Making money
“It’s beginning to look like a good
Christmas—for credit-card lenders,”
said Polo Rocha in AmericanBanker
.com. After lockdowns and other restric-
tions tempered the holiday cheer last
year, many Americans used their govern-
ment stimulus checks, expanded unem-
ployment benefits, and suspended rent
to pay down debts. Overall, card bal-
ances in the third quarter still remained
$123 billion lower than they were at the
end of 2019, “underlining the extent
to which consumers” chipped away at
their bills. But lenders are anticipating
a bounce-back to near pre- pandemic
spending levels by the end of the year. Card issuers are seizing
the opportunity, “launching new card options and improving
their rewards to attract more business.” Capital One last week
introduced a new high-end travel card along with its first-ever
airport lounge, complete with Peloton bikes and nap pods.So much for that pandemic cushion, said Anneken Tappe in
CNN.com. “Between July and September, U.S. household debt
climbed to a record of $15.24 trillion,” more than $1 trillion
higher than at the end of 2019. The majority of the debt is owed
on mortgages. But while wages are rising, “everything is get-
ting more expensive,” so that money in the bank is going fast.
Credit-card interest rates are quietly ticking up, too, said Anna
Bahney, also in CNN.com. Borrowers got a reprieve last yearwhen the Federal Reserve dropped its
benchmark interest rate to near-zero in
response to the pandemic. But “over
the past two quarters, the average an-
nual percentage rate (APR) has risen
from 15.91 percent to 17.13 percent,”
just below the all-time high. How has
the average APR swung so much when
the Fed hasn’t adjusted its rate? More
people with poor credit aren’t paying
off their balances.A shrinking savings rate isn’t always
a bad thing, said Adam Hardy in
Money.com. The personal savings
rate—the percentage of cash left over after taxes and other
expenses—soared in April 2020 to a record 33.8 percent, an ab-
surd figure. That was down to 7.5 percent by this Sep tem ber, ex-
actly where it was for the 10 years before the pandemic. “Free-
falling savings” sounds bad for individuals, but it’s a different
story for the economy as a whole. Businesses need customers to
spend so that they can keep workers employed. Americans are
also better positioned to spend than they’ve been in years, said
Jill Shah in Bloomberg.com. Many acted responsibly with their
increased savings last year. The strength of U.S. household bal-
ance sheets compared with before the pandemic is why more
people are planning big life changes “such as moving locations,
buying a house, or having a baby” in the next 12 months. That’s
a good thing for economic growth.Consumer credit: Back to the borrowing habit
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Americans are taking advantage of credit-card offers.One week from listing to offer
If you’re looking to buy a home today, you
need to move fast, said Chris Morris in
Fortune.com. That’s the takeaway from a re-
port by the National Association of Realtors
last week, which found that the average listing
between July 2020 and June 2021 found a
buyer “in just one week.” That rate was the
quickest since 1989, and triple the speed at
which homes were selling in the same period a
year earlier. And sellers aren’t settling; in fact,
35 percent got more than they asked for their
properties. That has netted the average home
seller $85,000 more than their purchase price.
Though “the housing market is cooling down
after its historic run,” median prices were still
up 16 percent in the third quarter.Insurance premiums outpace inflation
Family health-care coverage now costs busi-
nesses on average more than $22,000 a year
for each employee, said Sarah O’Brien in
CNBC.com. That’s a 47 percent increase
in the cost of family premiums over the
last decade, according to the Kaiser Family
Foundation, “outpacing both wage growth
(31 percent) and inflation (23 percent) over
the same time period.” Workers pay $5,969
of that amount, while employers foot the rest.But deductibles, or “the amount you pay out
of pocket for services before your insurance
starts paying, have also jumped 68.4 percent
since 2011, to an average of $1,669.” Roughly
155 million people rely on employer- sponsored
health coverage, Kaiser said. About 59 percent
of employers offer it, a share that has “re-
mained largely unchanged since 2011.”Turning down professional advice
Wealthy young investors are increasingly
spurning traditional financial advice for do-it-
yourself digital platforms, said Rachel Louise
Ensign and Peter Rudegeair in The Wall Street
Journal. “About 70 percent of households
with a net worth of $500,000 or more headed
by a person under 45” did most if not all of
their own investing in 2019, “up from 57 per-
cent in 2010.” The resistance isn’t just about
wealth management fees. Travis Chambers,
33, was discouraged when none of the advis-
ers he interviewed “brought up crypto or real
estate, the investments that most interested
him.” Startup founder Michael Martocci, 26,
said that “most young people don’t really care
about the downside” when investing, which is
what an adviser would consider. At this point,
he said, “he prefers risky investments that
could potentially double or triple.”What the experts say
One of the biggest challenges to end-
ing the Covid-19 pandemic is getting
the whole world vaccinated, particu-
larly people in regions already facing a
severe shortage of health-care workers
and resources. VillageReach (village
reach.org) is a nonprofit that promotes
vaccine equity in sub- Saharan Africa
by strengthening the supply chain so
that vaccines and health-care workers
can reach people even in remote areas.
VillageReach has been working for 20
years to solve the “last mile” difficulties
of delivering health care in Africa and
is currently focused on bringing Covid
vaccines to Ivory Coast, the Democratic
Republic of Congo, Liberia, Malawi,
and Mozambique. It has developed
innovative techniques to overcome the
logistical hurdles—even experiment-
ing with using drones to bring medical
supplies to remote villages.Charity of the week
Each charity we feature has earned a
four-star overall rating from Charity
Navigator, which rates not-for-profit
organizations on the strength of their
finances, their governance practices,
and the transparency of their operations.
Four stars is the group’s highest rating.