Current Events in August 2022

You may notice that you’re receiving more credit card offers in the mail. In spite of inflation and fears of a slowing economy, credit card companies are ramping up efforts to sign up new customers.

The Wall Street Journal reports that American Express, Capital One, and Discover have all committed new money to their marketing budgets, suggesting that executives at these lenders believe consumers will continue to spend.

In fact, consumers are still spending despite recession fears. JPMorgan Chase reports that consumers spent more than $271 billion using plastic in the second quarter. That’s 33% more than they spent in the fourth quarter of 2019, just before the COVID-19 pandemic.

Many consumers are charging more but not paying off the balance. VantageScore reports that Gen Z consumers increased credit card balances by 30% in the second quarter.

Check your credit

With banks so willing to lend, what should consumers look for when considering a new credit card? According to ConsumerAffairs' research, your current financial situation and credit history should determine the best credit card for you.

First, check your credit score. The cards with the best terms are usually reserved for consumers with good to excellent credit.

Next, think about how you will use the card. If you have a high-interest card with a balance, getting a balance transfer card with a long introductory 0% interest rate may be most advantageous.

Many credit cards offer generous rewards, but pending legislation could put those perks in jeopardy. A Senate bill would give businesses more credit processing options, which would likely reduce the fees credit card companies collect with each purchase.

Should the bill become law, Scott Lieberman, founder of TouchdownMoney.com, says there could be some unpleasant repercussions for consumers with generous rewards cards.

“Capping credit card fees may make issuers skittish about their lucrative rewards programs,” Lieberman told ConsumerAffairs. “They’ll need to reevaluate Customer Lifetime Value (CLV) for folks with rewards cards as the card fees paid by others might no longer be enough to offset the bonus programs.”

The interest rate may carry more importance

Every time the Federal Reserve hikes the federal funds rate, it puts upward pressure on credit card interest rates. If you think you’ll carry a balance, applying for a card with a low interest rate, or even a 0% introductory rate, might save more money than a cashback rewards card. A low credit score usually means a higher interest rate, but there are credit cards specifically marketed towards consumers with less-than-perfect credit.

Consumers who are rebuilding their credit might consider a secured credit card. The account is secured by an upfront deposit, which sets the credit limit. Just be sure that the card issuer reports payments to all three credit agencies. Not all secure lenders do.

Finally, when researching credit card offers, take advantage of ConsumerAffairs’ guide to the Best Credit Cards to help reach a decision.

While many consumers might be concerned about the amount of time they spend on their smartphones, a new study conducted by researchers from University College London has found a key benefit of smartphone use. According to their findings, the devices may play an important role in improving consumers’ memory skills. 

“We wanted to explore how storing information in a digital device could influence memory abilities,” said researcher Dr. Sam Gilbert. “We found that when people were allowed to use an external memory, the device helped them to remember the information they had saved into it. This was hardly surprising, but we also found that the device improved people’s memory for unsaved information as well.” 

Boosting memory

For the study, the researchers had nearly 190 participants between the ages of 18 and 71 complete a memory task on a tablet or computer. The memory assessment involved dragging colored circles to different sides of a computer screen to earn points. The participants were able to use their digital devices to set reminders and take notes to help them remember which sides were worth higher points. 

Using the devices paid off, as the reminders helped the participants remember the higher point values more frequently. The participants improved their memory of the higher-value points by nearly 20%. While many of them didn’t write down the lower-point values, knowing the location of the higher-point values improved those scores by nearly 30%. 

“This was because using the device shifted the way that people used their memory to store high-importance information versus low-importance information,” Dr. Gilbert said. “When people had to remember by themselves, they used their memory capacity to remember the most important information. But when they could use the device, they saved high-importance information into the device and used their own memory for less important information instead.” 

By using the devices to remember the most important information, the participants were able to use their working memory to remember even more. Though experts may have had concerns over too much digital device use, these findings highlight the cognitive benefits of consumers of all ages using smartphones. 

“The results show that external memory tools work,” said Dr. Gilbert. “Far from causing ‘digital dementia,’ using an external memory device can even improve our memory for information that we never saved. But we need to be careful we back up the most important information. Otherwise, if a memory tool fails, we could be left with nothing but lower-importance information in our own memory.” 

