the credit you deserve? More importantly, how can you improve your situation and start receiving rewards for your spending? Before submitting another unsuccessful application, first check these three situations.

You don’t have a credit history

Before the banks give you your own line of credit, they want to make sure you can take responsibility. With a history of good spending and low balances, you could qualify for the biggest bonus offers and the best credit card rates. Until that time comes, you may be denied the best credit card deals.

If you’re just building your credit history or recovering from bankruptcy or written off debts, think carefully about your application strategy.

Earning rewards with top credit cards is a marathon activity, not a sprint. Before asking for the best cards in the business, start with cards with no annual fee or cash back to build a solid report. With good usage and regular spending, it’s pretty easy to switch to top tier credit cards.

You have too much “bad” debt

When banks look at a credit report, they look at two different types of debt: good debt and bad debt. “Good” debts are long-term loans on large purchases, such as houses, cars, and even student loans. If you have one in your name and responsibly pay them off each month, your credit score and overall report is in a much more favorable space with lenders.

On the other hand, “bad” debt is your current balance on credit cards or store credit. High balances and late payments can hurt your credit score and disqualify you from the best credit card options. Before mounting another claim, start paying off your balances to get your credit in a better place.

It is important to note that “good” and “bad” debt are not mutually exclusive. If you have many different credit cards but your overall usage is low, your credit score will go up and put you in a prime position to get the credit card.

best credit cards
. But if you only have two or three credit cards that are still being used to the max, your credit score will go down.

Your credit history is not stellar

Everyone has a hard time.

With bankruptcy or debt written off on your credit report, lenders may be wary of approving you for their best credit products. The good news is that everything passes over time, including bankruptcy. If you have bad credit scores today, that’s okay. Most negative reports drop off your credit report in seven years.

What is more important is how you treat your current lines of credit during this time. By keeping balances low and buying responsibly, you can get approval for better credit card deals, giving you more rewards than you can use in your everyday life.

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American student loans – the Chronicle https://sunnationalbankcenter.com/american-student-loans-the-chronicle/ https://sunnationalbankcenter.com/american-student-loans-the-chronicle/#respond Mon, 22 Mar 2021 09:38:40 +0000 https://sunnationalbankcenter.com/american-student-loans-the-chronicle/

During the recent Democratic presidential debate, Senator Elizabeth Warren reflected the concerns of millions of Americans, Republicans and Democrats, when she expressed her intention to write off the student debt of 95% of Americans. As the student loan bubble grows larger, the details of the policy surrounding government loans shift further into the realm of mainstream political discourse.

However, much of the rhetoric on both sides is driven more by emotions than grounded in theory and history. A more informed perspective might suggest a hands-off approach to student loan policy that can help ensure greater macroeconomic stability and long-term prosperity. Of course, while it is difficult to tackle all the intricacies of student loan policy in one column, I hope my admittedly heterodox perspective might lead more politically engaged students to take an interest in alternative policy prescriptions.

The government really got involved in student loans in 1958, with the Perkins Federal Loans Program and the National Defense Student Loans Program. The Perkins Loan was a needs-based program that offered loans at a fixed interest rate of 5%. In 1965, with the first version of the Higher Education Act, the state intervention in the area of ​​student loans was doubled by establishing a program of guaranteed student loans, through the federal program of loans for students. family education. Since then, the federal government has started to interfere more and more in the loan market, further skewing the results, leading to a history of significant instability.

Over the summer, I had the opportunity to go through almost every report from the Government Accountability Office (GAO) and the Congressional Research Service (CRS) regarding student loan policy. The vast majority of these reports were either complaints or warnings about bad incentives, too cheap credit, lack of accountability, corruption, and general waste due to immunity to market signals. Clearly, since credit is too cheap, too many people are borrowing too much money and they simply cannot afford to pay off a large chunk of their loans. Beyond that, the state-controlled bureaucracy is insensitive to the pressures of market-based competition, resulting in bloated administrations, unbalanced budgets and painfully substandard service.

