Showing posts with label payment. Show all posts
Showing posts with label payment. Show all posts
Sunday, April 13, 2014
Credit Scores Payment Choice and Durbin
The policy implication from a recent paper released by the Federal Reserve Bank of Boston is that younger, less educated, and lower income consumers, as a group, may be adversely affected by the Durbin interchange fee cap.
The study looked at the relationship between credit scores and consumer payment choices. It found that even when controlling for several variables that affect payment behavior, consumers with a higher credit score have a higher probability of holding a credit card, and a lower probability of holding a debit card. Moreover, cardholders with higher credit scores were found to use credit cards for a higher share of their payments and use debit cards less.
The study postulates that if financial institutions attempt to recoup forgone interchange revenues due to the Durbin amendment by charging a debit card fee, consumers with low credit scores are more likely to be harmed by a debit card fee. Low credit score consumers -- who tend to be younger, less educated and lower income -- use debit cards more intensively than those with high credit scores because their access to alternative means of payment is restricted.
Read the paper.
ReadThe RestEntry..
The study looked at the relationship between credit scores and consumer payment choices. It found that even when controlling for several variables that affect payment behavior, consumers with a higher credit score have a higher probability of holding a credit card, and a lower probability of holding a debit card. Moreover, cardholders with higher credit scores were found to use credit cards for a higher share of their payments and use debit cards less.
The study postulates that if financial institutions attempt to recoup forgone interchange revenues due to the Durbin amendment by charging a debit card fee, consumers with low credit scores are more likely to be harmed by a debit card fee. Low credit score consumers -- who tend to be younger, less educated and lower income -- use debit cards more intensively than those with high credit scores because their access to alternative means of payment is restricted.
Read the paper.
Thursday, May 23, 2013
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And last but not the least to ensure that the eligible customer gets the loan approved within no time.
It is a hard and sometimes impossible task to get a regular loan from banks or credit unions to buy a new or used automobile when you have a poor credit score. Even if a lender does offer you a loan, the interest rates charged may be so high that you may not be able to meet the expense of the loan. In these circumstances, auto loans for bad credit prove very helpful.
There is a higher risk for the lender offering auto loans for bad credit than a traditional lender as the borrower has a poor credit history, previously having failed to fulfill some financial commitments.Buying a used car instead of a brand new one allows you to fund the purchase with a smaller loan that also puts a much smaller monthly burden on your finances.
People who are looking to buy a new car but have a poor credit score that prevents them from getting a regular loan can benefit greatly from opting for pre-approved auto financing for bad credit. This makes the loan shopping and car purchase process much easier.
Pre-approval is based on various factors. Your current income and credit history are two of the most important factors that are considered. Other than these, your lender may also ask for an estimate of your total disposable income as this will disclose your repayment capacity. Every lender calculates the total pre-approval amount for a potential borrower using his own special formula that takes all these factors into account.
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