A new study conducted by the Mayo Clinic explored the way that consumers’ diet choices can affect their kidney health. According to their findings, incorporating more foods that are high in potassium and calcium are likely to lower the risk of recurring kidney stones. 

“These dietary findings may have particular importance because recommendations for preventing kidney stones have been based primarily on dietary factors associated with first-time rather than recurrent stone formation,” said researcher Dr. Andrew Rule. “Patients may not be likely to adjust their diet to prevent an incidence of kidney stones, but they are more likely to do so if it can help prevent recurrence.” 

Improving long-term kidney health

The researchers had over 400 participants who recently had their first kidney stones and over 380 people who hadn’t had a kidney stone involved in the study. All of the participants visited the Mayo Clinic in either Florida or Rochester between 2009 and 2018, and they answered in-depth questionnaires that assessed their diets. 

Ultimately, there were several links between diet and kidney health. Lower levels of calcium and potassium were two of the leading risk factors associated with getting the first kidney stone. After following up with the participants for more than four years, the researchers learned that increasing calcium and potassium intake was beneficial in preventing future kidney stones. 

The team recommends that consumers incorporate more foods that are high in both nutrients. This can include fruits and vegetables like apricots, bananas, peas, oranges, potatoes, cantaloupe, and zucchini, among several others. The researchers say aiming for 1,200 mg of calcium per day should be consumers’ goal, but there is no set figure for potassium intake. 

“Changing your diet to prevent kidney stones can be very difficult,” Dr. Rule said. “Thus, knowing the dietary factors that are most important for preventing kidney stone recurrence can help patients and providers know what to prioritize.” 

Mercedes-Benz USA (MBUSA) is recalling 81 model year 2020 Mercedes-Benz GLS 450s and GLS 580s.

The front airbag wiring harness may be routed incorrectly, which can cause the airbag to deploy improperly.

An airbag that does not deploy properly can increase the risk of an injury in a crash.

What to do

Dealers will correct the wiring harness routing free of charge.

Owner notification letters are expected to be mailed on August 30, 2022.

Owners may contact MBUSA customer service at (800)367-6372.

Hyundai Motor America is recalling 10,575 model year 2017-2018 Ioniq HEVs and Ionic PHVs that were previously recalled in 2018.

The Power Relay Assembly (PRA) located underneath the rear seat may overheat.

An overheated PRA increases the risk of a fire.

What to do

Dealers will inspect and replace the main relay or PRA -- as necessary -- free of charge. Vehicles repaired under the previous recall will need to have the new remedy completed. Owner notification letters are expected to be mailed on August 26, 2022.

Owners may contact Hyundai customer service at (855) 371-9460. Hyundai's number for this recall is 232.

BMW of North America is recalling 6,930 model year 2022-2023 iX xDrive40s, iX xDrive50s, iX M60s, model year 2022 i4 eDrive40s, and i4 M50s with hybrid electric powertrains.

While in Valet Parking Mode, the Central Information Display (CID) may not display critical safety information, such as warning messages and/or warning lights.

A display that does not show this critical information can increase the risk of a crash.

What to do

Dealers will update the display's head unit software free of charge. Owner notification letters are expected to be mailed on August 29, 2022.

Owners may contact BMW customer service at (800) 525-7417.

It’s back-to-school time, and current levels of inflation promise to put this year into a class all by itself. The National Retail Foundation (NRF) reports that the higher prices that parents are seeing on food and gas are also showing up in back-to-class essentials like clothes and school supplies.

Even though the Consumer Price Index is at its highest level in over 40 years, consumers aren’t holding back on back-to-school and college spending. In fact, the NRF says this year’s expected spending is on par with last year’s record highs and exceeds pre-pandemic levels.

“Necessities are the most protected segment of retail, and getting kids to school is essential for families,” said Mark Matthews, the NRF's Vice President of Research Development and Industry Analysis.

Matthews notes that consumers are so focused on getting all the school items they need that they’re cutting back on spending elsewhere. Consumers are also reportedly taking other measures like working additional hours to cover costs for back-to-school shopping this season.

