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Surprise overdraft fees and depositor fees are the target of the Consumer Financial Protection Bureau’s latest move in an ongoing effort to eliminate so-called junk fees.
Many banks already have either eliminated overdraft or non-sufficient funds fees this year, which the CFPB estimates have saved consumers $3 billion.

Rohit Chopra, director of the Consumer Financial Protection Bureau, testifies during a Senate Banking, Housing and Urban Affairs Committee hearing on April 26, 2022.
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The nation’s consumer watchdog is upping its efforts to clamp down on so-called junk fees that some banks charge consumers.
The Consumer Financial Protection Bureau on Wednesday said it issued guidance to end two particular bank fees that can catch customers by surprise — and are “likely unfair and unlawful,” according to the agency’s release. The move is the latest in the CFPB’s ongoing initiative to scrutinize junk fees, which generally are fees that are unexpected or excessive.

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“Americans are willing to pay for legitimate services at a competitive price, but are frustrated when they are hit with junk fees for unexpected or unwanted services that have no value to them,” said CFPB Director Rohit Chopra.
During a press briefing Wednesday morning, President Joe Biden said the administration’s actions on junk fees — including those from banks as well as hotels, airlines and other entities — would “immediately start saving Americans collectively billions of dollars in unfair fees” and hold corporations accountable.
“My administration is also making it clear surprise overdraft fees are illegal,” he said.
In a statement, American Bankers Association President and CEO Rob Nichols said the action “attempts to sensationalize highly regulated fees that are already clearly disclosed to customers under existing federal rules.”

CFPB targets surprise overdraft and depositor fees

Nevertheless, the new guidance first targets surprise overdraft fees, which can be as much as $36 each, the CFPB said. These fees can happen when a customer had enough money in their account to cover a debit charge at the time the bank authorized it, but then is charged an overdraft fee due to the timing of other charges hitting their account.
The second fee the CFPB addresses can happen when a customer deposits a check that ends up bouncing — despite the overdraft being due to the check writer’s insufficient funds. The charge is typically $10 to $19 per instance, according to the CFPB.
Already this year, many banks have been eliminating overdraft and non-sufficient funds fees or making their policies more consumer-friendly. The CFPB estimates those changes translate into $3 billion in savings for consumers.
— CNBC reporter Emma Kinery contributed to this story.

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Under the amendments adopted by the Securities and Exchange Commission on Wednesday, shareholder reports for funds will need to be more concise and user-friendly.
Additionally, investment company advertising will need to promote “transparent and balanced presentations” of fees and expenses.
Most of the changes won’t be required for 18 months after the effective date.

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Federal regulators on Wednesday adopted rule changes intended to make it easier for consumers to understand what they’re invested in and how much it’s costing them.
Under amendments approved by the Securities and Exchange Commission, investment company ads will need to promote “transparent and balanced presentations” of fees and expenses.

Additionally, shareholder reports from mutual funds and exchange traded funds will need to be “concise and visually engaging,” according to the SEC.
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“A retail investor looking to understand the performance, fees and other operations of a mutual fund or [ETF] may need to sift through extensive financial information,” said SEC Chair Gary Gensler.
“Today’s final rules will require fund companies to share a concise set of materials that get to the heart of the matter,” Gensler said.

Key fund information will need to be highlighted

For the shareholder reports, key information — such as fund expenses, performance and portfolio holdings — will need to be highlighted. The use of graphic and text features also will be encouraged, as will making online versions of the reports more user-friendly and interactive.

Today, these reports can be 100 pages or more long, according to the SEC.

Fees in ads will need to be transparent

As for the advertising amendments: Presentations of fees and expenses in ads and sales literature will need to be consistent with relevant information in the prospectus’ fee table, and be “reasonably” current. They also cannot be materially misleading.
Fees paid by fund investors eat away at their returns. For example, $100,000 invested over 20 years earning 4% yearly would end up being worth $10,000 less with an annual 0.5% fee, compared with 0.25%, according to the SEC’s Office of Investor Education and Advocacy.