Instead of restoring the state Following accountability, as almost all politicians, regardless of their stripe, seem determined to do so, perhaps we should consider reducing the role of the state in allocating scarce credits, and returning that duty to the market. The price system is the only way to aggregate the preferences and resource constraints of all participants in the economy. Without market-determined rates, risk is over-subsidized, and the consequences of over-subsidized risk are all too familiar to macroeconomists who saw what cheap credit did to the housing market in 2008.

But what do we do with all of our current student debt? Cancel that? Such an attempt would represent a bill of $ 1.6 trillion that taxpayers will have to pay, which is roughly thrice as important as annual Medicare spending. Not only would this create a huge moral hazard for future borrowers, who might view periodic bailouts as inevitable and borrow for education they don’t need and likely won’t use, but even a one-time bailout would disproportionately benefit investors. rich by a staggering amount (about half of all student loan debt is held by the richest 25% of households by income). Such a huge grant would do little to curb the rising costs of education that have plagued American families for years, and would likely cause colleges to increase costs even more, given the increased demand created by the grants. .

At the heart of this problem is also the culture which suggests that everyone needs a certain degree. Many jobs do not actually require college training, and more and more people are paying for degrees that do not have the same gain that they used to do. What we may need is a fundamental change in our education system that prioritizes practical skills related to employment.

More urgently, however, we need to move towards a higher education market that is more strongly rooted in market principles, rather than in a utopian faith in the capabilities of the state, which has repeatedly failed to reach the end of the spectrum. desired goals.

Nikhil Sridhar is a senior from Trinidad. Its “laissez faire et laissez passer” section is published every Monday.

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The ECB’s Lagarde deal was hard won, but the battle against the hawks has only just begun https://sunnationalbankcenter.com/the-ecbs-lagarde-deal-was-hard-won-but-the-battle-against-the-hawks-has-only-just-begun/ https://sunnationalbankcenter.com/the-ecbs-lagarde-deal-was-hard-won-but-the-battle-against-the-hawks-has-only-just-begun/#respond Mon, 22 Mar 2021 09:38:40 +0000 https://sunnationalbankcenter.com/the-ecbs-lagarde-deal-was-hard-won-but-the-battle-against-the-hawks-has-only-just-begun/

FRANKFURT (Reuters) – European Central Bank President Christine Lagarde this week negotiated a tough compromise to gain support for a new pandemic package, but her battle to win over skeptics among her colleagues and investors are just getting started.

FILE PHOTO: European Central Bank (ECB) President Christine Lagarde reacts as she addresses a press conference on the results of the Governing Council meeting, in Frankfurt, Germany, March 12 2020. REUTERS / Kai Pfaffenbach

The ECB has unveiled plans to buy an additional 500 billion euros in bonds and give banks even larger subsidies to keep credit in circulation, with the aim of supporting the eurozone economy until ‘at the expected end of the coronavirus epidemic.

The package, aimed at keeping borrowing costs low for governments, households and businesses, brings the ECB closer than ever to outright targeting of specific levels of bond yields and spreads, without saying so openly.

But conversations with five sources within or close to the ECB’s Governing Council suggest that the December 9-10 meeting was tense, and disagreements over the new round of bond buying began even before.

The ECB kicked off talks last week with an envelope of 750 billion euros for bond purchases, but reduced it to 500 billion euros before the meeting after being pushed back.

Still, chief economist Philip Lane’s scaled-down proposal nearly fell through at the meeting, with policymakers at odds over the economic outlook, the size of bond purchases and the terms of subsidized loans to banks.

Lagarde stepped in to orchestrate a deal on political tools, offering concessions to dissidents rather than dismissing them like his predecessor Mario Draghi did on occasion, the sources said.

In one case, Lagarde helped convince dissidents by pointing out that the envelope of 500 billion euros ($ 608 billion) would not need to be fully spent if financing conditions remained easy.

This reassured governors who wanted smaller debt purchases as bond yields are already languishing at record highs, spreads are tight and government papers are hard to come by in some smaller countries.

Lagarde also said the envelope could be increased. But that would require a new Governing Council decision, making the obstacle implicitly higher.