Electronics are the new must-have

The days of pencils, paper, and notebooks have given way to electronics as the one thing students must have. Mathews said inflation has caused products like computers to rise in price by as much as 22% since 2019. Now, the amount consumers are expected to spend on electronics accounts for half of back-to-school growth and nearly one-quarter of back-to-college growth.

To take advantage of the situation, Best Buy, Dell, Apple, Amazon, and HP are all offering discounts on tech products and electronics. For example, when ConsumerAffairs looked at Best Buy deals, we found one Chromebook at an inviting sub-$100 price point. At Apple, consumers can not only get special education discounts on MacBooks and iPads, but they can also get a free $120 gift card.

While we’re talking about Apple, consumers should also consider buying refurbished products. They may be slightly used, but they come with one-year warranties, 90 days of complimentary technical support, and prices that are generally at least 15% lower than the cost of a new Apple product. It's worth mentioning that Walmart just opened up a new "refurbished" platform too.

Interesting places consumers can look for deals

If there’s any one thing that social media – especially Facebook – has cultivated, it’s communities of like-minded people. The experts at GETIDA told ConsumerAffairs that there are a handful of social media groups on Facebook that consumers can join to get information on deals. 

“This can help in many ways. One way is large volume discounts,” a GETIDA spokesperson told ConsumerAffairs. “If you only need one unit of a product, but on a certain website if you buy a minimum of three units, you get a significantly better deal, then you should be able to easily post about such an offer, and find another fellow shopper on your social media group for example, and have them join you at buying at bulk for the deal for collective savings.”

Another nugget GETIDA shared was that cashback apps not only have gift cards for major online retailers at a discount, but consumers can also find unique discount codes. 

“What is nice about discounted gift cards which act as a cashback, is that you can pay for such gift cards with your credit cards. This way, you are stacking up your cashback rewards,” GETIDA said.

“For example, if you find a deal to buy a $100 Nike gift card for $95 (5% cashback), but your credit card gives you a 2% cashback for purchasing the gift card, in this case, you are stacking almost at 7% cashback in rewards.

“These layers of cashback rewards can tremendously give you a firm advantage of getting more value for your money, and fighting inflation by having you, the consumer, with the upper hand,” the spokesperson concluded.

Just about every online retailer will offer a few products – mostly computers – that are refurbished. The price is usually a lot less than if the item was new.

Walmart has taken the concept a step further by setting up Walmart Restored, a section of Walmart.com that only sells used or refurbished products. In addition to computers, Walmart Restored offers TVs, smartphones, cameras, audio gear, large and small appliances, and video games.

Walmart has struggled recently because consumers have shifted much of their spending away from products and toward food and gasoline because of inflation. The retailer says it is offering a portfolio of refurbished products to counter rising prices.

“In a year when customers are looking for ways to save money, like-new refurbished products have become an increasingly popular way to cut down on costs without sacrificing quality,” the company said in a statement.

Walmart says all products listed on Walmart Restored have been professionally inspected, tested, and cleaned. It offers a 90-day free return policy to help boost customer confidence in the used products.

Example of the savings

The savings from the new offering can be significant. Walmart Restored currently offers a 50" 4K Roku Smart LED TV for $218. The same TV sells for new at a competitor for $300.

In the small appliance category, a refurbished Panasonic 2.2 Cu. Ft. countertop microwave oven is priced at 169.95. It generally sells new for upwards of $210.

Walmart says it works with sellers and suppliers who are committed to refurbishing top-quality products and preparing them for resale at a fraction of typical costs. Walmart Restored will increase their number and put them together in one place to make shopping easier. Brands included in the section include Apple, Samsung, and KitchenAid.

How reliable will these products be? It may depend on the product. The experts at TechPenny.com say the reliability of refurbished TVs can be hit or miss. One answer may be to purchase an extended warranty, but that cost has to be weighed against the savings from buying a refurbished product.