It may be a while before investors notice changes from the adopted changes.
While the amendments take effect 60 days after publication in the Federal Register, the SEC said it is providing an 18-month transition period after that effective date to give investment companies time to adjust their shareholder reports and adhere to the advertising fee rules.
The amendments that deal with misleading representations of fees and expenses will apply on the effective date.

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Soon more employers will share salary information with prospective employees as a growing number of states pass laws on pay transparency.
“We expect the recent wave of pay transparency legislation to continue,” says WTW’s Mariann Madden.
98% of workers are in favor of salary disclosures, according to Monster.

Soon more job descriptions will include salary ranges.
New York City’s Wage Transparency Law goes into effect on Nov. 1, making it mandatory for employers to share the salary or hourly wage in postings.

A growing number of states, including California, Connecticut, Colorado, Maryland, Nevada, Rhode Island and Washington are rolling out their own pay disclosure rules — or have already.
“We expect the recent wave of pay transparency legislation to continue,” said Mariann Madden, director of work and rewards at benefits consulting firm WTW, formerly known as Willis Towers Watson.

However, “regulatory requirements are only one factor in the expected increase in disclosures and communication about pay,” Madden added.
“Job seekers and current employees want to know and understand that they are treated fairly and are provided with equal opportunities to thrive and grow within the organization,” Madden said.
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With or without legal requirements, workers overwhelmingly support of salary transparency — in fact, 98% said employers should disclose salary ranges in job postings, according to new data from Monster.
Most also said salary disclosure laws would have a positive impact on the future of work. The idea is that pay transparency will bring about pay equity, or essentially equal pay for work of equal or comparable value, regardless of worker gender, race or other demographic category.
More than half, or 53%, would refuse to even apply for a job that does not disclose the salary range, even in states where salary transparency isn’t a law, Monster said. A separate survey by job search site Adzuna found that 33% of job seekers said they would not go to a job interview without first knowing the salary the employer is willing to offer.
That kind of margin could drive further change, according to Vicki Salemi, career expert at Monster.
“Employers may realize this transparency is important to job seekers and start including it anyway without a mandate,” she said.

Determine ‘what you should be earning’

Salaries are in the spotlight as inflation weighs on most workers’ financial standing.
While wage growth has been high by historical standards, it isn’t keeping up with the increased cost of living, which is still rising at the fastest annual pace in about four decades, and that is leaving more workers unsatisfied with their pay.

When it comes to determining what you should be earning, “don’t rely on the job description alone,” Monster’s Salemi advised. “Know your worth based on your experience and skill sets and the norm for the industry you are in.”
But pay isn’t everything, she added. Other factors to consider include increased opportunities for advancement, flexibility and a healthy work-life balance, Salemi said.

Get the salary question ‘out of the way’

“The reality is the job market is still strong,” said Mandi Woodruff-Santos, career coach and co-host of the Brown Ambition podcast, and that gives job seekers more leverage when it comes to benefits and pay.
Woodruff-Santos advises clients to inquire about a position’s salary during the initial phone-screening interview.
“I would ask them straight up: Do you have a budget for this role?” she said. “Then decide whether you want to proceed.
“I am in favor of getting it out of the way,” she added.
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The average interest rate on a 30-year fixed-rate mortgage has been trending above 7% for most of October, more than double where it was at the start of 2022.
Demand is slowing, which overall works in buyers’ favor.
Whether you’re looking at buying soon or down the road, these tips will help you be better prepared for the purchase.

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Becoming a homeowner can be challenging enough under good circumstances.
Add in higher mortgage rates, elevated home prices and unrelenting high inflation — i.e., the current home-buying environment — and it may feel decidedly unattainable.

The average rate on a 30-year fixed-rate mortgage has been trending above 7% for most of October, more than double the 3.3% heading into 2022, according to Mortgage News Daily. Meanwhile, the median list price for a home in the U.S. was $427,000 last month, 13.9% more than a year ago, Realtor.com’s latest monthly report shows.

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However, conditions generally appear to be shifting in buyers’ favor as demand continues to fall. In the face of higher interest rates — which makes payments less affordable and reduces the pool of potential buyers — median home prices have been sliding on a monthly basis since hitting an all-time high of $449,000 in June, according to Realtor.com. 
While it’s impossible to know with certainty where home prices or mortgage rates will be in the coming months and years, there are ways to make sure you’re in the best financial position possible to enter the market as a buyer, whether soon or down the road.
Here are some tips that may help you get ready.

