Two and a Half Inflation Myths

Inflation lately has been pretty tame. Still, the possibility that it could raise its ugly head again, eating away at our spending power and standard of living, is always in the back of our minds. That’s why it’s important to understand inflation to better protect ourselves from its potential impact. Knowing these myths about inflation is a good place to start. Myth one: Inflation is easy to predict. The U.S. Bureau of Labor Statistics (BLS) measures inflation and reports consumer …

Banks Ease Terms for Struggling Student Borrowers

Big banks are beginning to cut some slack to distressed student-loan borrowers. Wells Fargo announced a new program this week that will lower the interest rate on loans so payments will be more affordable based on a struggling borrower’s income. The bank will review borrowers’ financial situations to determine whether they qualify for short- or long-term loan modification. >> 8 Hidden College Expenses According to the Wall Street Journal, both borrowers and cosigners will have to show financial hardship to get a modification. Modifications …

‘Boring’ High-Quality Bonds and Why You Need Them

Between mid-September and mid-October, the S&P 500 average sank nearly 150 points, or about 7.4 percent. Many investment pundits now suggest stocks are quite risky and the next great Bear Market could be coming. Suddenly bonds, previously shunned by many investment advisers, are looking more appealing. To better understand how high-quality bonds and bond funds act as a portfolio’s shock absorber during market volatility, let’s go back to the very painful period that ended on March 9, 2009. The stock market had plunged well …

Will Interest Rates Rise Next Year? And Should You Care?

When interest rates rise, the value of bonds declines. Many experts are sure that rates will increase next year, but should you worry about that? Why are experts convinced that rates will rise next year? For one, the Federal Reserve announced last week that it will start raising the federal funds rate next year from the near-zero rate of today. The Fed is also tapering quantitative easing, meaning that it’s buying back its own longer-term bonds at a much slower pace …

Regulator Seeks Greater Oversight of Auto Financing

The Consumer Financial Protection Bureau wants to extend its oversight to large nonbank auto-finance companies to make sure they are not discriminating against consumers. The CFPB announced today its proposed rule to expand its supervision to these companies, which would include the finance arms of auto manufacturers. “Nonbank auto-finance companies extend hundreds of billions of dollars in credit to American consumers, yet they have never been supervised at the federal level,” CFPB Director Richard Cordray said in a statement. “Today’s proposal …

Payday Lender Ordered to Pay $10 Million Over Collection Practices

Ace Cash Express, one of the nation’s largest payday lenders, has agreed to pay a $10 million settlement over its collection practices. The Consumer Financial Protection Bureau said that Ace, based in Irving, Tex., must refund $5 million to customers who fell victim to such practices from March 2011 to September 2012; it must also pay a $5 million civil penalty. Payday loans are taken out by people who need quick cash between paychecks. Companies such as Ace Cash Express have been known …