The Securities and Exchange Commission (SEC) has charged 11 people for creating and promoting Forsage, a fraudulent cryptocurrency pyramid and Ponzi scheme that raised more than $300 million from millions of retail investors worldwide. While the lead actors in the scheme are foreign nationals, several of the charged individuals are U.S.-based promoters who were hired to pump up Forsage on websites and social media platforms.

The SEC said Forsage has operated as a pyramid scheme for more than two years. The fraudulent system allowed retail investors to enter into transactions via smart contracts that operate on the Ethereum, Tron, and Binance blockchains. 

Unfortunately for defrauded investors, cease and desist actions by federal, state, and foreign officials failed to stop Forsage from continuing to perpetuate its scheme. Emboldened by the regulators’ failures, the defendants allegedly continued to promote Forsage while denying legal claims on YouTube, its website, and other means.

The SEC didn’t release figures on how many people were ripped off by the scheme, but ConsumerAffairs found 7,500 members who were part of a Forsage-related Facebook group.

"As the complaint alleges, Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors," said Carolyn Welshhans, Acting Chief of the SEC’s Crypto Assets and Cyber Unit. "Fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains."

While the eleven who were charged have yet to comment, the SEC said two of those charged have agreed to settle the complaint. One other investor has agreed to pay penalties.

How to protect yourself from pyramid schemes

Pyramid and Ponzi schemes are investment scams that promise high rates of return with little risk. The scams build credibility by giving early investors returns on their investments. However, that money comes from the investments of later investors and not as an actual return that honest investments – such as real estate or stocks – produce. 

The SEC has created a website – Investor.gov – that details the characteristics of these schemes that investors should be on the lookout for. Here are the common warning signs:

High returns with little or no risk. Naturally, every investment carries some degree of risk, with high-return investments involving more of it. The SEC says investment opportunities that use the word “guaranteed” in their pitch should raise red flags for investors.

Overly consistent returns. Anyone who’s invested in the stock market knows that they’ll probably have to endure the occasional spikes and dips. To that end, the SEC says investors should be skeptical about any investment that regularly generates positive returns regardless of overall market conditions.

Unregistered investments. If an investment isn’t registered with the SEC – like most Ponzi schemes –  that is a red flag that investors should investigate further. Registration is important because it provides investors with access to information about the company’s management, products, services, and finances.

Unlicensed sellers. Most Ponzi schemes are carried out by unlicensed individuals or unregistered firms. Federal and state securities laws require investment professionals and firms to be licensed or registered. Every investor should ask for proof of licensing and registration and, if possible, verify it with the SEC.

One thing that ConsumerAffairs found that might be helpful is the SEC’s “Investment Adviser Public Disclosure” site. It allows investors to search the names of investment companies and promoters, including their years of experience and disclosures.

Secretive, complex strategies. If you see an investment that’s difficult to understand, or you can’t get complete information about it, you’re better off keeping your money to yourself.

Issues with paperwork. Ponzi and pyramid schemers frequently make mistakes on account statements. If you see one, it could be a sign that your funds are not being invested as promised.

Difficulty receiving payments. Lastly, be suspicious if you don’t receive a payment or have difficulty cashing out your investment. Remember – Ponzi scheme promoters need your money to show that the scheme works for the investors upstream. If an investment group tries to prevent you from cashing out by offering even higher returns for staying put, you should take action immediately and seek help from officials if necessary.

With the cost of living rapidly rising, the number of Americans who live paycheck-to-paycheck appears to be rising just as fast.

LendingClub Corporation, in partnership with PYMNTS.com, has released its periodic study of consumer spending patterns and found that 61% of consumers spend all of their money between pay periods. That’s up from 52% a year ago.

According to LendingClub, living paycheck-to-paycheck is the most common financial lifestyle in the U.S., with increasingly more high-income consumers now entering that category. However, the researchers also report that an estimated 33.5 million U.S. consumers – about 13% – actually spent more than they earned in the past six months by tapping savings or going into debt.

Inflation is a complicating factor

After the lowest income group, the survey shows that higher-income households are the most likely to barely scrape by. The biggest rise in paycheck-to-paycheck living occurred among consumers in households that earned between $100,000 and $150,000. Paycheck-to-paycheck living rates were up11% year-over-year in May 2022, and were at 52% in June 2022. That period coincides with a jump in the inflation rate.