Know how much home you can afford

The first thing to do is figure out how much home you can truly afford, experts say. This means having a good handle on your current financial situation.

“Understand your current budget … what are your expenses, how’s your spending, would you need to make changes,” said certified financial planner Sandy Higgins, senior wealth advisor with Capstone Financial Advisors. The firm, based in Downers Grove, Illinois, ranked No. 77 on the 2022 CNBC Financial Advisor 100 list.
While the purchase of a house is a single transaction, affordability is largely about monthly mortgage payments. 

“Think about spending no more than 25% to 28% of your gross monthly income on your payment, including taxes and insurance,” said CFP Dean Karrash, principal at BLB & B Advisors in Montgomeryville, Pennsylvania. The firm ranked No. 87 on CNBC’s FA 100 list.
The home-buying transaction itself also generally comes with expenses, such as mortgage fees and other closing costs, such as transfer taxes or the price of a title search. Those one-time costs can total thousands of dollars.
You also should consider ongoing costs that come with homeownership like maintenance and repairs. 
“Try not to be house rich and cash poor,” Karrash said. “You’ll find there are a lot of things you can’t do, like afford a replacement vehicle or go on vacation.”

‘Make improvements’ to your credit score

As you may know, the higher your credit score, the lower the interest rate you can qualify for on a variety of loans, including mortgages. Home buyers with lower credit scores may pay almost $104,000 more over the life of a 30-year fixed-rate mortgage than someone with an excellent score (based on a home price of about $354,200), according to a Zillow analysis.
“Look at your current credit score and see if you need to make improvements,” Higgins said.
Generally speaking, a score of 740 or higher yields the best mortgage rates. However, be aware that the scores you see for free online — so-called educational scores such as VantageScore — are typically not what lenders use in the approval process.

Look at your current credit score and see if you need to make improvements.

Sandy Higgins
Senior wealth advisor with Capstone Financial Advisors

While mortgage lenders pull your score from the three big credit-reporting firms — Equifax, Experian and TransUnion — it is a specific FICO score that is used and can be different from an educational score.
Regardless, financial habits like paying your bills on time and getting rid of high credit card debt can help your score head higher.

Save for a down payment

Another part of the calculation of how much house you can afford is the down payment, which helps determine how big of a loan you need to take on. The less you need to borrow, the less you’ll pay in interest overall and the smaller your monthly mortgage payments. A bigger down payment can sometimes help you get a better mortgage rate, too.
“We usually advise people to put at least 20% down to avoid private mortgage insurance,” Karrash said.
That type of insurance is for the protection of the lender if you default on your loan and usually is applied to mortgages that are for more than 80% of the home’s value at the time of purchase. It can cost anywhere from 0.58% to 1.86% of the loan’s value.
If a 20% down payment seems out of reach, be aware that many home purchases involve a much smaller amount: First-time homebuyers put an average of 7% down, according to the National Association of Realtors. For repeat buyers, the average down payment is 17%.

‘Maintain an emergency stash’

Beyond things like real estate taxes and homeowners insurance, there are other costs that come with owning a house such as footing the bill for maintenance and repairs. Those expenses can easily set you back thousands of dollars all at once.
Before buying a house, make sure you’d still have money in savings to cover those surprise costs or any other unexpected hit to your income or budget, Higgins said.
“You should maintain an emergency stash,” she said. “As you own a house, more of those unplanned situations happen.”
Financial advisors recommend having at least three to six months’ worth of income in a savings account that you can tap in case of unanticipated expenses. More

Investor Toolkit

The Leading Economic Index, published by the Conference Board, is now below a threshold that the group says is a recession signal.
The index has 10 components that it is based on, including stock market performance and initial jobless claims.
Some economists say the underlying economic data is a mixed bag right now, making it hard to predict what’s going to happen in the upcoming months.

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A monthly gauge of what could lie ahead for the U.S. economy is flashing a recession warning sign.
The Leading Economic Index dipped by 0.4% in September from August and is down 2.8% since March, according to the Conference Board, an independent group that publishes the index. The latest reading is below a threshold that the organization considers a recession signal.

