Monthly Payment

While still sizeable, rate consumers could handle a $400 emergency improves


It’s taken five years, but federal officials are seeing an improvement if consumers faced a financial emergency roughly equal to one payment on their vehicle installment contract.

The Federal Reserve Board’s latest Report on the economic well-being of U.S. households indicated four in 10 adults, if faced with an unexpected expense of $400, would either not be able to cover it or would cover it by selling something or borrowing money. Officials pointed out this level is an improvement from half of adults in 2013 being ill-prepared for such an expense.

The report released this week goes on to mention that economic well-being has generally improved over the past five years. The project noted that 74 percent of adults reported they were doing at least OK financially in 2017 — up 10 percentage points from the first survey in 2013.

Even so, officials acknowledged notable differences remain across race, ethnicity, education groups and locations, and many individuals still struggle to repay college loans, handle small emergency expenses and manage retirement savings.

The report derived from the Fed’s fifth annual Survey of Household Economics and Decision-making (SHED) and examined the economic well-being and financial lives of Americans and their families. During November and December 2017, more than 12,000 people participated in the survey. They described their experiences on a wide range of topics, including income, employment, unexpected expenses, banking and credit, housing, education and retirement planning.

Among the new topics covered in this year’s report is the relationship between the opioid epidemic and local economic conditions, which could certainly impact whether a contract holder stays current or falls into delinquency.

The Fed discovered one in five adults personally knows someone who has been addicted to opioids, and those who do have somewhat less favorable assessments of economic conditions. Still, more than half of adults exposed to opioid addiction say that their local economy is good or excellent, suggesting a role for factors beyond economic conditions in understanding the crisis.

“This year’s survey finds that rising levels of employment are translating into improved financial conditions for many but not all Americans, with one third now reporting they are living comfortably and another 40 percent reporting they are doing ok financially,” said Federal Reserve Board Governor Lael Brainard. “Even with the improvement in financial outlook, however, 40 percent still say they cannot cover a $400 emergency expense, or would do so by borrowing or selling something.

“We learned that about one in five adults knows someone with addiction to opioids or painkillers; whites are about twice as likely to have such exposure as blacks and Hispanics; and exposure does not vary much by education level or by local economic conditions,” Brainard continued.

The Board’s SHED data looked at how individuals are managing their finances and making decisions vital to their financial lives and futures. Alongside the economic gains observed since the Great Recession, this report also noted challenges faced by people who are trying to piece together multiple jobs or who are struggling to establish emergency savings.

Among the report’s other key findings:

— Individuals of all education levels, races and ethnicities have shared in the economic expansion over the past five years, although reported well-being remains lower for racial and ethnic minorities and those with less educational attainment.

— Most workers are satisfied with the wages and benefits from their current job and are optimistic about their future job opportunities. Even so, challenges including irregular job scheduling remain. One in six workers have irregular work schedules that they did not request, and one in ten receive their work schedule less than a week in advance.

— Many adults are struggling to save for retirement, and less than two-fifths believe that they are on track with their savings. While preparedness for retirement increases with age, concerns about inadequate savings are still common for those nearing retirement.

The entire report can be downloaded here.

FICO auto financing survey reinforces importance of dealerships

SAN JOSE, Calif. - 

U.S. consumers are going online in droves to acquire everything from nail polish to holiday knickknacks. Their propensity to do the same to secure auto financing isn’t quite at the same level, according to a global consumer survey on automotive finance experience released on Thursday by FICO.

Silicon Valley analytic software firm FICO on Thursday announced the findings of its first global survey on consumer perceptions of the automotive finance process. The research looked at how consumers view the financing aspect of their auto purchase for new and used vehicles, as well as how the ecosystem of providers (banks, captive finance providers, credit unions, dealerships and startups) are currently meeting customer expectations.

A trio of initial findings showed:

• Only 5 percent of U.S. consumers applied for their loans online, while 29 percent plan to do so for their financed installment contract.

• Seventy-three percent of U.S. consumers obtain their financing at the dealership; more than any other country.