"What a difference a year makes. Last summer we were all worried about how quickly the economy would recover. Now, as inflation continues its upwards swing, consumers are finding it more difficult to manage spending and are eating into their savings as financial pressures mount," said Anuj Nayar, LendingClub's Financial Health Officer. 

The survey found that 77% of households earning less than $50,000 a year were living paycheck-to-paycheck in June, which should come as no surprise. However, that’s a slight improvement from April when 79% of those households were in that category.

The generation that lived through the Great Depression had the highest savings rate of any modern demographic. Today, even high-wage-earners are more likely to spend all their money between paychecks.

A slight improvement in savings

Consumers in households that earn more than $200,000 a year are the only ones that actually saved a little more in June than in April. That group is also the most likely to have investments in stocks and bonds, and half of all investors reported their portfolios losing money in the last three months.

But even with declining assets and rising prices, Nayar says there is no evidence that consumers are slowing their spending habits. This could make them more financially vulnerable.

“Not only is it going to be difficult for them to handle future emergency expenses, but even foreseen payments like education, student loans, or housing expenses may be harder to balance for the everyday American consumer," Nayar said.

A new study conducted by researchers from the University of Maryland School of Medicine explored the importance of kids getting enough sleep. According to their findings, young kids who aren’t getting at least nine hours of sleep each night may struggle with long-term brain and cognitive function. 

“We found that children who had insufficient sleep, less than nine hours per night, at the beginning of the study had less gray matter or smaller volume in certain areas of the brain responsible for attention, memory, and inhibition control compared to those with healthy sleep habits,” said researcher Ze Wang, Ph.D. “These differences persisted after two years, a concerning finding that suggests long-term harm for those who do not get enough sleep.” 

Health risks related to poor sleep

The researchers analyzed data from over 8,300 kids between the ages of nine and 10 who were enrolled in the Adolescent Brain Cognitive Development (ABCD) study. The children’s parents completed surveys about their children’s sleeping habits when the study began and two years later. The team used that data and also evaluated the kids’ medical records and brain scans. 

Ultimately, not getting enough sleep was evident from both brain health and cognitive function standpoints. Kids who weren’t reaching nine hours of sleep on a nightly basis had less gray matter in certain parts of the brain. Over time, this can be detrimental to important cognitive skills. 

The study showed that insufficient sleep increased the risk of anxiety, depression, poor overall well-being, and impulsive behaviors. The researchers also found that a lack of sleep was linked with poorer outcomes in key areas like intelligence and memory. 

By the study’s two-year follow-up mark, these findings held up. Children who were struggling to sleep at least nine hours each night were still getting poor sleep each night. While children who were sleeping well when the study began started sleeping less as the study progressed, the team explained that this is expected as kids enter their teenage years. 

Knowing that there are long-term risks associated with poor sleep, the researchers hope parents recognize how important it is that their children regularly get a good night's sleep. 

“Sleep can often be overlooked during busy childhood days filled with homework and extracurricular activities. Now we see how detrimental that can be to a child’s development,” said researcher Dr. E. Albert Reece.

While recent studies have explored consumers’ habits related to substance use during the COVID-19 pandemic, a new study conducted by researchers from the American Cancer Society looked closely at smokers. Their report showed that rates of consumers quitting smoking dropped over the course of the pandemic and remained low for over a year. 

“Smoking cessation is an urgent public health priority given that smoking is associated with an increased risk of severe COVID-19 outcomes and at least 12 cancers,” said researcher Dr. Priti Bandi. “It is essential to re-engage persons who smoke in serious attempts to quit smoking, considering a typical smoker tries to quit on average six times before being successful.” 

Consumers’ health is at stake

For the study, the researchers analyzed data from nearly 800,000 people enrolled in the Behavioral Risk Factor Surveillance System study from 2011 through 2020. They also looked at retail records from 2017 through 2020 that tracked purchases of nicotine replacement therapy (NRT) from over 30 states across the country. 

