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  • How much money should you have in a high-yield savings account?

    How much money should you have in a high-yield savings account?

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    A checking account and a savings account are two basic, but very important, accounts for managing money. And while there isn’t any one “correct” way for an individual to manage the money in their checking and savings accounts, there are some general rules of thumb that can help you figure out how much money you should have in each account.

    “Like many Americans, you may default to leaving extra funds in a traditional checking or savings account,” says Dan Stampf, a CFP® and Vice President of Advisory Solutions for Personal Capital. “Maybe you haven’t decided how to allocate it to investment accounts. Perhaps you’re stowing away money for a rainy day or emergency fund. Or you could be building up savings for a short-term goal like funding a wedding or a vacation.”

    It’s important to note that you’re essentially losing money if you allow that cash to just sit in a low-yield checking account, as the value of your money is being eaten away by inflation and you’re missing out on higher interest payments from a high-yield savings account. This is why high-yield savings accounts are generally recommended as a vehicle for keeping savings, including your emergency fund.

    Some checking accounts, like the Ally Interest Checking Account or the Capital One 360 Checking® accounts do offer slightly higher interest rates compared to traditional checking accounts, but the interest is still lower than what high-yield savings accounts offer.

    How much money should you keep in a high-yield savings account?

    Of course, you do want to make sure you’re investing — and not only saving — so you can reach long-term goals like retirement. So you do have to draw a line between how much you should invest versus keep in a savings account.

    “Everyone’s financial situation is different and the amount of cash you have on hand will depend on your life stage and savings goals,” Stampf says. “As a general rule, consider aiming to have six to 12 months worth of liquid cash or cash alternatives, so you can withdraw from those if needed without touching your [investment] portfolio.”

    Avoid over-saving

    Stampf also cautions against over-saving for emergencies since keeping too much cash on hand could mean not having enough of your money invested, which could potentially undermine your retirement goals or other investing goals.

    You can avoid over-saving by targeting a specific number for your emergency fund. Maybe a fully funded emergency account for you means having six months’ worth of necessary expenses saved; take your monthly expenses and multiply that by six to find your target amount. You might also consider using a budgeting app, like Mint or Personal Capital, to help you figure out what your total monthly expenses look like.

    And of course, a high-yield savings account is also the best way to save for large expenses that you foresee having to make in the near future (1–3 years). It’s prudent to make sure you save for these expenses on top of your fully-funded emergency account money. And the higher interest rates let you grow your balance just a little quicker. Select ranked the Marcus by Goldman Sachs High Yield Online Savings as the best account for no fees.

    Marcus by Goldman Sachs High Yield Online Savings

    Goldman Sachs Bank USA is a Member FDIC.

    • Annual Percentage Yield (APY)

    • Minimum balance

      None to open; $1 to earn interest

    • Monthly fee

    • Maximum transactions

      Up to 6 free withdrawals or transfers per statement cycle *The 6/statement cycle withdrawal limit is waived during the coronavirus outbreak under Regulation D

    • Excessive transactions fee

    • Overdraft fees

    • Offer checking account?

    • Offer ATM card?

    The SoFi Checkings and Savings also stands out since it offers a welcome bonus after you setup and receive direct deposit payments. You can earn anywhere from $50 to $300, depending on the amounts of your direct deposits in a 30-day period.

    SoFi Checking and Savings

    Information about Sofi Checking and Savings has been collected independently by Select and has not been reviewed or provided by the issuer prior to publication.

    • Monthly maintenance fee

    • Minimum deposit to open

    • Minimum balance

    • Annual Percentage Yield (APY)

      Members with direct deposit earn 3.00% APY on savings and Vaults balances, and 2.50% APY on their checking balances. Members without direct deposit will earn 1.20% APY.

    • Free ATM network

      55,000+ fee-free ATMs within the Allpoint® Network

    • ATM fee reimbursement

    • Overdraft fee

      No-Fee Overdraft Coverage is available; however, SoFi requires $1,000 of monthly direct deposit inflows to unlock it

    • Mobile check deposit

    Pros

    • No minimum deposit to open an account
    • 1.80% APY with direct deposit
    • 2-day-early-paycheck automatically when you set up direct deposit
    • Save your change automatically with Roundups and set savings goals with Vaults
    • Get up to 15% cash back at local establishments
    • No foreign transaction fees

    Cons

    • No reimbursement for out-of-network ATM fees
    • Not a standalone checking or savings account

    Bottom line

    A high-yield savings account can sometimes be a happy medium between investing for the long-term and keeping liquid cash on hand for shorter-term large expenses, but it’s still important to avoid over-saving. ]

    Stampf recommends keeping six to 12 months’ worth of expenses in a high-yield savings account for easy access to cash in case of an emergency and saving for larger expenses that are are coming in the short term, like buying a home. Of course, you’ll want to also consider your stage of life and your needs when determining how much money to keep in a high-yield savings account.

    Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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  • Student loan payments may not resume until August. Here’s what borrowers need to know

    Student loan payments may not resume until August. Here’s what borrowers need to know

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    President Joe Biden and Secretary of Education Miguel Cardona.

    The Washington Post | The Washington Post | Getty Images

    It’s been almost three years since people with federal student loans have had to make a payment on their debt, and the Biden administration recently announced that borrowers have even more time.

    In March 2020, when the coronavirus pandemic first hit the U.S. and crippled the economy, the U.S. Department of Education suspended federal student loan payments and the accrual of any interest, providing borrowers extra breathing room during an especially hard financial period.

    Resuming the bills for more than 40 million Americans has proven to be a massive and tricky task, and the holiday on the payments has now spanned two presidencies and been extended eight times.

    Even before the public health crisis, when the U.S. economy was enjoying one of its healthiest periods in history, problems plagued the federal student loan system, with about 25% — or more than 10 million borrowers — in delinquency or default.

    Experts say hardship rates are likely to only increase with the setbacks of the pandemic, the current sharp rise in prices on everyday goods and the fact that borrowers have gotten used to a budget sans student loans.

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    White House officials had hoped to ease the transition back into life with student loan payments by first forgiving a large swath of the debt.

    Yet not long after President Joe Biden announced his plan to cancel up to $20,000 in student loans for millions of Americans, a number of conservative groups and Republican-backed states attacked the policy in the courts. Two of these lawsuits have been successful in at least temporarily halting the relief, and the Education Department closed its loan cancellation application portal this month.

    With so much still up in the air, the Biden administration has pushed back the due date on student loan bills again.

    “It would be deeply unfair to ask borrowers to pay a debt that they wouldn’t have to pay, were it not for the baseless lawsuits brought by Republican officials and special interests,” Education Secretary Miguel Cardona said in a statement.

    Here’s what borrowers need to know about getting more time.

    So when exactly will payments resume?

    It’s a little complicated.

    With previous extensions of the payment pause, the Education Department provided one date for when student loan bills would resume.

    This time, it left things a little more open-ended, saying that the bills will restart only 60 days after the litigation over its student loan forgiveness plan resolves and it’s able to start wiping out the debt.

    Therefore, the soonest the bills could become due again would be late January, if the legal challenges clear up by the end of November, although that’s unlikely.

    If the Biden administration is still defending its policy in the courts by the end of June or if it’s unable to move forward with forgiving student debt by then, it said, the payments will pick up at the end of August.

    So borrowers have at least two more months without the bills and at most nine.

    What if I was behind on my student loans?

    The U.S. government has extraordinary collection powers on federal debts and it can seize borrowers’ tax refunds, wages and Social Security checks if they fall behind on their student loans.

    During the extended payment pause, however, the Education Department is also ceasing all collection activity, it said.

    Borrowers in default on their student loans should also look into the recently announced “Fresh Start” initiative, in which they’ll have the opportunity to return to a current status.

    Should I still hold off on refinancing?

    Higher education expert Mark Kantrowitz had previously recommended that, despite the chance of picking up a lower interest rate, federal student loan borrowers should refrain from refinancing their debt with a private lender while the Biden administration deliberated on how to move forward with forgiveness. Refinanced student loans wouldn’t qualify for the federal relief.

    Now that borrowers know how much in loan cancellation is coming — assuming the president’s policy survives in the courts — borrowers may want to consider the option now, Kantrowitz said. With the Federal Reserve expected to continue raising interest rates, he added, you’re more likely to pick up a lower rate with a lender now than later.