• The U.S. has the second longest wait time to complete the finance process as 62 percent of U.S. consumers have to wait 30 minutes or more.

“FICO’s research provides valuable insight into the auto finance experience for consumers. As a customer-centric organization, GM Financial puts our customers at the center of everything we do. The results of the research are a great validation that lenders, and their dealers must be relationship-focused throughout the customer journey,” said Bob Beatty, executive vice president for North America customer experience at GM Financial.

FICO highlighted that among the key findings is a sizable gap between a consumer’s interest in online auto financing (33 percent) versus current global market adoption (10 percent). In the United States, there is a 24-point difference, as only 5 percent of U.S. consumers applied for their financing online, while 29 percent plan to do so for their next purchase.

Also, in the U.S., FICO noticed that more than any other country surveyed, the dealership is still the main channel for U.S. consumers as 73 percent finance their vehicle purchase at the dealership.

FICO acknowledged consumers appreciate immediacy in their financing process. The survey showed 87 percent would accept or at least consider an instant offer for financing a vehicle if that meant they could avoid dealing with a bank or doing extra paperwork. However, globally, 54 percent of consumers wait 30 minutes or more to complete their financing transaction — from filling out the application, to receiving an offer and finalizing the loan.

The percentage of U.S. consumers who have to wait that long is higher at 62 percent, which makes it the second highest country, behind only Mexico at 65 percent.

 In contrast, the U.K. has the shortest wait time for the financing process with 63 percent waiting less than 30 minutes. 

“The survey results underscore that consumers expect more transparency, personalization and timeliness. There is tremendous opportunity for the industry to move beyond transactional relationships into a long-term, customer-centric relationship by providing personalized experiences that gives customers more control over the auto buying process,” said Ken Kertz, senior director and practice leader of auto and motorized at FICO.

Other data points of note for the U.S. included:

• Financing has a meaningful impact on the effectiveness of marketing to auto shoppers. FICO noticed 67 percent of participants said that the level of financing they qualified for had some or a great deal of impact on their selection of a vehicle, make, model or dealership.

• There are generational differences in auto financing. FICO found that baby boomers strongly prefer going to a dealership, and millennials prefer going to a bank.  In general, younger consumers are more likely to seek digital financing, however, is not the first choice for the majority of any age group.

• Monthly payments and interest rates are most important when considering competing options. The findings indicated consumers care most about low monthly payment amount (92 percent) and interest rates (94 percent) and are willing to put more money down as a trade-off.

• Overall, consumers are fairly satisfied with their experience. FICO said 87 percent of respondents felt they got a good or excellent deal, and the clear majority of consumers around the world feel that they are receiving at least a fair deal in during their financing experience.

FICO’s independent research surveyed 2,200 adult consumers across nine countries including the U.S., Canada, Mexico, Chile, Australia, New Zealand, Germany, Spain,and the United Kingdom. The respondents were between the ages of 18 and 64 who acquired financing for a new or used vehicle within the last three years.

More information on the survey results can be found at this website.

REPAY makes another acquisition, securing PayMaxx Pro


More industry consolidation came to light on Wednesday as Realtime Electronic Payments (REPAY) made another acquisition.

The provider of advanced payment technology products and electronic transaction processing services for the consumer finance industry has acquired PayMaxx Pro, an electronic payments provider to the automotive industry.

“This acquisition expands our footprint in the automotive industry and broadens our software integration capabilities, enabling us to better serve our existing and prospective customers,” REPAY chief executive officer John Morris said.

“PayMaxx Pro’s people will bring a wealth of knowledge and expertise, and we look forward to welcoming Megan Bussie, Jon Leedom and their team to the REPAY family,” Morris added.

Executives said PayMaxx Pro customers will soon experience the benefits of the acquisition.

“We are excited about the expanded product offerings and technology enhancements this partnership brings to our integrated partners and clients,” said Bussie, former director of PayMaxx Pro and now director of sales for REPAY. 

Bussie indicated customers will have access to an enhanced product suite, including a customer-facing mobile app, and they will continue to receive the exceptional PayMaxx Pro customer service.