“Its persistent downward trajectory in recent months suggests a recession is increasingly likely before year-end,” said Ataman Ozyildirim, senior director of economics at the Conference Board.
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Yet at this point, some experts say, the index’s latest reading is not indicative that a recession is imminent.
“The question is whether it is going to continue to deteriorate,” said Brian Bethune, an economist and professor at Boston College. “It’s a mixed signal, I’d say.”

Other recession hallmarks are mixed

A recession is generally defined as a broad-based, significant decline in economic activity that lasts for more than a few months, according to the National Bureau of Economic Research, a non-government agency that identifies recessions.

While the economy did contract in the first two quarters of 2022 by 1.6% and 0.6%, respectively, other factors that characterize a recession — such as widespread jobless claims and a broad drop in personal wages and salaries — have not materialized.

Some LEI changes are ‘not significant’

The Leading Economic Index is based on 10 components that detail factors like jobless claims, manufacturing orders and performance of the S&P 500 stock index, a broad barometer of how U.S. companies are faring. Some of those components show significant weakness — the S&P is down 20.3% year to date through Oct. 24 — while others do not.
For instance, while the average weekly hours worked in manufacturing has trended downward on a monthly basis since February when it was 41.6, September’s reading wasn’t too far below that at 41.1, according to the U.S. Bureau of Labor Statistics.
“A decline of a half-hour per week is not significant,” Bethune said.

Initial jobless claims — another data point used in the index — also do not point to the kind of broad-based job loss that comes with a recession. The most recent data shows 214,000 initial claims were filed in the week ended Oct. 20, which is a reduction from 226,000 in the previous week.
That could change, of course.

Fed rate hikes could cool the job market

The Federal Reserve is expected to continue pushing up interest rates in an effort to bring down persisting high inflation. The general idea is that by making the cost of borrowing money more expensive, spending is reduced, which in turn will slow consumer demand and ease inflationary pressure.
However, reduced demand also can translate into job and/or income loss — which generally is the primary pain point for households in a recession. Yet despite the Fed’s moves, unemployment remains low, at 3.5%, according to the latest data from the U.S. Bureau of Labor Statistics.

“Hard data on a monthly basis do not suggest the labor market overall is cooling fast,” said Alessandro Rebucci, an associate professor of economics at Johns Hopkins University.
“There are pockets of the labor market that have shed jobs, but it’s not widespread job loss,” he said.

‘We are in new territory’

Of course, the index’s 10 components will change before its next reading. For instance, another data point used — the Consumer Confidence Index, also published by the Conference Board — already is now lower than when the Leading Economic Index was published Oct. 20. At that point, consumer confidence had increased for two months.
In other words, the data is constantly changing and is not all headed in a straight line up or down, making it hard for economists to say with certainty what’s on the horizon.
“We are in new territory and don’t fully understand everything that’s happening,” Rebucci said. “It’s hard to form accurate expectations of where the economy is going.”
Correction: This story has been updated to reflect the correct name of the National Bureau of Economic Research. More

As everyday costs increase, Americans now say it will cost more to retire.
Adults now say it will take $1.25 million to retire comfortably, a 20% increase from last year.
The average expected retirement age has also increased to 64, up from 62.6 last year.

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Americans now expect they will need $1.25 million to retire comfortably, according to a new study from Northwestern Mutual. That figure represents a 20% increase from the $1.05 million respondents cited last year.
That’s not necessarily good news for individuals who have seen their retirement savings decline in the past year amid persistent high inflation and market volatility. The average retirement nest egg has fallen 11% to $86,869, down from $98,800 a year ago, Northwestern Mutual’s survey found.

Moreover, the expected retirement age has risen to 64, up from 62.6 last year.

The results, which were released by the firm on Tuesday, are based on an online survey conducted in February that included 2,381 adults ages 18 and up. Northwestern Mutual was not available for comment by press time.
Northwestern Mutual’s report comes as another survey from Bankrate.com found 55% of working Americans feel they are behind in their retirement savings as higher costs strain household budgets.
Those closest to retirement — working baby boomers ages 58 to 76 — were most likely to say they feel behind, with 71%, Bankrate.com found. Many of those near retirement reported wishing they’d started saving earlier.
“The closer you get to retirement, the more likely you are to say that that is your biggest financial regret,” said Greg McBride, chief financial analyst at Bankrate.com.