    Still, Kantrowitz added, it’s probably a small pool of borrowers for whom refinancing is wise.

    It would be deeply unfair to ask borrowers to pay a debt that they wouldn’t have to pay, were it not for the baseless lawsuits brought by Republican officials and special interests.

    Miguel Cardona

    Secretary of the U.S. Department of Education

    He said those include borrowers who don’t qualify for Biden’s forgiveness — the plan excludes anyone who earns more than $125,000 as an individual or $250,000 as a family — and those who owe more on their student loans than the Biden administration plans to cancel. Those borrowers may want to look at refinancing the portion of their debt over the relief amounts, Kantrowitz said.

    Betsy Mayotte, president of The Institute of Student Loan Advisors, warned borrowers to first understand the federal protections they’re giving up before they refinance.

    For example, the Education Department allows you to postpone your bills without interest accruing if you can prove economic hardship. The government also offers loan forgiveness programs for teachers and public servants.

    “Refinancing can generate a lower interest rate than federal student loan rates,” Mayotte said. “But your rate doesn’t matter if you lose your job, have sudden medical expenses, can’t afford your payments and find that defaulting is your only option.”

    What should I do with the extra cash during the pause?

    Boy_anupong | Moment | Getty Images

    With headlines warning of a possible recession and layoffs picking up, experts recommend that you try to salt away the money you’d usually put toward your student debt each month.

    Certain banks and online savings accounts have been upping their interest rates, and it’s worth looking around for the best deal available. You’ll just want to make sure any account you put your savings in is FDIC-insured, meaning up to $250,000 of your deposit is protected from loss.

    And while interest rates on federal student loans are at zero, it’s also a good time to make progress paying down more expensive debt, experts say. The average interest rate on credit cards is currently more than 19%.

    Could it make sense to still pay my student loans?

    If you have a healthy rainy-day fund and no credit card debt, it may make sense to continue paying down your student loans even during the break.

    With interest temporarily suspended, any payments will go directly toward your debt’s principal, potentially shortening your repayment timeline, said Anna Helhoski, a student loan expert at NerdWallet.com.

    “You could continue making payments each month by contacting your servicer, or save the money and make a lump sum payment on your highest-interest loan before interest accrues again when repayment restarts,” Helhoski said.

    There’s a big caveat here, however. If you’re enrolled in an income-driven repayment plan or pursuing public service loan forgiveness, you don’t want to continue paying your loans.

    That’s because months during the government’s payment pause still count as qualifying payments for those programs, and since they both result in forgiveness after a certain amount of time, any cash you throw at your loans during this period just reduces the amount you’ll eventually get excused.

    One more possibility: If you find yourself in a financially comfortable position and it doesn’t make sense for you to continue paying down your student loans, you may want to donate the extra cash.

    You can make sure an organization is reputable using tools such as the Better Business Bureau’s Wise Giving Alliance or Charity Navigator, Helhoski said. If the charity is registered as a 501(c)(3), you’ll even be eligible for a tax break.

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  • Singapore’s inflation may have eased slightly, but central bank warns pain likely to linger

    Singapore’s inflation may have eased slightly, but central bank warns pain likely to linger

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    Singapore skyline from the Merlion park on May 15, 2020.

    Roslan Rahman | AFP | Getty Images

    Singapore’s economy is likely to face persistent pain from global financial concerns, even though the country’s core inflation eased somewhat in October.

    The Monetary Authority of Singapore warned of prolonged risk factors piling onto the nation’s financial vulnerability in the corporate, housing and banking sectors — citing weakening demand and persistent inflationary pressures.

    “Amid weakening external demand, the Singapore economy is projected to slow to a below-trend pace in 2023,” the central bank said in its latest Financial Stability Review report. “Inflation is expected to remain elevated, underpinned by a strong labour market and continued pass-through from high imported inflation.”

    Warning of contagion risk from global markets, the central bank said the nation’s corporate, household, and financial sectors should “stay vigilant” amid the macroeconomic challenges that lie ahead.

    “The most immediate risk is a potential dysfunction in core international funding markets and cascading liquidity strains on non-bank financial institutions that could quickly spill over to banks and corporates,” it said.

    The report comes days after the nation reported some easing in inflation prints for October. While still at 14-year highs, Singapore’s core consumer price index rose 5.1% for the month compared with a year ago, slightly lower than 5.3% in September.

    Singapore does not have an explicit inflation target, but MAS sees a core inflation rate of 2% as generally reflective of “overall price stability.” The country’s October core CPI is also significantly above that level as well as the central bank’s forecast for “around 4%” inflation for 2022.

    JPMorgan analysts said while they expect core inflation levels to remain elevated until the first quarter of next year, they predict the readings that follow will show more easing. That would leave room for the central bank to step away from a hawkish stance.

    “If this forecast materializes, this would suggest little need for the MAS to tighten its NEER policy next year,” the firm said in a note.

    Peak hawkishness?

    Minutes from the latest Federal Reserve meeting released this week said that smaller interest rate hikes should happen “soon” — an indication that its global peers, including the MAS, could also take a breather from their own tightening cycles.

    “MAS is in a similar position too — it has tightened monetary policy a lot in 2022 and will want to see how the impact plays out,” said BofA Securities ASEAN economist Mohamed Faiz Nagutha.

    “This means further tightening is not a given, but also cannot be ruled out at this juncture,” he said.

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    Nagutha emphasized, however, that elevated inflation will continue to broaden for a while.

    “MAS will not be declaring it a success anytime soon in our view,” he said.

    IG market strategist Jun Rong Yeap said that also applies to MAS’ peers in Asia-Pacific.

    Though global central banks like the Reserve Bank of Australia and the Bank of Korea have taken smaller steps in interest rate hikes, inflation will remain a key focus, he said.

    “Persistence in pricing pressures could still a drive a recalibration of how high or how much longer interest rates will have to be in restrictive territory,” he said. “And that will come with a greater trade-off for growth.”

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  • Turkey cuts rates by 150 basis points and ends easing cycle

    Turkey cuts rates by 150 basis points and ends easing cycle

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    An electronic board displays exchange rate information at a currency exchange bureau in Istanbul, Turkey, on Monday, Aug. 29, 2022.

    Nicole Tung | Bloomberg | Getty Images

    Turkey’s central bank on Thursday cut interest rates by 150 basis points to 9% and decided to end its cycle of monetary policy easing, citing increased inflation risks.

    The CBRT [Central Bank of the Republic of Turkey] has been under consistent pressure from President Recep Tayyip Erdogan to continue cutting rates despite soaring inflation, which hit 85.5% year-on-year in October as food and energy prices continued to soar.

    “Considering the increasing risks regarding global demand, the Committee evaluated that the current policy rate is adequate and decided to end the rate cut cycle that started in August,” the central bank said in a statement.

    Erdogan has continued to insist that raising interest rates, in line with central banks around the world, would harm the Turkish economy, an insistence economists suggest has caused a significant devaluation of the lira currency and driven inflation higher. The president has repeatedly states his aim of getting the country’s interest rate down to single digits by the end of this year.

    “While the negative consequences of supply constraints in some sectors, particularly basic food, have been alleviated by the strategic solutions facilitated by Türkiye, the upward trend in producer and consumer prices continues on an international scale,” the central bank said.

    “The effects of high global inflation on inflation expectations and international financial markets are closely monitored. Moreover, central banks in advanced economies emphasize that the rise in inflation may last longer than previously anticipated due to high level of energy prices, imbalances between supply and demand, and rigidities in labor markets,” it added.

    The CBRT is undergoing a review of its policy framework, focusing on the “liraization” of its financial system and said in its report Thursday that it would “continue to use all available instruments” within the framework of this strategy until “strong indicators point to a permanent fall inflation and the medium-term 5 percent target is achieved.”

    “Stability in the general price level will foster macroeconomic stability and financial stability through the fall in country risk premium, continuation of the reversal in currency substitution and the upward trend in foreign exchange reserves, and durable decline in financing costs,” the CBRT said.

    “This would create a viable foundation for investment, production and employment to continue growing in a healthy and sustainable way.”

    This is a breaking story. Please check back for more.

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  • Nigeria launches new banknotes to help curb corruption

    Nigeria launches new banknotes to help curb corruption

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    Regulators have said January 31 is the deadline for old notes to either be used or deposited at banks.