Both companies highlighted they also will benefit from shared resources and cutting-edge technology, and REPAY will continue to invest in the consumer finance and automotive industries.

REPAY pledged to expand its relationships with software partners while remaining committed to providing a first-class customer experience where customers can automate and accept payments anywhere, anytime and through any method.

“REPAY was the obvious choice when selecting a group that had the resources, knowledge and commitment to continue the growth of PayMaxx Pro. They will build upon the products and services that will enhance our clients' business operations,” said Chris Leedom, chief executive officer and president of PayMaxx Pro.

REPAY isn’t unfamiliar with making acquisitions as almost a year ago the company finalized a deal for Sigma Payment Solutions.

Nicholas Financial among ACI Worldwide’s 2017 Innovation Award winners

NAPLES, Fla. - 

ACI Worldwide, one of the more than 60 exhibitors set to share their expertise during Used Car Week, recently announced the winners of the 2017 ACI Innovation Awards, with one of the recipients being a finance company that specializes in subprime paper.

The awards recognize banks, financial intermediaries, merchants and billers around the world for their innovative use of ACI’s UP portfolio of payment solutions. And one of the winners was Nicholas Financial, which originates subprime vehicle installment contracts with franchised and independent dealerships.

ACI Worldwide highlighted that Nicholas Financial pioneered new payments channels and technologies to increase electronic payment adoption while reducing print and mail costs, increasing customer adoption and satisfaction.

This year’s other winners include:

• Auchan Retail International: One of the world’s largest retailers, Auchan leveraged new card payments standards and took control of the payment chain to more effectively innovate, improve time to market, reduce costs and ultimately improve customer satisfaction.

• Everlink: A leading provider of comprehensive, innovative and integrated payment solutions and services to Canadian Financial Institutions, Everlink successfully deployed Proactive Risk Manager, augmenting it with enhanced rules and integration into SMS messaging for a 360-degree measure of customer protection. This deployment is leading the way in Canada with the capability of protecting millions of Canadians.

• MB Financial: A top commercial bank, MB Financial implemented a best-in-class internal training and communication program in which every customer received specialized training related to a major systems conversion.

• Rabobank Nederland: A leading bank in the Netherlands, Rabobank implemented a complete new debit card payment infrastructure. By standardizing on solutions, Rabobank was able to realize a faster time to market ratio, allowing the bank to be more responsive to new developments like mobile payments with new services, the rapid emergence of wearables, the internet of things and biometrics.

• The Co-operative Group: She leading convenience retailer in U.K., Co-op established a customer rewards experience unmatched among national merchants; the program has generated significant increases in customer loyalty and community engagement.

• Westpac New Zealand Limited: A faster payments pioneer in the Asia Pacific region, Westpac NZ implemented a new payments engine capable of meeting the Reserve Bank of New Zealand’s mandated go-live date for hourly intraday settlement and interchange of electronic credits and payments.

The awards celebrate global payments innovation, and winners were selected by a panel of judges composed of ACI experts and industry analysts from Aite Group, Celent and Ovum.

“ACI is honored to work with many tremendous organizations—and the winners of this year’s Innovation Awards represent the best in forward-thinking payments excellence,” said Craig Saks, chief operating officer at ACI Worldwide. ”We are thrilled to have received a record number of submissions this year; these organizations make us proud to support innovation in the payments industry.” 

For additional information on the Innovation Awards program and winners, visit

Used-financing trends produce stable September


Along with sharing some insights on how new vehicles are being financed in the Houston market following Hurricane Harvey, Edmunds reported that nationwide used-vehicle financing trends in September remained stable.

Analysts determined the average term for a used-vehicle installment contract written in September came in at 66.81 months, down just slightly from a year earlier when it was 66.95 months. Five years ago, terms averaged 63.31 months in September, according to data Edmunds shared on Tuesday.

The amount financed to finalize used-vehicle deliveries ticked up by $169 year-over-year to $21,380 in September. During the same month five years ago, the average amount financed for a used-vehicle contract stood at $18,976.