Why people plan to work longer

A quarter of Northwestern Mutual’s survey respondents — 25% — plan to retire later than they had anticipated.
The top reason why, cited by 59%, is they want to continue to work and save money.
Other reasons included concerns about rising health care costs and unexpected medical costs, with 45%. About a quarter, 26%, are taking care of relative or friend, and 24% have had to dip into retirement savings, 24%.

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At the same time, the survey found 15% of respondents plan to retire earlier. The top reason, cited by 44%, was to spend more time with family and loved ones.
Other reasons included prioritizing a personal mission over saving more, with 34%; being able to afford it, 32%; focusing on priorities and hobbies outside of work, 28%; being offered a buyout or other incentive plan, 22%; or changing work situation, 22%.

Shaky faith in Social Security

When it comes to retirement income, individuals surveyed said they expect to draw from a mix of 401(k) or other retirement account funds, for 27%; Social Security, 26%; and personal savings or investments, 22%.
Yet, 45% of respondents said they can imagine a time when Social Security no longer exists.
Despite the reliance on Social Security, a new report from the Center for Retirement Research at Boston College finds early claiming actually slightly declined during the Covid-19 pandemic.

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FA Playbook

The choice between Roth and pre-tax retirement savings can be difficult for investors.
The decision depends on your current versus expected future tax rate.
That’s impossible to know. But there are certain situations in which “success” is more likely.

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Add this to the list of challenging questions for retirement savers: Should I contribute to a pre-tax or Roth account?
You may not know if you made a wise choice until decades have passed. Fortunately, there are some key factors to help make the decision easier, and situations in which the probability of “success” is greater, according to financial advisors.

“There is no clear answer, so you have to take a leap,” said Ellen Lander, principal and founder of Renaissance Benefit Advisors Group based in Pearl River, New York.

The key difference between a pre-tax and Roth account

The tax code offers a financial benefit to Americans who contribute to a qualified retirement account like a 401(k) plan or individual retirement account.
The core difference between a pre-tax and Roth account is when savers reap those benefits — and when their taxes come due.
In a pre-tax account, savers get an upfront tax benefit. They don’t pay income tax on their contributions; those funds are deducted from savers’ taxable income, which reduces their tax bill. Instead, they opt to pay tax later when they withdraw funds in retirement.
The opposite is true of a Roth account: Savers pay tax upfront when they contribute money, but don’t pay income tax on withdrawals in retirement.

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The choice is a ‘tax bet’

Taxes are therefore a primary consideration when choosing to save via pre-tax or Roth.
It comes down to this question: Do you expect your tax rate to be higher or lower in retirement?
If higher, it makes sense to save in a Roth account now and pay taxes at your current, lower rate. If lower, saving in a pre-tax account and deferring your tax bill generally makes more financial sense.    
Consider this: If your present and future tax rates are identical, the pre-tax versus Roth choice doesn’t matter from a mathematical standpoint, said David Blanchett, head of retirement research at PGIM, an asset-management arm of Prudential Financial. You’ll end up with the same amount of after-tax retirement savings.
Of course, it’s impossible to know what your future tax rate will be — lower, identical, higher — due to unknowable personal circumstances and future policy adjustments.
“You’re really just making a tax bet,” Ted Jenkin, a certified financial planner and CEO of oXYGen Financial, said of the choice.

A Roth often ‘wins out’ for young professionals

But some savers have better odds of winning that tax bet.
Young people in their 20s and 30s are often the best candidates for Roth savings, according to financial advisors.
Since these young professionals are early in their careers, there’s a strong likelihood they’ll earn higher salaries later and have a higher standard of living when they retire. Those higher salaries and income needs may translate to a higher future tax rate.   
“I’d say a Roth always wins out [for younger people],” Lander said.
Jenkin, a member of CNBC’s Advisor Council, “almost always” counsels clients of any age to use a Roth 401(k) or IRA when they’re in the 24% federal tax bracket or lower.
In 2022, this includes single individuals with annual taxable income below $170,050 and married couples below $340,100. Those amounts will increase in 2023.