    Nigeria has launched newly designed currency notes, a move that the West African nation’s central bank says will help curb inflation and money laundering.

    Experts, however, are sceptical about such results in a country that has battled chronic corruption for decades, with government officials known to loot public funds causing more hardship for the many struggling with poverty.

    Launched on Wednesday, the new denominations of 200 ($0.46), 500 ($1.15) and 1,000 naira ($2.30) are the first time Nigeria’s currency has been redesigned in 19 years. The banknotes will be in circulation by mid-December.

    The naira is “long overdue for a new look,” Nigerian President Muhammadu Buhari said at the launch. The new paper notes designed in Nigeria and featuring enhanced security “will help the central bank to design and implement better monetary policy objectives”.

    More than 80 percent of the 3.2 trillion naira ($7.2bn) in circulation in Nigeria are outside the vaults of commercial banks and in private hands, said Godwin Emefiele, the governor of the Central Bank of Nigeria.

    With inflation at a 17-year high of 21.09 percent that is driven by soaring food prices, he said the new notes “will bring the hoarded currencies back into the banking system” and help the central bank regain control of the money being used in the country.

    Regulators last month announced a January 31 deadline for old notes to either be used or deposited at banks.

    “The currency redesign will also assist in the fight against corruption as the exercise will reign in the higher denomination used for corruption and the movement of such funds from the banking system could be tracked easily,” Emefiele said.

    Analysts, however, say the new notes would yield little or no results in managing inflation or in the fight against corruption in the absence of institutional reforms.

    “If you want to curb money laundering, your financial system needs to be better; if you want to curb ransom payment, security needs to be better; if you want to curb inflation, the level at which the total money supply in the economy is growing has to slow down — so it is not about cash,” said Adedayo Bakare, an analyst with Lagos-based Money Africa.

    The newly designed denominations would also drive financial inclusion and economic growth, the central bank chief said.

    But Bakare said the move by Nigeria’s central bank is at best an “expensive process that will cost the public a lot of pain because of the short period” required to either use or deposit cash in circulation.

    At least 133 million people, or 63 percent of Nigeria’s citizens, are multidimensionally poor, according to government statistics.

    “It could potentially slow down the economy if people do not have cash and people cannot exchange their cash for new notes at a fast pace,” he said. “You can’t phase out cash without fixing financial inclusion or electronic payment and even at that.”

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  • Klarna CEO says firm was ‘lucky’ to cut jobs when it did, targets profitability in 2023

    Klarna CEO says firm was ‘lucky’ to cut jobs when it did, targets profitability in 2023

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    Sebastian Siemiatkowski, CEO of Klarna, speaking at a fintech event in London on Monday, April 4, 2022.

    Chris Ratcliffe | Bloomberg via Getty Images

    HELSINKI, Finland — Klarna will become profitable again by next year after making deep cuts to its workforce, CEO Sebastian Siemiatkowski told CNBC.

    Klarna lost more than $580 million in the first six months of 2022 as the buy now, pay later giant burned through cash to accelerate its expansion in key growth markets like the U.S. and Britain.

    Under pressure from investors to slim down its operations, the company reduced headcount by about 10% in May. Klarna had hired hundreds of new employees over the course of 2020 and 2021 to capitalize on growth fueled by the effects of Covid-19.

    “We’re going to return to profitability” by the summer of next year, Siemiatkowski told CNBC in an interview on the sidelines of the Slush technology conference last week. “We should be back to profitability on a month-by-month basis, not necessarily on an annual basis.”

    The Stockholm-based startup saw 85% erased from its market value in a so-called “down round” earlier this year, taking the company’s valuation down from $46 billion to $6.7 billion, as investor sentiment surrounding tech shifted over fears of a higher interest rate environment.

    Buy now, pay later firms, which allow shoppers to defer payments to a later date or pay over installments, have been particularly impacted by souring investor sentiment.

    Siemiatkowski said the firm’s depressed valuation reflected a broader “correction” in fintech. In the public markets, PayPal has seen its shares slump more than 70% since reaching an all-time high in July 2021.

    Ahead of the curve?

    Siemiatkowski said the timing of the job cuts in May was fortunate for Klarna and its employees. Many workers would have been unable to find new jobs today, he added, as the likes of Meta and Amazon have laid off thousands and tech remains a competitive field.

    “To some degree, all of us were lucky that we took that decision in May because, as we’ve been tracking the people who left Klarna behind, basically almost everyone got a job,” Siemiatkowski said.

    “If we would have done that today, that probably unfortunately would not have been the case.”

    His comments may raise eyebrows for former employees, some of whom reportedly said the layoffs were abrupt, unexpected and messily communicated. Klarna informed staff of the redundancies in a pre-recorded video message. Siemiatkowski also shared a list of the names of employees who were let go publicly on social media, sparking privacy concerns.

    While Siemiatkowski admitted to making some “mistakes” around moves to keep costs under control, he stressed that he believed it was the right decision.

    “I think to some degree actually, Klarna was ahead of the curve,” he said. “If you look at it now, there’s been tons of people who’ve been making similar decisions.”

    “I think it’s a good sign that we faced reality, that we recognized what was going on, and that we took those decisions,” he added.

    Siemiatkowski said there was some “insanity” caused by the competition among tech firms to attract the best talent. The job market was largely employee-driven, particularly in tech, as employers struggled to fill vacancies.

    That trend is under threat now, however, as the threat of a looming recession has prompted employers to tighten their belts.

    Earlier this month, Meta, Twitter and Amazon all announced they would lay off thousands of workers. Meta let go 11,000 of its employees, while Amazon parted with 10,000 workers. Under the reign of its new owner Elon Musk, Twitter laid off about half of its workforce.

    The tech sector has been under pressure broadly amid rising interest rates, high inflation and the prospect of a global economic downturn.

    But the mass layoff trend has been criticized by others in the industry. Julian Teicke, CEO of digital insurance startup Wefox, decried the wave of layoffs, telling CNBC in an interview that he’s “disgusted” by the disregard of some companies for their employees.

    “I believe that CEOs have to do everything in their power to protect their employees,” he said in a separate interview at Slush. “I haven’t seen that in the tech industry. And I’m disgusted by that.”

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  • Citigroup faulted by U.S. banking regulators for poor data management in ‘living will’ review

    Citigroup faulted by U.S. banking regulators for poor data management in ‘living will’ review

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    CEO of Citigroup Jane Fraser testifies during a hearing before the House Committee on Financial Services at Rayburn House Office Building on Capitol Hill on September 21, 2022 in Washington, DC.

    Alex Wong | Getty Images

    Citigroup needs to address weaknesses in how it manages financial data, according to a review of the biggest banks’ so-called living will plans, U.S. banking regulators said Wednesday.  

    Citigroup’s shortcomings could hurt its ability to produce accurate financial reports in times of duress, the Federal Reserve and the Federal Deposit Insurance Corporation said in a letter to the bank’s executives. The biggest U.S. banks submitted plans last year that detail how they could be quickly unwound in the event of a bankruptcy.

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    “Issues regarding the Covered Company’s data governance program could adversely affect the firm’s ability to produce timely and accurate data and, in particular, could degrade the timeliness and accuracy of key metrics that are integral to execution of the firm’s resolution strategy,” the agencies told Citigroup in a letter dated Nov. 22.

    Citigroup was the only bank among the eight institutions reviewed that was found to have a shortcoming in its plan.

    Shares of Citigroup slipped 0.75% in early trading.

    This story is developing. Please check back for updates.

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  • Credit Suisse shareholders greenlight $4.2 billion capital raise

    Credit Suisse shareholders greenlight $4.2 billion capital raise

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    The logo of Swiss bank Credit Suisse is seen at its headquarters in Zurich, Switzerland March 24, 2021.

    Arnd Wiegmann | Reuters

    Credit Suisse shareholders on Wednesday approved a 4 billion Swiss franc ($4.2 billion) capital raise aimed at financing the embattled lender’s massive strategic overhaul.

    Credit Suisse’s capital raising plans are split into two parts. The first, which was backed by 92% of shareholders, grants shares to new investors including the Saudi National Bank via a private placement. The new share offering will see the SNB take a 9.9% stake in Credit Suisse, making it the bank’s largest shareholder.

    SNB Chairman Ammar AlKhudairy told CNBC in late October that the stake in Credit Suisse had been acquired at “floor price” and urged the Swiss lender “not to blink” on its radical restructuring plans.