Edmonds noticed the rate ticked up a bit, too, in September as the average APR was 7.52 percent, up from 7.29 percent a year earlier. However, Edmunds pointed out that finance companies wrote paper with a higher APR in September 2012 as the average was 7.96 percent.

The monthly payment buyers are making on used vehicles they took delivery in September came in at $386, up by $6 year-over-year and by $23 compared to five years ago.

The average down payment for a used-vehicle contract rose to $2,494, representing a $141 climb year-over-year and a $309 jump versus September 2012.

Moving over to the new-car side, Edmunds determined Houston-area shoppers who are buying replacement vehicles for those lost in Hurricane Harvey are being a bit more pragmatic. The average new-car down payment was $4,432 in Houston in September, up 18 percent compared to last month and up 24 percent compared to September of 2016.

Additionally, analysts noticed the average monthly payment for a new car in Houston dropped to $571 in September, a 4-percent decline from September of last year and the lowest average monthly payment since July 2015.

Edmunds also mentioned new-car sales in Houston spiked 109 percent in the three weeks immediately following the hurricane when compared to the three weeks before the storm hit.

“Car buyers in Houston tend to opt for pricier trucks and SUVs, so it’s a positive sign to see buyers putting more down up front,” said Jessica Caldwell, Edmunds executive director of industry analysis.

Meanwhile, in the rest of the country, automakers are still grappling to find the right way to trim excess inventory to make way for 2018 vehicles. Despite overall incentives reaching record levels, Edmunds explained OEMs are reticent to offer zero-percent financing deals.

Similar to what Edmunds saw in August, in September only 10 percent of new-car contract had zero-percent financing, compared to 15 percent of loans in September of last year.

“Even though automakers are being very aggressive with incentives, because interest rates are still relatively low, zero-percent financing just isn’t the big draw that it used to be,” Caldwell said.

“Right now dealers are more apt to sweeten the deal through discounted leases or taking cash off of the purchase price, especially on 2017 models that are languishing on the lot,” she added.

RateGenius hits new milestone, aims for 400,000 refinanced contracts

AUSTIN, Texas - 

RateGenius, an online auto refinancing platform, recently reached a milestone by refinancing more than 334,738 installment contracts, saving customers an estimated $350.5 million since its inception in 1999.

“It’s gratifying to know that we've helped so many people save such a magnitude of money. Knowing that many people live paycheck to paycheck lets me know that we provide a valuable service, and I'm extremely proud of that,” RateGenius chief executive officer Chris Brown said.

RateGenius now looks forward to helping 400,000 people refinance their vehicles — 334,738 down, 62,262 to go.

“You do good things, good things come,” Brown said. “Our momentum is tremendous. People are realizing that we are great and are telling their friends. Word of mouth is one of the best forms of advertising.

“Every day the number of referrals that we get grows. We look forward to seeing our network grow and continuing to help as many people save money as we can,” Brown went on to say.

Edmunds notices down payments keep rising for used and new financing


While many of the August auto finance metrics Edmunds compiled and shared remained stable on a year-over-year basis, analysts did spot one rise that should be pleasing to finance companies.

Edmunds noticed increases in down payments in August for both new- and used-vehicle transactions, compared to the same month last year. For new models, the average down payment climbed by 5.9 percent to land at $3,667.

The average used-vehicle down-payment jump was even more, coming in at $2,480, which represented a 7.2 percent increase year-over-year.

Looking back to five years ago, Edmunds found that down payments on both used and new financing is much higher. Analysts pegged the rise on the new-model side at 9.1 percent and 14.7 percent for used vehicles.

As seen in the chart below, Edmunds determined four of the other major auto finance metrics did not change much in August.