When a pre-tax account makes sense

Spending typically declines in retirement relative to one’s peak expenditures while working. A pre-tax 401(k) or IRA might make financial sense in this case since a lower tax rate may accompany those lesser income needs.
Peak spending is generally from age 45 to 54, when the average household spends roughly $84,000 a year, according to the 2021 Consumer Expenditure Survey. Spending falls to about $52,000 a year, on average, for those age 65 and older.

You’re really just making a tax bet.

Ted Jenkin
certified financial planner and CEO of oXYGen Financial

Of course, it’s not a guarantee your tax rate will fall in retirement.  
Additionally, some people may feel they can only afford to save money for retirement if they get the upfront tax break from a pre-tax account. And someone with high-interest credit card debt or another type of loan may be better-served by a pre-tax retirement account and using the extra money the tax savings leave in their paycheck to help pay down that debt, according to advisors.

Why diversifying may be the best bet

Just as financial advisors suggest retirement savers diversify their investments, they also preach the benefits of tax diversification — especially for investors to whom the choice between a pre-tax and Roth account doesn’t seem clear.
Such investors might elect to funnel half their contributions to a Roth and half to a pre-tax account to hedge their tax bet, for example.
“I love the half and half [option],” Lander said. “You’re only half wrong.”
Having two tax buckets presents financial options to retirees.

For example, retirees who are on the cusp of jumping into a higher tax bracket can opt to withdraw money from a Roth account for their income needs. Since a Roth withdrawal doesn’t count toward taxable income, the person wouldn’t jump into a higher bracket.
The same strategy applies to Social Security taxes and monthly premiums for Medicare Part B and Medicare Part D — each of which may increase with income.
A retirement law passed in 2019 — the SECURE Act — makes diversification useful even for wealthier savers, especially those who plan to bequeath retirement assets to heirs, Jenkin said.
The law requires non-spouse beneficiaries like kids and grandkids to withdraw all account assets within 10 years, a much shorter time window than under prior law. Heirs wouldn’t pay income tax on Roth assets but would on the pre-tax withdrawals.
“Even for some wealthier people, I’m starting to hedge bets,” Jenkin said. More

The Biden administration announced permanent changes to public service loan forgiveness to make it easier for borrowers to get relief.
Student loan borrowers pursuing this type of forgiveness can now get credit for partial, late or lump sum payments or for payments made under a different repayment plan, as well as credit for periods in deferment and forbearance.

Borrowers can get credit for late, partial payments

Under these new regulations, which take effect on July 1, 2023, federal student loan borrowers can get credit for payments that previously didn’t qualify. Those may include partial, late or lump sum payments, payments made under a different repayment plan and credit for periods in deferment and forbearance.
In order to qualify, you must have a direct loan. If you have either a Federal Family Education Loan (FFEL) or a Federal Perkins Loan, you now have until July 2023 to consolidate your loans into direct loans with your servicer.

Check out the consolidation loan application to find out what you’ll need to apply. Since the process can take a few months, borrowers should apply for consolidation by May 1, 2023, department officials said.
The plan also makes permanent some of the changes the Biden administration introduced a year ago with a limited waiver, which ends on Oct. 31.
Now, a borrower who misses the October deadline will have another chance to get their timeline recounted if they were disqualified because of their type of loan or repayment plan. 

Changes bring many loans ‘closer to forgiveness’

Borrowers stand to benefit as early as this fall on the new rules counting payments during deferments or forbearances. Starting in November, borrowers who reach 120 payments toward public service loan forgiveness and borrowers who have 20 years or 25 years of payments under an income-driven repayment plan will start receiving loan discharges.
These executive actions “will bring most loans managed by the department closer to forgiveness,” the Education Department said.
Before any changes to public service loan forgiveness were implemented, “only 3% of borrowers who applied for loan forgiveness had received loan forgiveness,” said higher education expert Mark Kantrowitz.
As of August, the share of borrowers who received forgiveness under the expanded program jumped to roughly 14.5%, he said. Kantrowitz estimates that more than 17% of applicants received loan forgiveness as of last month.

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