    The second capital increase issues newly registered shares with pre-emptive rights to existing shareholders, and passed with 98% of the vote.

    Credit Suisse Chairman Axel Lehmann said the vote marked an “important step” in the building of “the new Credit Suisse.”

    “This vote confirms confidence in the strategy, as we presented it in October, and we are fully focused on delivering our strategic priorities to lay the foundation for future profitable growth,” Lehmann said.

    Credit Suisse on Wednesday projected a 1.5 billion Swiss franc ($1.6 billion) loss for the fourth quarter as it begins its second strategic overhaul in less than a year, aimed at simplifying its business model to focus on its wealth management division and Swiss domestic market.

    The restructuring plans include the sale of part of the bank’s securitized products group (SPG) to U.S. investment houses PIMCO and Apollo Global Management, as well as a downsizing of its struggling investment bank through a spin-off of the capital markets and advisory unit, which will be rebranded as CS First Boston.

    The multi-year transformation aims to shift billions of dollars of risk-weighted assets from the persistently underperforming investment bank to the wealth management and domestic divisions, and to reduce the group’s cost base by 2.5 billion, or 15%, by 2025.

    ‘Too big to fail’ but more transparency needed

    Vincent Kaufman, CEO of the Ethos Foundation, which represents hundreds of Swiss pension funds that are active shareholders in Credit Suisse, voiced disappointment ahead of Wednesday’s vote that the group was no longer considering a partial IPO of the Swiss domestic bank, which he said would have “sent a stronger message to the market.”

    Despite the dilution of shares, Kaufman said the Ethos Foundation would support the issuance of new shares to existing shareholders as part of the capital raise, but opposed the private placement for new investors, primarily the SNB.

    “The capital increase without pre-emptive rights in favor of new investors exceed our dilution limits set in our voting guidelines. I discussed with several of our members, and they all agree that the dilution there is too high,” he said.

    “We do favor the part of the capital increase with preemptive rights, still believing that the potential partial IPO of the Swiss division would have also been a possibility to raise capital without having to dilute at such a level existing shareholders, so we are not favoring this first part of the capital increase without pre-emptive rights.”

    At Credit Suisse’s annual general meeting in April, the Ethos Foundation tabled a shareholder resolution on climate strategy, and Kaufman said he was concerned about the direction this would take under the bank’s new major shareholders.

    ABRDN: Despite risks, their are pockets of real value in Credit Suisse

    “Credit Suisse remains one of the largest lenders to the fossil fuel industry, we want the bank to reduce its exposure, so I’m not sure this new shareholder will favor such a strategy. I’m a little bit afraid that our message for a more sustainable bank will be diluted among these new shareholders,” he said.

    Wednesday’s meeting was not broadcast, and Kaufman lambasted the Credit Suisse board for proposing a capital raise and entering in new external investors “without considering existing shareholders” or inviting them to the meeting.

    He also raised questions about “conflict of interest” among board members, with board member Blythe Masters also serving as a consultant to Apollo Global Management, which is buying a portion of Credit Suisse’s SPG, and board member Michael Klein slated to head up the new dealmaking and advisory unit, CS First Boston. Klein will step down from the board to launch the new business.

    “If you want to restore trust, you need to do it clean and that’s why we’re still not convinced. Again, a stronger message with an IPO of the Swiss domestic bank would have reassured at least the pension funds that we are advising,” he said.

    However, Kaufman stressed that he was not concerned about Credit Suisse’s long-term viability, categorizing it as “too big to fail” and highlighting the bank’s strong capital buffers and shrinking outflows.

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  • Credit Suisse projects $1.6 billion fourth-quarter loss as it embarks on strategy overhaul

    Credit Suisse projects $1.6 billion fourth-quarter loss as it embarks on strategy overhaul

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    Switzerland’s second largest bank Credit Suisse is seen here next to a Swiss flag in downtown Geneva.

    Fabrice Coffrini | AFP | Getty Images

    Credit Suisse on Wednesday projected a 1.5 billion Swiss franc ($1.6 billion) fourth-quarter loss as it undertakes a massive strategic overhaul.

    The embattled lender last month announced a raft of measures to address persistent underperformance in its investment bank and a series of risk and compliance failures that have saddled it with consistently high litigation costs.

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    “These decisive measures are expected to result in a radical restructuring of the Investment Bank, an accelerated cost transformation, and strengthened and reallocated capital, each of which are progressing at pace,” the bank said in a market update on Wednesday.

    Credit Suisse revealed that it had continued to experience net asset outflows, and said these flows were approximately 6% of assets under management at the end of the third quarter. The Zurich-based bank flagged last month that this trend continued in the first two weeks of October, after reports cast doubt over its liquidity position and credit default swaps spiked. Credit default swaps are a type of financial derivative that provide the buyer with protection against default. 

    Swiss pension fund foundation CEO says he's 'not convinced' by Credit Suisse restructure

    “In wealth management, these outflows have reduced substantially from the elevated levels of the first two weeks of October 2022 although have not yet reversed,” Credit Suisse said Wednesday.

    The group expects to record a 75 million Swiss franc loss related to the sale of its shareholding in British wealth tech platform Allfunds group, while lower deposits and reduced assets under management are expected to lead to a fall in net interest income, recurring commissions and fees, which the bank said is likely to lead to a loss for its wealth management division in the fourth quarter.

    “Together with the adverse revenue impact from the previously disclosed exit from the non-core businesses and exposures, and as previously announced on October 27, 2022, Credit Suisse would expect the Investment Bank and the Group to report a substantial loss before taxes in the fourth quarter 2022, of up to CHF ~1.5 billion for the Group,” the bank said.

    Credit Suisse plunges on huge Q3 loss and strategic overhaul

    “The Group’s actual results will depend on a number of factors including the Investment Bank’s performance for the remainder of the quarter, the continued exit of non-core positions, any goodwill impairments, and the outcome of certain other actions, including potential real estate sales.”

    Credit Suisse confirmed that it has begun working toward the targeted 15%, or 2.5 billion Swiss francs, reduction of its cost base by 2025 with a targeted reduction of 1.2 billion Swiss francs in 2023. Layoffs of 5% of the bank’s workforce are underway alongside reductions to “other non-compensation related costs.”

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    The bank announced last week that it would accelerate the restructure of its investment bank by selling a significant portion of its securitized products group (SPG) to Apollo Global Management, reducing SPG assets from $75 billion to approximately $20 billion by the middle of 2023.

    “These actions and other deleveraging measures including, but not limited to, in the non-core businesses, are expected to strengthen liquidity ratios and reduce the funding requirements of the Group,” it said Wednesday.

    Credit Suisse holds an extraordinary general meeting on Wednesday, at which shareholders will vote on the group’s restructuring plans and capital raising proposals.

    Credit Suisse shares fell more than 5% in early trade.

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  • As Coinbase shares slide, Morgan Stanley lists major firms with potential FTX exposure

    As Coinbase shares slide, Morgan Stanley lists major firms with potential FTX exposure

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  • Layoffs aren’t the only way to optimize costs, DBS Bank says of GoTo

    Layoffs aren’t the only way to optimize costs, DBS Bank says of GoTo

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    Sachin Mittal of DBS Bank discusses the level of competition in e-commerce and recent layoffs in the tech sector.

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    Mon, Nov 21 202211:07 PM EST

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  • Democratic senators urge regulators to monitor SoFi trading activity, expressing concern during crypto meltdown

    Democratic senators urge regulators to monitor SoFi trading activity, expressing concern during crypto meltdown

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    Chairman Sherrod Brown (D-OH) questions Treasury Secretary Janet Yellen and Federal Reserve Chairman Powell during a Senate Banking, Housing and Urban Affairs Committee hearing on the CARES Act, at the Hart Senate Office Building in Washington, DC, September 28, 2021.

    Kevin Dietsch | Pool | Reuters

    Four Democratic lawmakers on the Senate Banking Committee urged federal regulators to look into SoFi’s cryptocurrency trading activity in a letter on Monday, warning its “digital asset activities pose significant risks to both individual investors and safety and soundness.”

    SoFi shares were down more than 6% Monday afternoon.

    In two separate letters, one to federal officials and another to SoFi CEO Anthony Noto, the lawmakers expressed deep concerns over a lack of regulation in cryptocurrency markets.