New-Vehicle Financing Trends
  August 2017 Change from August 2016 5-Year Change
 Term  69.3 months  0.8%  6.8%
 Monthly Payment  $507  0.6%  10.1%
 Amount Financed  $30,473  0.2%  15.5%
 APR  4.8%  10.9%  17.8%


Used-Vehicle Financing Trends
  August 2017  Change from August 2016 5-Year Change
 Term  66.7 months  -0.1%  5.5%
 Monthly Payment   $382  1.4%  5.1%
 Amount Financed  $21,091  0.9%  11.2%
 APR  7.5%  2.6%  -6.1%




FIS and Equifax launch solution to prevent financial fraud and identity theft


Your thumbprint isn’t just for your iPhone any longer.

FIS and Equifax recently teamed up to improve consumer experiences by bringing new levels of convenience and security to consumers challenged with maintaining multiple usernames and passwords to protect themselves from financial fraud and identity theft.

The two companies jointly now offer OnlyID, an identity verification solution that can provide a higher level of account protection and personal control through a single, secure digital log-in, consisting of the consumer's thumbprint or another unique identifier.

This identity solution, which can be used across multiple accounts, will be offered by financial institutions and e-retailers who participate in the OnlyID Network. In addition to providing security and convenience to consumers, OnlyID can benefit financial institutions and businesses by helping them reduce fraud claim costs, provide better digital experiences and increase consumer loyalty.

“Imagine if you no longer needed passwords to protect your digital identity because you had a unique, protected identifier that only you could use at the places where you bank and shop,” said Bruce Lowthers, head of FIS Payments.

“OnlyID from FIS and Equifax brings the power of advanced authentication technologies to make consumers' financial lives simpler while providing secure protection against fraud,” Lowthers continued.

Equifax and FIS, both trusted data stewards with powerful identity authentication and analytics capabilities, can deliver anti-fraud solutions to thousands of financial institutions. This joint effort will advance digital security and uniquely positions them to deliver a powerful, universal authentication service through OnlyID.

"OnlyID combines powerful predictive analytics with risk scoring models that generate a frictionless fraud assessment, without disruption to consumers or businesses,” Equifax president Trey Loughran said. “Our collective unique data assets, innovation and depth of expertise across Equifax and FIS enabled us to create a solution that will advance digital security over the web and via mobile devices.”

The two companies plan to co-market the OnlyID solution to banks, credit unions, retailers, telecommunications providers, utilities and other businesses.

“Passwords not only provide little security, they also result in cumbersome and clunky user experiences, particularly in the mobile environment," said Julie Conroy, research director at Aite Group. “The next generation of digital security leverages authenticators such as device-based security and biometrics, which provide greater levels of security as well as a better consumer experience.”

For more information about OnlyID from FIS and Equifax, visit

Hyundai Capital America out to help customers hit by Harvey

IRVINE, Calif. - 

In a move similar to the one made by the captive for Toyota and Lexus, Hyundai Capital America, which does business as Hyundai Motor Finance, Genesis Finance and Kia Motors Finance, has announced that it is offering payment relief solutions to its customers affected by Hurricane Harvey.

“We are concerned about the well-being and immediate safety of our customers that have been displaced by this unprecedented storm,” Hyundai Capital America president and chief executive officer Ross Williams said.

“Our thoughts and prayers go out to everyone in Texas and all across the Gulf coast,” Williams went on to say

Hyundai Capital America indicated impacted lease and finance customers residing in the impacted areas may be eligible to take advantage of several payment relief options, some of which include:

—Payment extensions

—Redirecting billing statements

—Arranging phone or on-line payments free of charge

Customers who would like to discuss their account options are encouraged to contact Hyundai Motor Finance, Genesis Finance and Kia Motors Finance for further assistance.

Great Recession repeat not expected as payment performance likely softens

CARY, N.C. - 

As experts and policymakers shared a variety of economic trend updates and observations, Fitch Ratings summarized that record-setting payment performance isn’t likely to simply last forever.

But at the same time, Fitch reiterated that deterioration of auto finance performance — especially in the subprime space — won’t pull the entire economy into a tailspin like some pontificators keep trying to allege.