“It is no longer an envelope but a ceiling, a maximum amount,” said one of the sources.

Austrian central bank governor Robert Holzmann also said on Friday that he did not expect the ECB to use the full amount.

Policymakers also disagreed over the size of longer-term Targeted Refinancing Operations (TLTROs), an increasingly controversial facility whereby banks are paid to borrow from the ECB as long as they don’t shrink their portfolios. of loans.

The political hawks were opposed to Philip Lane’s initial suggestion to increase the maximum amount that banks will be allowed to borrow from 50% to 60% of their eligible loans, but Lagarde managed to strike a compromise midway through. 55% path, the sources said.

In the end, the package was supported by a large majority.

A central bank spokesperson declined to comment on this story.

Speaking on Friday, Lithuanian central bank governor Vitas Vasiliauskas said he had reservations about providing too many additional stimulus measures, but was happy with the deal reached on Thursday.

THE END OF THE BEGINNING?

Winning a deal on Thursday’s package, however, could prove to be the first of many challenges for the ECB president, who took office just over a year ago.

First, some skeptics of the deal maintained their reservations, claiming privately that it was an implicit form of “yield curve control” and that it had to end at the end of it. of the pandemic.

“Keeping spreads stable is a bad economy,” said one of the sources, saying market prices should be allowed to reflect economic fundamentals.

Even the TLTRO, until recently one of the ECB’s most consensual tools, is now becoming the target of criticism as it effectively subsidizes banks and eases the pressure on them to get back into shape or merge.

Second, by making bond purchases contingent on borrowing costs rather than committing to them no matter what, the ECB can invite markets to test its resolve.

This kind of tentative language had been a source of frequent criticism from the eurozone central bank at the onset of the 2010-12 debt crisis, but was swept aside by Mario Draghi soon after becoming president with his pledge. to do “whatever it takes”. to save the euro.

“Now that the market knows the commitment to the PEPP is low, expect it to challenge the resolve of the ECB as the data surprises on the upside and the hawks get louder,” said Marco Brancolini, economist at Nomura.

($ 1 = 0.8227 euros)

Reporting by Francesco Canepa, Balazs Koranyi and Frank Siebelt; Editing by Hugh Lawson

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Trump deserves a lot of credit for his many accomplishments as president | PennLive Letters https://sunnationalbankcenter.com/trump-deserves-a-lot-of-credit-for-his-many-accomplishments-as-president-pennlive-letters/ https://sunnationalbankcenter.com/trump-deserves-a-lot-of-credit-for-his-many-accomplishments-as-president-pennlive-letters/#respond Mon, 22 Mar 2021 09:38:39 +0000 https://sunnationalbankcenter.com/trump-deserves-a-lot-of-credit-for-his-many-accomplishments-as-president-pennlive-letters/

President Donald Trump has done more for the United States than any other president in my lifetime. Its policies have made the United States energy independent and the world’s largest producer of oil and natural gas. We are now energy exporters and no longer need oil from the Arab world.

Trump’s Operation Warp Speed ​​produced a vaccine in nine months; it would normally have taken four to five years to complete. Trump brought manufacturing back to the United States by eliminating most of the Obama / Biden administration’s more than 600 executive orders and rescinding bad trade deals that had forced manufacturing to go overseas. Trump as a businessman has done more for American business than any other president.

Before the “Chinese virus” hit the United States, the wages of the middle class had increased by $ 6,000 / household. Before the “Chinese virus,” the United States had the lowest unemployment rate on record for blacks, Hispanics, Asians and women.

In recent months, three other Arab countries have normalized their relations with Israel; this peace initiative resulted in Trump’s nomination for the Nobel Peace Prize.

Many people believe that President Trump contributed to the riots in the United States. It’s important to note that all of these “riot” towns have one thing in common: a Democratic governor and a Democratic mayor. Texas and Florida are our second and third most populous states; they have Republican governors and they don’t have riot towns. These Republican governors would not allow that to happen.

Don Orris, Hershey, Pennsylvania.

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