    “Over the past year, several meltdowns in the crypto market have wiped out trillions in value, including another huge crash last week,” the letter to Noto said.

    SoFi is unique among institutions singled out for regulatory scrutiny because it operates as both a bank holding company and as a crypto exchange, through a subsidiary.

    SoFi pitches itself as a digital financial services company with 3.9 million members as of Q1 2022. SoFi began as a student loan company in 2011. Since then, the San Francisco-based, Nasdaq-traded company made its first foray into crypto through a partnership with Coinbase in 2019. But lawmakers have honed in on SoFi’s February 2022 acquisition of Golden Pacific Bancorp.

    That acquisition converted SoFi into a bank holding company and, according to lawmakers, subjected it to “consolidated supervision by the Federal Reserve.” It’s this new regulatory oversight that has prompted lawmakers’ objections to SoFi’s expanding cryptocurrency offerings.

    Bank holding companies have to conform to strict regulations on the kinds of financial products they can offer. Heightened financial and risk controls mean that SoFi’s crypto activities “pose significant risks to both individual investors and safety and soundness,” the lawmakers said.

    The lawmakers — Senate Banking Chair Sherrod Brown, D-Ohio, and fellow committee members Jack Reed, D-R.I., Chris Van Hollen D-Md., and Tina Smith D-Minn. — point to SoFi’s financial guidance as evidence. Investor education material from SoFi warns that a cryptocurrency offered on SoFi’s crypto platform, Dogecoin, has “no special use case or features.” SoFi’s literature calls it a pump-and-dump scheme.

    To offer products that the company knows are “pump-and-dumps” flies in the face of SoFi’s new obligation to “fundamental principles of investor protection and safety and soundness,” lawmakers wrote.

    In the letter to Noto, the Democrats said they are “concerned that SoFi’s continued impermissible digital asset activities demonstrate a failure to take seriously its regulatory commitments and to adhere to its obligations.” They urged leaders of the Federal Reserve System, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency to “ensure that SoFi complies with all consumer financial protection and banking regulations.”

    “SoFi takes our regulatory and compliance commitments seriously, including our non-bank operations within the digital assets space,” a SoFi spokesperson said in a statement. “We believe we have been fully compliant with the mandates of our bank license and all applicable laws. Additionally, we maintain consistent, constructive dialogue with each of our regulators. Cryptocurrency remains a non-material component of our business. We look forward to sharing the requested information with the Senators in a timely fashion.”

    The letters to regulators and SoFi come as crypto markets weather their worst crisis yet. The implosion of cryptocurrency exchange FTX and the engagement that FTX founder Sam Bankman-Fried had with U.S. regulators, have drawn the ire of Congress and the public.

    Lawmakers have demanded an explanation from SoFi on its risk management, credit, financial and compliance systems by Dec. 8. The company has already endured tumult over potential plans to forgive student loan balances, with shares down over 24% since President Biden announced his intentions.

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  • What borrowers need to know while student loan forgiveness is in limbo

    What borrowers need to know while student loan forgiveness is in limbo

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    Olga Ryazantseva | Istock | Getty Images

    After applying for student loan forgiveness, some borrowers are receiving what looks like good news from the U.S. Department of Education.

    “We reviewed your application and determined that you are eligible for loan relief under the Plan,” according to a letter sent out by Education Secretary Miguel A. Cardona.

    Yet the notice goes on to say that “Unfortunately, a number of lawsuits have been filed challenging the program, which have blocked our ability to discharge your debt at present.”

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    Not long after President Joe Biden announced his sweeping plan to cancel up to $20,000 in student debt for millions of Americans, a number of conservative groups and Republican-backed states attacked the policy in the courts. Two of these lawsuits have been successful in at least temporarily halting the relief, and the Education Department closed its loan cancellation portal this month.

    The Biden administration believes its plan is legal and will prevail in the courts, but for now, the financial future of millions of Americans remains uncertain.

    Here’s what we know about the legal delays to the policy.

    Delays could drag on for months or more

    In a recent filing with the Supreme Court, the Biden administration warned that the legal battles over its forgiveness plan could drag into 2024 if the cases weren’t decided on an expedited basis.

    However, such a long delay is unlikely, said higher-education expert Mark Kantrowitz.

    He pointed out that the Education Department hopes its loan servicers will apply the relief to people’s accounts within two weeks after it gives it the green light to do so. That means if it’s allowed to continue forgiving student debt, it can act quickly and other legal challenges “will be rendered moot.”

    Around 26 million borrowers have already applied for the forgiveness. Those who haven’t done so yet shouldn’t fret, Kantrowitz said. The government will just reopen its application portal again if its plan succeeds in the court.

    Loan payment pause may be extended again

    The Biden administration is reported to be considering extending the payment pause on student loan bills yet again. That relief policy has been in effect since the start of the coronavirus pandemic.

    It would be the eighth time borrowers have been given more time to pause payments, but it may be the White House’s only option with so much still in the air, experts say.

    “Restarting repayment now will be messy because the Biden Administration has promised forgiveness to tens of millions of borrowers who will be upset about having to make payments on loans that they expected to be forgiven,” Kantrowitz said.

    Indeed, a top official at the Education Department recently said student loan default rates could dramatically spike if its loan forgiveness plan is thwarted, “due to the ongoing confusion about what they owe.”

    Borrowers have other aid options

    Those unnerved by the possibility of student loan forgiveness falling through may take some comfort in a number of other options that may offer help.

    The Biden administration recently announced a new repayment plan for certain struggling borrowers that would cap monthly bills at 5% of their discretionary income. It should go into effect next July, Kantrowitz said. (Use one of the calculators at Studentaid.gov or Freestudentloanadvice.org to find the repayment plan most affordable for you.)

    The Public Service Loan Forgiveness program, which allows those who work for the government and certain nonprofits to get their debt cleared after a decade, is also getting a number of improvements.

    If you’re unemployed or dealing with another financial hardship, you can put in a request for an economic hardship or unemployment deferment. Those are the ideal ways to postpone your federal student loan payments, because interest doesn’t accrue under them.

    If you don’t qualify for either, though, you can use a forbearance to continue suspending your bills. Just keep in mind that interest will rack up and your balance will be larger — possibly much larger — when you resume paying.

    And for those in the most difficult situations, it may soon be easier to discharge your student debt in bankruptcy.

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  • ‘We’re alive and kicking’: CEO of banking app Dave wants to dispel doubts after this year’s 97% stock plunge

    ‘We’re alive and kicking’: CEO of banking app Dave wants to dispel doubts after this year’s 97% stock plunge

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    Mobile banking app provider Dave has enough cash to survive the current downturn for fintech firms and reach profitability a year from now, according to CEO Jason Wilk.

    The Los Angeles-based company got caught up in the waves rocking the world of money-losing growth companies this year after it went public in January. But Dave is not capsizing, despite a staggering 97% decline in its shares through Nov. 18, Wilk said.

    Shares jumped as much as 13% on Monday and closed 7.9% higher.

    “We’re trying to dispel the myth of, ‘Hey, this company does not have enough money to make it through,’” Wilk said. “We think that couldn’t be further from the truth.”

    Few companies embody fintech’s rise and fall as much as Dave, one of the better-known members of a new breed of digital banking providers taking on the likes of JPMorgan Chase and Wells Fargo. Co-founded by Wilk in 2016, the company had celebrity backers and millions of users of its app, which targets a demographic ignored by mainstream banks and relies on subscriptions and tips instead of overdraft fees.

    Dave’s market capitalization soared to $5.7 billion in February before collapsing as the Federal Reserve began its most aggressive series of rate increases in decades. The moves forced an abrupt shift in investor preference to profits over the previous growth-at-any cost mandate and has rivals, including bigger fintech Chime, staying private for longer to avoid Dave’s fate.

    “If you told me that only a few months later, we’d be worth $100 million, I wouldn’t have believed you,” Wilk said. “It’s tough to see your stock price represent such a low amount and its distance from what it would be as a private company.”

    Employee comp

    The shift in fortunes, which hit most of the companies that took the special purpose acquisition company route to going public recently, has turned his job into a “pressure cooker,” Wilk said. That’s at least partly because it has cratered the stock compensation of Dave’s 300 or so employees, Wilk said.

    In response, Wilk has accelerated plans to hit profitability by lowering customer acquisition costs while giving users new ways to earn money on side gigs including paid surveys.