In analysis released this week, Fitch acknowledged the continued financial resilience of the U.S. consumer has prolonged a period of “extremely strong” asset quality among many U.S. consumer lending segments. However, analysts insisted that U.S. consumer loan losses at financial institutions are at “unsustainable” cyclical lows and a more meaningful amount of credit deterioration should be expected over the near to medium term.

“This will particularly be the case should unemployment claims begin to reverse after reaching multi-decade lows,” Fitch said.

A month after the rate tied a 10-year low, S&P Dow Jones Indices and Experian released data through June on Tuesday and determined auto loan defaults decreased 3 basis points from the previous month to settle at a new low mark of 0.82 percent. The May reading had tied for the lowest mark analysts have seen during the past 10 years. In June 2015, the auto finance default rate also stood at 0.85 percent.

The new low record might not last, as the rate has made an upward movement from June into July during five of the past eight years. The most pronounced rise in the cyclical pattern arrived in the immediate aftermath of the Great Recession, when the rate in June 2009 of 2.18 percent jumped to 2.46 percent a month later.

Fitch explained the extent to which weaker credit performance will be a challenge for individual consumer lenders and finance companies will vary depending on the diversity of their activities and the extent to which they have strengthened capital and loss reserves to absorb higher losses. Analysts added their willingness to tighten underwriting standards in recent quarters in anticipation of a weaker macroeconomic environment will also be a key factor.

“Reflecting these dynamics, Fitch believes diversified banks are better positioned than mono-line lenders to weather meaningful erosion in consumer asset quality,” analysts said.

Fitch also pointed out that credit cards and auto loans — particularly retail credit cards and subprime vehicle installment contracts — will be the consumer loan segments most likely to see asset quality deterioration in the near to medium term. The firm noted higher loss rates and delinquencies have already begun to materialize.

“Drivers of weaker credit performance include stronger loan growth in recent years, increased competition leading to looser underwriting standards in the post-financial crisis period (including greater exposure to subprime borrowers) and, in the case of auto lending, residual values that have been supported by unsustainably high used vehicle prices,” analysts said.

According to Federal Reserve surveys, banks have begun tightening underwriting standards in both segments over the past several quarters.

“The potential systemic impacts of a rapid deterioration in either credit card or auto lending are limited relative to pre-crisis residential mortgage lending,” Fitch said. “Both segments are much smaller than residential mortgage debt with shorter loan durations and smaller loan balances.”

Ability to maintain payments

While Fitch referenced the impact unemployment might have on consumers’ ability to maintain their debt commitments, the latest analysis from Comerica Bank took a closer look at the latest federal employment report that indicated payroll employment increased by 222,000 net jobs in June.

Comerica Bank mentioned that revised figures for April and May triggered the unemployment rate to tick up slightly to 4.4 percent.

“This is not a sign of a cooling labor market. We expect that labor market conditions will continue to tighten through the second half of this year,” Comerica Bank chief economist Robert Dye said in the commentary.

Comerica also mentioned the average workweek inched up by one tenth of an hour to 34.5, and average hourly earnings increased moderately by 4 cents, or 0.2 percent.

“So this labor report hit the trifecta, showing that more workers worked longer hours and got paid more for it,” Dye said. “This is supportive of income growth in June and beyond and consumer spending, too.”

Comerica Bank maintained that despite this labor market data, the Federal Reserve is likely to leave interest rates where they currently are at 1.25 percent when the Federal Open Market Committee meets beginning on Tuesday. Dye is also projecting that the Fed will announce the beginning of balance sheet reduction at its September meeting and that another 0.25 interest rate rise should come in December.

During her semiannual appearance before the House Financial Services Committee, Federal Reserve chair Janet Yellen reiterated the strategy policymakers plan to leverage.

“The committee continues to expect that the evolution of the economy will warrant gradual increases in the federal funds rate over time to achieve and maintain maximum employment and stable prices,” Yellen said in her prepared testimony. “That expectation is based on our view that the federal funds rate remains somewhat below its neutral level — that is, the level of the federal funds rate that is neither expansionary nor contractionary and keeps the economy operating on an even keel.