While the research spanned nearly a decade, 2020 marked the first year that attempts to quit smoking dropped. In 2011, 65.2% of American smokers attempted to quit; by 2020, that number dropped to 63.2%. These decreases remained steady throughout the pandemic. 

Similarly, NRT sales dropped over the course of the study. Experts found that purchases were as much as 13% lower in 31 states across the country when compared to national sales projections. 

The researchers also found that certain factors made it less likely for consumers to quit smoking. Consumers with lower education levels, those with comorbidities, middle-aged people, and Black consumers were all found to be the least likely to attempt to stop smoking over the course of the pandemic. The researchers believe the stressors related to COVID-19 may have come into play here. 

“These results remind us how critical it is for clinicians and health care systems to support persons who smoke with evidence-based quitting strategies,” said researcher Dr. William Dahut. 

Moving forward, the team hopes more work is done to encourage consumers across the country to quit smoking to promote the best health outcomes. 

“Tobacco is the number one, preventable cause of cancer and is responsible for up to one-third of all cancer deaths,” said researcher Lisa Lacasse. “We know quitting tobacco isn’t easy, so we must do everything in our power to ensure individuals trying to quit have access to the cessation services they need.” 

Hyundai Motor America is recalling 72,470 model year 2020-2022 Venues.

The front driver-side and/or passenger-side seat belt pretensioners may explode upon deployment in a crash.

An exploding seat belt pretensioner can project metal fragments into the vehicle that strike vehicle occupants and result in injuries.

What to do

Dealers will secure the seat belt pretensioners with a cap at no cost to vehicle owners. Venues repaired under a previous recall need to have the new remedy completed. Owner notification letters are expected to be mailed on August 26, 2022.

Owners may contact Hyundai customer service at (855) 371-9460. Hyundai's number for this recall is 231.

Two U.S. Senators, one a Democrat and the other a Republican, have introduced legislation to allow businesses to have alternatives to current credit card processing networks. The sponsors say their bill would reduce “swipe fees” that are a burden to small businesses and increasingly are passed along to consumers.

Sen. Dick Durbin (D-Ill.) and Sen. Roger Marshall (R-Kan.) introduced the Credit Card Competition Act of 2022, saying it would introduce competition to a market that is currently dominated by Visa and Mastercard.

Building off of debit card competition reforms enacted by Congress in 2010, the lawmakers say their bill would direct the Federal Reserve to ensure that giant credit card-issuing banks offer a choice of at least two networks over which an electronic credit transaction may be processed. 

‘Devastating effect’

Jay Zigmont, founder of Childfree Wealth, says lowering swipe fees may impact consumers. However, he also says it will most likely take time before consumers notice. Ted Rossman, a senior industry analyst at Bankrate, believes the measure would be “very bad” for consumers.

“For starters, it would have a devastating effect on credit card rewards programs,” Rossman told ConsumerAffairs. “Debit card rewards all but disappeared after Sen. Durbin’s eponymous Durbin Amendment took effect in 2011. It capped debit card interchange fees, removing a key funding source of debit card rewards. Sen. Durbin and others argued that consumers would benefit from lower prices. Merchants won’t admit it, but they pocketed the savings.”

In other words, Rossman says it’s far from certain that the savings from lower swipe fees would be passed along to consumers. Isaac Tebbs, head of growth at Millions, says the credit card industry would take steps to make up the lost revenue if possible, which would ultimately affect consumers.

“The credit card industry would be adversely affected by this legislation, but it is unlikely to be a death knell,” Tebbs told us. “Credit card companies would likely respond by reducing the rewards they offer to consumers and by increasing other fees, such as annual fees.”

Higher fees

Richard Gardner, CEO at Modulus, also agrees that this legislation would have some unintended consequences for consumers. He points to the Durbin Amendment, which he said led to the wholesale cancellation of debit card rewards programs.

“But, that's not all,” Gardner told ConsumerAffairs. “Surveys from the time showed that the monthly fees on non-interest checking accounts jumped by 25% and the minimum balance requirements for free checking accounts rose by nearly that amount. Perhaps worst of all, large banks attempted to institute monthly debit card fees on consumers as a response to the new regulation on interchange fees, though they gave up on the idea after customers revolted.”