    The company said earlier this month that third-quarter active users jumped 18% and loans on its cash advance product rose 25% to $757 million. While revenue climbed 41% to $56.8 million, the company’s losses widened to $47.5 million from $7.9 million a year earlier.

    Dave has $225 million in cash and short-term holdings as of Sept. 30, which Wilk says is enough to fund operations until they are generating profits.

    “We expect one more year of burn and we should be able to become run-rate profitable probably at the end of next year,” Wilk said.

    Investor skepticism

    Still, despite a recent rally in beaten-down companies spurred by signs that inflation is easing, investors don’t yet appear to be convinced about Dave’s prospects.

    “Investors haven’t jumped back into fintech more broadly yet,” Devin Ryan, director of fintech research at JMP Securities, said in an email. “In a higher interest rate backdrop where the cost of capital has been materially raised, we don’t see any abatement in investors challenging companies toward operating at cash profitability … or at the very least, demonstrating a clear and credible path toward that.”

    Among investors’ concerns are that one of Dave’s main products are short-term loans; those could result in rising losses if a recession hits next year, which is the expectation of many forecasters.

    “One of the things we need to keep proving is that these are small loans that people use for gas and groceries, and because of that, our default rates just consistently stayed very low,” he said. Dave can get repaid even if users lose their jobs, he said, by tapping unemployment payments.

    Investors and bankers expect a wave of consolidation among fintech startups and smaller public companies to begin next year as companies run out of funding and are forced to sell themselves or shut down. This year, UBS backed out of its deal to acquire Wealthfront and fintech firms including Stripe have laid off hundreds of workers.

    “We’ve got to get through this winter and prove we have enough money to make it and still grow,” Wilk said. “We’re alive and kicking, and we’re still out here doing innovative stuff.”

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  • Innovation Refunds Educates Banks on Verifying Clients for Employee Retention Credit

    Innovation Refunds Educates Banks on Verifying Clients for Employee Retention Credit

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    The company aims to help banks become advisors for their clients, so they can take advantage of the payroll tax credit.

    Press Release
    –

    Nov 21, 2022 07:00 CST


    DES MOINES, Iowa, November 21, 2022 (Newswire.com)
    –
    The Employee Retention Credit (ERC) can provide a critical payroll tax refund for businesses.  Innovation Refunds, an industry leader in turnkey tax solutions, is advising banks on how they can assist their clients in qualifying for the tax credit.

    Innovation Refunds recently attended the American Bankers Association annual convention,  providing banks with guidance on how they help their clients with ERC. Just as banks educated and connected clients with the Small Business Administration’s Paycheck Protection Program (PPP) loans, they now can play a similar role with the ERC.

    Qualifying for the ERC could make or break a business in today’s economy. With the ERC, companies are eligible for a payroll tax refund of up to $26,000 per employee, even if they have received PPP funds. The average refund is over $400K through Innovation Refund’s bank partners. 

    Innovation Refunds, which does not charge any upfront costs when verifying businesses for ERC, has now empowered more than 60 community banks in helping their clients receive payroll refund money. The company specializes solely in ERC, which enables its team members to be experts on the most up-to-date changes in rules and regulations.

    “Banks can play a critical role by being an advisor to clients and educating them about the availability of the ERC to ensure the money gets back into the hands of small and middle-sized businesses that were impacted by the pandemic,” said Howard Makler, CEO of Innovation Refunds.

    Innovation Refunds assists banks in developing marketing campaigns around the ERC to spread awareness to banks’ small and medium-sized business clients on what they can do to apply for the ERC. This is achieved through a comprehensive strategy that includes social posts, email playbooks, direct mailers, email blasts, text messages, and other tactical channels. All of these assets are customized to each bank’s branding.

    “The ability to receive ERC funds will expire gradually by late 2024, so time is of the essence to offer this critical education,” Makler said. “Innovation Refunds wants to be the marketing engine that offers a turnkey solution to help banks send this message to their business clients and make it easy for them to spread the word.”

    The Internal Revenue Service (IRS) anticipates that 70-80% of businesses are good candidates for the ERC. Qualifying for the payroll tax refund can be a game-changer for a company that has been impacted by the pandemic, and Innovation Refunds is a valuable resource in helping them avoid leaving money on the table. 

    To partner with Innovation Refunds, email bankpartner@innovationrefunds.com. To learn more, visit www.innovationrefunds.com.

    About Innovation Refunds
    Our mission is to assist small and medium-sized businesses to attain cash incentives from federal and state governments. Innovation Refunds began providing its services in 2020. Since then, it has been able to provide financial solutions to thousands of companies, with billions in cash refunds available for small and medium-sized businesses. To learn more, visit www.innovationrefunds.com.

    Source: Innovation Refunds

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  • Goldman Sachs says the ‘bear market is not over’ for global stocks and predicts the bottom

    Goldman Sachs says the ‘bear market is not over’ for global stocks and predicts the bottom

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  • Bank stock Comerica can jump more than 20% from current levels, Raymond James says in upgrade

    Bank stock Comerica can jump more than 20% from current levels, Raymond James says in upgrade

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  • Malaysian coalitions’ party manifestos don’t mention anything close to fiscal responsibility: Analyst

    Malaysian coalitions’ party manifestos don’t mention anything close to fiscal responsibility: Analyst

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    Anand Pathmakanthan of Maybank Investment Banking Group says it’s “very clear” that the country needs higher taxes and should roll back subsidies, but the parties have “very populist manifestos.”

    02:51

    Sun, Nov 20 202211:16 PM EST

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  • FTX will sell or restructure global empire, CEO says

    FTX will sell or restructure global empire, CEO says

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    FTX’s new CEO said on Saturday that the bankrupt crypto exchange is looking to sell or restructure its global empire, even as Bahamian regulators and FTX squabble in court filings and press releases about whether the bankruptcy filing should proceed in New York or in Delaware.

    “Based on our review over the past week, we are pleased to learn that many regulated or licensed subsidiaries of FTX, within and outside of the United States, have solvent balance sheets, responsible management and valuable franchises,” FTX chief John Ray, said in a statement.

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    Ray, who replaced FTX’s founder Sam Bankman-Fried when the company filed for Chapter 11 bankruptcy protection on Nov. 11, added that it is “a priority” in the coming weeks to “explore sales, recapitalizations or other strategic transactions with respect to these subsidiaries, and others that we identify as our work continues.”

    Ray’s statement came with a flurry of Saturday morning filings in Delaware bankruptcy court. In those filings, FTX asked for permission to pay outside vendors, consolidate bank accounts, and establish new ones.

    The exact timing of a possible sale is unclear. FTX indicated that it has not set a specific timetable for the completion of this process and said that it “does not intend to disclose further developments unless and until it determines that further disclosure is appropriate or necessary.”

    Both FTX and Bahamas securities regulators are seeking jurisdiction over the bankruptcy process in two different U.S. courts. Last week, Bahamian regulators moved potentially hundreds of millions of “digital assets” from FTX custody into their own, acknowledging the deed in a press release after FTX attorneys accused them of doing so in an emergency court filing.

    Ray singled out some of the company’s healthier subsidiaries for praise. One example was LedgerX, a Commodity Futures Trading Commission-regulated derivatives platform. LedgerX was one of the few FTX-related properties that are not a part of its bankruptcy proceedings and remains operational today. The platform, which FTX acquired in 2021, lets traders buy options, swaps and futures on bitcoin and ethereum.

    The new FTX CEO asked that employees, vendors, customers, regulators and government stakeholders “be patient” with them.

    FTX said in a filing that there could be more than one million creditors in these Chapter 11 cases.

    FTX and its accountants had identified 216 bank accounts, across 36 banks, with positive balances globally. Cash balances across all entities totaled some $564 million, with $265.6 million of that in the custody of LedgerX on a restricted basis.

    FTX attorneys also want to employ a “cash pooling system,” merging all the cash assets of each disparate FTX entity into one consolidated balance statement and in new bank accounts, which FTX is currently in the process of opening.

    Notably, FTX attorneys wrote that they were “working, and will continue to work, closely with [existing FTX banks] to ensure that prior authorized signatories do not have access” to any prior FTX accounts that will continue to be used. Prior reporting and court filings have indicated that Sam Bankman-Fried held nearly absolute control over cash management and account access.