“Because the neutral rate is currently quite low by historical standards, the federal funds rate would not have to rise all that much further to get to a neutral policy stance,” she continued. “But because we also anticipate that the factors that are currently holding down the neutral rate will diminish somewhat over time, additional gradual rate hikes are likely to be appropriate over the next few years to sustain the economic expansion and return inflation to our 2 percent goal.

“Even so, the committee continues to anticipate that the longer-run neutral level of the federal funds rate is likely to remain below levels that prevailed in previous decades,” Yellen went on to say.

And with regard to rate hikes the Fed already made, TransUnion’s analysis showed that most borrowers were able to absorb their increased monthly payment obligations after the Fed’s rate hike last December.

TransUnion’s study identified these 63 million consumers because they carried debts for which the minimum monthly payment due was tied to the market interest rate, such that a rise in rates from the December rate hike could cause an increase in payments required. TransUnion used its CreditVision aggregate excess payment (AEP) algorithm, which incorporates monthly payments from mortgages, credit cards and other debt obligations, to identify 10.6 million of these consumers who were at elevated risk of not having the capacity to absorb a rate increase of 0.25 percent.

The study then tracked the performance of these consumers through the end of March to give the December rate increase enough time to affect payment obligations. The study found that, in fact, only 1 million of these consumers were delinquent at the end of March. This was slightly lower than the study’s control group, who had no variable-rate products.

TransUnion explained this result implies that consumers with variable-rate credit were able to manage the rate increase as well as, or better than, consumers without variable-rate products.

“When we announced our ‘capacity to absorb a rate increase’ metric last May we said that it was a conservative measure of risk, in that it did not account for contributions to savings or investments that could be reallocated to cover debt service increases,” said Ezra Becker, senior vice president of research and consulting at TransUnion.

“We described our metric as an upper bound on the number of consumers who would struggle with a rate increase,” Becker continued. “We’re pleased to see that only 10 percent of those consumers we had considered at elevated risk of payment shock from a rate increase exhibited delinquency over the study period. Most consumers appeared able to reallocate their available cash, or make small changes to their spending habits, to effectively absorb the December rate increase.”

More about the overall economy

Fitch is maintaining its view that U.S. GDP growth will rise in 2017 and 2018.

“Increases in interest rates unaccompanied by meaningful economic growth and expanding wages could pressure consumer asset quality as it would result in increased debt service (for floating-rate obligations) and elevated refinancing risk without the benefit of higher income to absorb these costs,” analysts said.

“We believe that recent Fed rate hikes are part of long-term monetary policy normalization that is aligned with current macroeconomic conditions and the outlook,” they continued.

 In the first quarter, Fitch mentioned U.S. consumer debt returned to its pre-crisis peak of $12.7 trillion after falling to a post-crisis low of $11.2 trillion in 2Q13. The student loan and auto segments have had the most pronounced increases, although credit card debt has also accelerated recently.

Between Q4 2008 and Q1 2017, Fitch calculated that student loan debt more than doubled to $1.3 trillion while auto finance balances increased by 48 percent to $1.2 trillion.

Over the same period, Fitch added that the much larger mortgage component of consumer debt declined by 6.8 percent to $8.6 trillion from a peak of $9.3 trillion, reflecting substantially tighter underwriting amid increased regulation and the exit of many non-bank lenders.

“Looking ahead, my colleagues on the FOMC and I expect that, with further gradual adjustments in the stance of monetary policy, the economy will continue to expand at a moderate pace over the next couple of years, with the job market strengthening somewhat further and inflation rising to 2 percent,” Yellen told House lawmakers.

“This judgment reflects our view that monetary policy remains accommodative,” she continued. “Ongoing job gains should continue to support the growth of incomes and, therefore, consumer spending; global economic growth should support further gains in U.S. exports; and favorable financial conditions, coupled with the prospect of continued gains in domestic and foreign spending and the ongoing recovery in drilling activity, should continue to support business investment.

“These developments should increase resource utilization somewhat further, thereby fostering a stronger pace of wage and price increases,” Yellen added.