Durbin argues that the legislation is needed to help small businesses that are struggling against high inflation and rising credit processing costs. He points out that many small businesses now charge consumers an extra 3.5% to cover swipe fees. 

Durbin said the bill would give businesses “a meaningful choice” when it comes to credit card processing networks and help reduce their costs. While that might be true, the experts we consulted expressed strong doubt that consumers would be the beneficiaries.

With inflation putting the squeeze on consumers, many are finding that their credit card debt is getting unmanageable. It’s especially difficult since interest rates tend to go up every time the Federal Reserve hikes the federal funds rate.

Applying for a balance transfer credit card with a year or more of 0% interest can help pay down credit card debt faster. As an alternative, Rocket Mortgage has introduced a new home equity loan that it says could save homeowners thousands of dollars if they used the equity in their homes to pay off their credit card balances.

"Our goal is to consistently create financial products that help our clients achieve their goals," said Bob Walters, CEO of Rocket Mortgage. "In the current market, short-term interest rates have risen sharply - making it much harder to pay off credit card debt. With our new home equity loan, clients can improve their lives by having a payment they can more comfortably afford."

Credit card interest is now averaging around 20%. The interest on a home equity loan is around 5%. Credit card debt is unsecured, so lenders charge more to cover their risk. A home equity loan is secured by the equity in the house. 

Americans have lots of home equity

According to the Federal Reserve, Americans currently have nearly $28 trillion in home equity. America’s total household debt stood at $15.84 trillion as of the first quarter of this year; that number is $1.7 trillion higher than it was at the end of 2019, before the COVID-19 pandemic. The Fed report also shows that credit card balances have risen since last year.

Rocket Mortgage says homeowners can access $45,000 to $350,000 of their home's equity in 10- or 20-year term, fixed-rate loans. The stipulation is that borrowers must maintain at least 10% equity in their homes. 

Because home equity loans are secured by the equity in a home, borrowers need to carefully consider all of the risks. The consequences of default are much higher than defaulting on a credit card bill.

To make it easier to understand home equity loans and pick the right lender, ConsumerAffairs has assembled an extensive guide here. To put it together, we reviewed the top lenders and compiled details about their loan packages. We also have thousands of verified consumer reviews about the top companies to help inform your research and choices.

There’s a bit of good news for people who are hoping to buy a home. The rate at which prices are rising slowed dramatically in June, according to housing data firm Black Knight.

Home prices are already at a record high, and rising mortgage rates have put monthly house payments out of reach for millions of Americans. There were fewer buyers in June as a result, and price gains slowed at the fastest rate on record.

The numbers show that year-over-year home price appreciation fell by 2% in June to 17.3%. Even during the housing market crash of 2008-09, prices didn’t slow by more than 1.9% from one month to another.

At the same time, prices are still going up. That’s because the housing market is so out of balance that there are still more people willing and able to purchase a home than there are houses for sale.

Black Knight reports that 25% of major U.S. housing markets saw growth slow by 3% in June. Four markets experienced a 4% or more slowdown. Even so, industry experts say it’s hard to say whether the market is moving in a direction that favors buyers.

“The market is showing signs of an inflection point with supply and days on the market ticking up in some areas,” Michael Gifford, CEO and co-founder of Splitero, told ConsumerAffairs. “With that said, we have been far from a normalized market since the pandemic's start, so change doesn't necessarily mean we are at an inflection point.”

Most expensive markets lost the most value

According to Black Knight data, the markets seeing the biggest slowdown in rising prices are the most expensive housing markets. For example, average home values in San Jose, Calif., fell by 5.1% from the first of May to the end of June.

Home prices have also declined in Seattle, San Francisco, San Diego, and Denver but are still well above the national median. In more encouraging news for buyers, Black Knight found that the supply of available homes increased in June.

However, while inventory increased by 22% during May and June, inventory levels are still 54% lower than from 2017 to 2019, just before the start of the pandemic.

Home foreclosures fell to record lows during the pandemic, but that appears to be reversing slightly. Black Knight reports foreclosure starts rose 27% in June but were 40% below pre-pandemic levels.