    FTX’s bank accounts reflect the global influence of the crypto-asset empire. Institutions in Cyprus, Dubai, Japan and Germany held a wide array of global currencies. FTX subsidiaries held more than a dozen accounts at Signature Bank, an American institution that made an aggressive foray into servicing crypto customers in 2021. With the exception of one Bank of America account for Blockfolio, major American banks are unaccounted for on the list. Blockfolio was acquired by FTX in the summer of 2020.

    In another petition, FTX lawyers moved to access $9.3 million for vendor payments that FTX called “critical.” No list was provided, but the FTX motion established criteria for “critical vendor” status.

    In welcome news for customers, FTX attorneys applied to the court for permission to redact “certain confidential information,” including the names and “all associated identifying information” of FTX’s customers. “Public dissemination of [FTX’s] customer list could give […] competitors an unfair advantage to contact and poach their customers,” the filing read, potentially jeopardizing FTX’s ability to sell off assets or businesses.

    FTX lawyers want the proceedings to continue in Delaware. Bahamas regulators, on the other hand, claim they do not recognize the authority of those Chapter 11 proceedings and want to hold a Chapter 15 process in New York.

    Chapter 15 bankruptcy is the route that the defunct hedge fund Three Arrows Capital has pursued. The implosion of Three Arrows launched a spiraling crisis that has taken down Voyager, Celsius, and ultimately FTX.

    The Chapter 11 process that FTX seeks would allow for restructuring or sale of the company to the highest bidder, although it isn’t clear who that might be. Rival exchange Binance initially made an offer before pulling it. That turnaround deepened a liquidity crisis at FTX and revealed a multibillion-dollar hole.

    FTX’s first hearing in its bankruptcy court case is set for Tuesday in Delaware.

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  • The best hardship personal loans if you need cash but have a low credit score

    The best hardship personal loans if you need cash but have a low credit score

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    Personal loans are a common way to pay for large expenses like weddings, funerals and home renovations. In fact, personal loan balances are up 31% from last year, according to a TransUnion report. But they can also be used to float the costs of a major emergency or hardship. This is especially handy since sometimes these events can wind up being a lot more costly than we might expect and a basic emergency fund may not suffice.

    This category of personal loans has unofficially become known as hardship personal loans. They’re regular personal loans that you can apply for when you just happen to be facing a hard time. And, there are some lenders out there that even cater to potential borrowers with lower credit scores.

    Select rounded up some personal loan lenders you can apply to for funding during a difficult time. We looked at key factors like interest rates, fees, loan amounts and term lengths offered, plus other features including how your funds are distributed, autopay discounts, customer service and how fast you can get your funds. (Read more about our methodology below.)

    Get matched with personal loan offers.

    Best hardship personal loans for bad credit

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    Best for people without a credit history

    Upstart Personal Loans

    • Annual Percentage Rate (APR)

    • Loan purpose

      Debt consolidation, credit card refinancing, home improvement, wedding, moving or medical

    • Loan amounts

    • Terms

    • Credit needed

      Credit score of 300 on at least one credit report (but will accept applicants whose credit history is so insufficient they don’t have a credit score)

    • Origination fee

      0% to 10% of the target amount

    • Early payoff penalty

    • Late fee

      The greater of 5% of last amount due or $15, whichever is greater

    Pros

    • Open to borrowers with fair credit (minimum 300 score)
    • Will accept applicants who have insufficient credit history and don’t have a credit score
    • No early payoff fees
    • 99% of personal loan funds are sent the next business day after completing required paperwork before 5 p.m. Monday through Friday

    Cons

    • High late fees
    • Origination fee of 0% to 10% of the target amount (automatically withheld from the loan before it’s delivered to you)
    • $10 fee to request paper copies of loan agreement (no fee for eSigned virtual copies)
    • Must have a Social Security number

    Who’s this for? Upstart is ideal for individuals who don’t have a sufficient enough credit history to qualify for most other loans and forms of credit. This lender is also ideal for those who do have a credit score that’s on the lower end.

    You can choose a three-year or five-year loan and borrow anywhere from $1,000 to $50,000. Plus, Upstart may be able to disburse your funds quickly. You can get your money as soon as the next business day if you accept the loan before 5 p.m. EST Monday through Friday. 

    One other major draw for Upstart is that this lender doesn’t charge any prepayment penalties. In other words, if you choose to pay off your loan early, you won’t be hit with a fee as a consequence.

    Best for flexible terms

    OneMain Financial Personal Loans

    • Annual Percentage Rate (APR)

    • Loan purpose

      Debt consolidation, major expenses, emergency costs

    • Loan amounts

    • Terms

    • Credit needed

    • Origination fee

      Flat fee starting at $25 to $500 or percentage ranging from 1% to 10% (depends on your state)

    • Early payoff penalty

    • Late fee

      Up to $30 per late payment or up to 15% (depends on your state)

    Pros

    • Approves applicants with bad or fair credit
    • No early payoff fees
    • Reasonable loan minimums ($1,500) for smaller needs
    • Can pre-qualify with a soft credit check (no hard inquiry right away)
    • ACH funding within 1-2 business days (sometimes same day with proper paperwork)
    • Option to apply for secured loan (with collateral) for potentially lower rates
    • Borrowers can choose the date the bill is due each month
    • Applicants may apply with a co-applicant or, if married, may apply for a loan separately from spouse

    Cons

    • High origination fee
    • High interest rates
    • No autopay APR discount
    • No co-signers

    Information about OneMain Financial’s secured loans:

    While not required, applicants who don’t qualify for an unsecured personal loan with OneMain Financial may be offered a secured loan. A secured loan lets borrowers who want to use the equity from their car potentially qualify for lower interest that way. Rates, repayment terms and agreements vary by individual and the state in which apply. Learn more by checking for offers on OneMain Financial’s site.

    OneMain Financial link provided by Even Financial.

    OneMain Financial consumer loans are offered in 44 states (we do not lend in AK, AR, CT, DC, MA, RI, and VT). Loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z such as college, university or vocational expense; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes.

    Example loan: A $6,000 loan with a 24.99% APR that is repayable in 60 monthly installments would have monthly payments of $176.07.

    Additional conditions for secured offers: Secured offers require a first lien on a motor vehicle that meets our value requirements, titled in your name with valid insurance. The lender places a lien on the collateral until the loan is paid in full. Active duty military, their spouse or dependents covered by the Military Lending Act may not pledge any vehicle as collateral.

    Funding options; availability of funds: Loan proceeds may be disbursed by check or electronically deposited to the borrower’s bank account through the Automated Clearing House (ACH) or debit card (SpeedFunds) networks. ACH funds are available approximately 1 to 2 business days after the loan closing date. Funds through SpeedFunds can be accessed on the loan closing date by using a bank-issued debit card.

    Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.

    Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: North Carolina: $7,500.

    Who’s this for?  OneMain Financial is a good option for people who want different options when it comes to the length of the repayment period. Borrowers can choose between term lengths ranging from 24 to 60 months.

    OneMain offers loan amounts ranging from $1,500 to $20,000 (this can vary by state). This lender also doesn’t charge any early payoff penalty fees. However, they do charge origination fees can either be a flat fee ranging from $25 to $500 or a percentage of the loan you’ve taken out, ranging from 1% to 10%, depending on your state. Late fees can cost up to $30 per late payment or 1.5% to 15% of the late amount of your last monthly payment.

    And while most personal loans are unsecured, OneMain Financial offers borrowers the option of using collateral in order to receive better loan terms, like a lower interest rate.

    Best for quick funding

    Avant Personal Loans

    • Annual Percentage Rate (APR)

    • Loan purpose

      Debt consolidation, major expenses, emergency costs, home improvements

    • Loan amounts

    • Terms

    • Credit needed

    • Origination fee

    • Early payoff penalty

    • Late fee

      Up to $25 per late payment after 10-day grace period

    Pros

    • Lends to applicants with scores lower than 600
    • No early payoff fees
    • Can pre-qualify with a soft credit check (no hard inquiry)
    • Quick funding (often by the next day)
    • Late payment grace period of 10 days

    Cons

    • Origination fee
    • Potentially high interest (caps at 35.99% APR)
    • No autopay APR discount
    • No direct payments to creditors (for debt consolidation)
    • No co-signers

    Who’s this for? Avant Personal Loans can be a good option for those who need money in a pinch. If you manage to be approved by 4:30 p.m. CT Monday through Friday, you can receive your funds as early as the next day. Of course, quick funding can also depend on whether or not you have submitted all the necessary information in a timely manner.

