Personal Finance

2011: A Look Ahead

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While 2009 – 2010 were defined by a credit freeze that slowly began to thaw, 2011 will probably look more like the slush that comes after a big freeze, but before Spring is fully in the air.

Foreclosures Accelerate.

Without effective intervention, which seems unlikely in the current political climate, foreclosures will accelerate and even more homeowners will lose their homes in 2011. At the same time, purchase and refinance loans will be scrutinized even more closely than before, making it difficult for even qualified borrowers to close on home loans. Lenders and servicers will be forced to devote even greater resources to cleaning up these loans.

Debit Card Rewards Become Extinct.

Regardless of what the Federal Reserve Board’s final debit card interchange rules look like, debit interchange fees are going to go down significantly, and debit cards reward programs will go down accordingly. At the same time, debit card fees – annual fees, transaction fees or even surcharges – will become more commonplace.

Prepaid Cards Will Grow in Popularity.

The Kardashian card notwithstanding, prepaid cards are booming and will continue to do so. The combination lack of access to credit for millions with damaged credit, frustration or anger with banks and credit card companies, coupled with new proposed regulations that will likely make debit cards more expensive, will fuel this industry.

The Credit Repair Boom is Coming.

Millions of Americans have less than perfect credit. Some of them have never dealt with the inconvenience of bad credit before, and they will be anxious – even desperate – to get back their good FICO scores. While a strict federal law, the Credit Repair Organizations Act, restricts credit repair operations, there are plenty of entrepreneurs who will see this as the next boom, and create products and services to cash in.

Online Loan Scams Will Continue.

Stories of advance fee loan scams have been one of the most active forum threads at  In these scams, consumers go online looking for a loan, only to be ripped off by firms that charge them upfront “processing” or “insurance” fees, or require them to make their first several payments upfront. Because most of these bogus lenders are located overseas , it will be easy for them to evade prosecution and to easily start new websites. This scam will continue to proliferate. In addition, we are receiving numerous reports of bogus debt collection firms, based overseas, that are harrassing and intimidating consumers. This scam, too, will become even more commonplace.

Free Credit Scores.

Some good news for a change. The combination of risk-based pricing notices and the Fair Access to Credit Scores Act mean that millions of consumers will get free disclosures of their credit scores. Better still, they will see the actual credit scores lenders use when making credit decisions. This will raise awareness of credit scores and perhaps pave the way toward free scores for all.

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