    This lender also lets you check to see if you prequalify for the loan without harming your credit score. If your credit score isn’t great, you can still get approved since Avant looks at both your credit score and income.

    You can borrow as little as $2,000 and as much as $35,000, and loan terms range from 24 to 60 months.

    The origination fees range from 0% to 4.75% of the loan amount. Also, keep in mind that this lender charges a late fee of $25 if you don’t make your payment within ten days after the due date.

    Best for fast approval

    LendingPoint Personal Loans

    • Annual Percentage Rate (APR)

    • Loan purpose

      Debt consolidation, wedding, car repair, home renovations and more

    • Loan amounts

    • Terms

    • Credit needed

    • Origination fee

      Origination or other fees from 0% to 7% may apply depending upon your state of residence

    • Early payoff penalty

    • Late fee

      Currently, LendingPoint does not charge any late fees but reserves the right to assess late fees of up to $30. Fees vary by state.

    Pros

    • Fast application with same-day approval
    • Possible next-day funding (after final documents are verified/approved)
    • May approve applicants with minimum 620 credit score
    • Allows soft inquiry to prequalify
    • No early payoff fees

    Cons

    • Origination fees from 0% to 6%
    • Not available in Nevada or West Virginia
    • Must have a social security number
    • No joint or co-signed loans

    Who’s eligible to apply for a LendingPoint loan:

    1. You must be at least 18 years of age.
    2. You must be able to provide a U.S. federal, state or local government issued photo ID.
    3. You must have a social security number.
    4. You must have a minimum annual income of $40,000 (from employment, retirement or some other source).
    5. You must have a verifiable personal bank account in your name.
    6. You must live in one of the states where LendingPoint does business (excludes Nevada and West Virginia). 

    Who’s this for? LendingPoint offers pre-qualification so you can check the terms of your potential loan without impacting your credit score. But the biggest appeal to LendingPoint is that this lender will inform you of the approval decision within seconds of applying. Generally, it will take one business day to receive the funds.

    There is, however, a minimum annual income requirement of $35,000 in order to qualify to apply for the loan, and these loans are not available to residents of Nevada or West Virginia. When determining eligibility for a loan, LendingPoint considers credit score, loan term, credit usage, loan amount and other factors.

    Loan amounts range from $2,000 to $36,500, and the length of the loan term can be anywhere from 24 to 72 months. The origination fees range from 0% to 7% of your total loan amount.

    Personal loan FAQs

    What is considered a bad credit score?

    Here is how lenders classify “fair” and “poor” credit scores:

    FICO Score

    • Very poor: 300 to 579
    • Fair: 580 to 669
    • Good: 670 to 739
    • Very good: 740 to 799
    • Excellent: 800 to 850

    VantageScore

    • Very poor: 300 to 499
    • Poor: 500 to 600
    • Fair: 601 to 660
    • Good: 661 to 780
    • Excellent: 781 to 850

    Scores lower than 670, and certainly scores lower than 600, will most likely disqualify you for the most affordable personal loans. But if you’re in a pinch, it’s not all-out impossible to get a loan with a credit score in the high 500s or low 600s.

    Can I pre-qualify without hurting my credit score?

    Yes, it is possible to pre-qualify for a personal loan without hurting your credit score. Do some research before you apply. Read reviews and learn what to consider before agreeing to take on a loan. When you’re ready to apply, follow these steps to make sure you don’t ding your score too much.

    1. Shop around for the best rate. Avoid hard inquiries by knowing your credit score before you submit a formal application so you know what you might qualify for. Many lenders will allow you to submit a prequalification form. Or consider using a lending platform (such as Upstart or LendingTree) to view multiple offers at once.
    2. Decide on the best offer. Choose the loan with the best monthly payment and interest rate for your budget. Be sure to look at how much the loan will cost you over the full length of the term and decide if the cost is worth it.
    3. Submit a formal application. Have your social security number on hand, as well as supporting documents such as bank statements and paystubs.
    4. Wait for final approval. This could take just a few minutes, an hour or up to 10 days. To facilitate speedier approval, apply during normal business hours and submit the required documents right away.
    5. Get your funds. Once your loan is approved, you’ll be asked to input your bank account information so the funds are deposited into your account. You may also be able to request a paper check from your lender, or in the case of a consolidation loan, you may be able to have funds sent right to your creditors.

    Do personal loans build credit?

    Personal loans are a form of installment credit, which affect both your credit report and your credit score. Having both installment and revolving credit in your profile will strengthen your credit mix.

    Having a diverse credit mix is helpful — but it’s not everything. Some say that adding a new installment loan, like a car loan or a mortgage, can boost your score, but there’s no sense in taking on debt (plus interest) unless you actually need it.

    While a new installment loan might boost your score by strengthening your credit mix, a personal loan will only improve your credit over time if you can afford to make on-time payments. Late and missed payments show up as negative marks on your credit report.

    While taking on an installment loan won’t boost your score a whole lot, using a personal loan to pay off credit card debt could increase in your credit score. Paying off a card will have a big impact on your credit utilization rate, which is a major factor in determining your credit score.

    Once your cards are paid off, aim to keep your spending under 10% of your available credit. If you don’t take on more credit card debt and you pay your personal loan on time each month, you’ll see a noticeable improvement to your credit score.

    What’s the difference between secured vs. unsecured loans?

    A secured loan is a loan backed by collateral. The most common types of secured loans are mortgages and car loans, where the collateral is your home or car. But really, collateral can be any kind of financial asset you own. And if you don’t pay back your loan, the bank can seize your collateral as payment. A repossession stays on your credit report for up to seven years.

    An unsecured loan requires no collateral, though you’re still charged interest and sometimes fees. Student loans, personal loans and credit cards are all examples of unsecured loans.

    Since there’s no collateral, financial institutions give out unsecured loans based in large part on your credit score, income and history of repaying past debts. For this reason, unsecured loans may have higher interest rates (but not always) than secured loans.

    Get matched with personal loan offers.

    Bottom line

    When facing a financially difficult time, having a low credit score can often limit the options you have available to you, since you may not qualify for certain credit cards or other loans. However, some personal loan lenders that cater to lower credit scores may be able to provide some relief. Just keep in mind that with a lower credit score, you may be subject to higher interest rates.

    Our methodology

    To determine which hardship personal loans are the best for consumers with bad credit, Select analyzed dozens of U.S. personal loans offered by both online and brick-and-mortar banks, including large credit unions. When possible, we chose loans with no origination or sign-up fees, but we also included options for borrowers with lower credit scores on this list. Some of those options have origination fees.

    When narrowing down and ranking the best personal loans, we focused on the following features:

    • Fixed-rate APR: Variable rates can go up and down over the lifetime of your loan. With a fixed rate APR, you lock in an interest rate for the duration of the loan’s term, which means your monthly payment won’t vary, making your budget easier to plan.
    • Flexible minimum and maximum loan amounts/terms: Each lender provides more than one financing option that you can customize based on your monthly budget and how long you need to pay back your loan.
    • No early payoff penalties: The lenders on our list do not charge borrowers for paying off loans early.
    • Streamlined application process: We considered whether lenders offered same-day approval decisions and a fast online application process. 
    • Customer support: Every loan on our list provides customer service available via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
    • Fund disbursement: The loans on our list deliver funds promptly through either electronic wire transfer to your checking account or in the form of a paper check. Some lenders (which we noted) offer the ability to pay your creditors directly.
    • Autopay discounts: We noted the lenders that reward you for enrolling in autopay by lowering your APR by 0.25% to 0.5%.
    • Creditor payment limits and loan sizes: The above lenders provide loans in an array of sizes, from $1,000 to $100,000. Each lender advertises its respective payment limits and loan sizes, and completing a preapproval process can give you an idea of what your interest rate and monthly payment would be for such an amount.

    The rates and fee structures advertised for personal loans are subject to fluctuate in accordance with the Fed rate. However, once you accept your loan agreement, a fixed-rate APR will guarantee your interest rate and monthly payment will remain consistent throughout the entire term of the loan. Your APR, monthly payment and loan amount depend on your credit history and creditworthiness. To take out a loan, many lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.

    Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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