Banking at the Post Office
An old financial service that originated over 100 years ago and was terminated in the 1960s is getting a new lease on life.
The Postal Savings System was passed into law in 1910 and post offices began taking deposits from customers on Jan. 1, 1911. However, that practice ended in 1967.
Four post offices were designated to accept deposits and offer other financial services last fall. Customers at those post offices can now cash checks and transfer money.
For now, only post offices in Washington, D. C., Falls Church, VA., Baltimore, MD, and Bronx, NY offer those financial services. However, if they are successful, the practice could be extended to more or all post offices.
Serving Poor People
About 22 percent (63 million) of Americans use alternatives to banks for financial transactions, according to a 2019 report by The Federal Reserve. Those alternatives are pricey. They include, check cashing services, pawn loans, money orders, auto title loans, payday loans, paycheck advances, or tax refund advances.
Having the post office offer alternatives to high fee financial service companies would save money for people who use those services. In addition, it could help the postal service.
Bolstering Post Office Bottom Line
The Inspector-General of the United States Postal Service reported in 2015 that offering financial services at local post offices could add $1.1 billion to the agency’s bottom line. However, some advocates today put the figure higher.
Sen. Kirsten Gillibrand, D-NY, who introduced legislation in 2020 to expand post office financial services, says today $9 billion could be derived from such services.
“The USPS is the only institution that serves every community in the country, from inner cities to rural America,” Gillibrand said in promoting her legislation. “The Postal Banking Act would reinforce the Postal Service, provide critical revenue, and establish postal banking for the nearly 10 million American households who lack access to basic financial services.”
Opposition
Saving poor people money and raising revenue to improve the postal system. Who could possibly oppose that? Ted Cruze, R-TX. He and 18 other Republicans have signed a letter opposing Gillibrand’s plan.
Expect More Credit Card Offers
Credit card companies often mount a marketing push in the fourth quarter to capture more money from the spike in holiday spending. However, those offers keep coming and may expand into subprime markets this year. As a result, consumers need to exercise care in evaluating new credit card offers.
Credit Card Debt Mounting
With the onset of the pandemic and spurred by government supplement checks, consumers reduced credit card debt substantially in 2020 and early 2021. However, by mid-2021, we had reverted to our old bad form.
According to the New York Fed, “Credit card balances increased in the third quarter by $17 billion, after an increase of the same size in the second quarter.”
A WalletHub report sees that trend increasing.
“Furthermore, WalletHub now projects that consumers will end the year with a net addition of $70 billion in credit card debt,” the firm reported in a December study, “which far exceeds the 10-year average of $45.6 billion.”
Credit Card Interest Rates Climbing
The average APR for all credit cards is 15.56% to 22.87%.
The annual percentage rate (APR) for credit cards accruing interest jumped from 16.30 percent to 17.13 percent in the third quarter last year, according to a report by Lending Tree. In addition, the same report notes that increase results in “the second-highest average since the Fed began tracking it in 1994.”
That rate is going up.
“The latest LendingTree data on credit card APRs shows that the average APR with a new credit card offer is 19.55%,” Lending Tree reports, “with the average card offering an APR range of 15.89% to 23.21%, with your rate varying based on your creditworthiness.”
We should expect rates to continue upward, according to Bankrate. That is based on the belief that the Federal Reserve will hike interest rates in Spring and mid-summer.
“If the Fed raises interest rates by a quarter of a percentage point, you’ll see that quarter-point passed along within one to two credit card statement cycles,” said Greg McBride, CFA and chief financial analyst at Bankrate. “My forecast is the Fed will raise rates twice next year and could easily do more.”
Managing Credit Card Debt
More credit becoming available and interest rates rising could build the perfect financial storm.
As a result, we should evaluate new credit card offers carefully and manage existing cards well.
Money Management International suggests some tips on evaluating credit card offers.
Can You Afford It
Start with your budget. Can you afford to pay down new credit card debt and fees? If not, take a pass on the shiny new plastic.
To know if your budget can handle a new card, first find out the interest rate, credit limit, and fees and penalties.
“It’s important to figure out whether you’ll be paying off the card in full each month, paying the minimum, or somewhere in between,” according to Money Management. “If you can only afford to pay the minimum payment, the APR will weigh more heavily than if you can afford to pay the balance in full. It’s important to be honest with yourself. If in the past you’ve struggled making the minimum payments on time, then you may reconsider opening a new credit card in the first place.”
Do You Need a New Card
How you use a card is also an important factor in considering new offers.
“Will you be using it for emergency expenses, or for everyday purchases?” asks Money Management. “If so, you may want a general credit card with rotating credit card rewards categories. Will the card primarily be used for travel? If that’s the case, then a card with generous travel perks and rewards may be the best fit for you.”
Conclusion
Getting a new credit card offer can be exciting. However, you should remember, it is not winning the lottery. It is taking on debt. The important questions to ask are: can you afford that extra debt and do you need the new card?
OpenSea Awash in New Money
Looking for a place to buy, sell, or trade NFTs? OpenSea is not only the largest marketplace for such transactions. It is also the highest valued.
OpenSea announced in the first week of the year that it had raised $300 million in funding led by investment firms Paradigm and Coatue Management. That pushed OpenSea’s valuation to $13.5 billion.
In the process, OpenSea has become one of the most valuable firms in crypto.
The new valuation is almost 10 times the firm’s valuation in July. That round of funding raised $100 million and lifted OpenSea’s valuation to $1.5 billion.
How Does OpenSea Work
OpenSea is a marketplace where crypto-collectibles such as digital art, gaming items, and other virtual goods are sold. The company takes a 2.5 percent fee for each transaction. It works like eBay backed by a blockchain.
Business is booming at OpenSea as a result of the increased funding and sales.
The new year started with new sales records being set.
“In fact, in just three days, OpenSea generated 3.5 times the volume that it generated in the entire month of June 2021,” reports Boardroom. “The site capped $3.2 billion in sales to round out the calendar and is clearly riding that momentum into 2022.”
Where’s All That Money Going
The NFT marketplace says it will use much of its new funding to increase staff. It only has 90 employees.
OpenSea also plans to double its security team. That comes after the company froze a trading account in late December over claims of the theft of $2.28 million in NFTs from a New York art dealer.
“The company also plans to invest heavily in product development to make its blockchain technology more accessible to mainstream consumers,” reports the New York Times, “and will soon start a grant program to support creators and blockchain builders in the NFT space.”
How Do You Get In
There are three ways you can make money using OpenSea.
- Invest in gaming items or NFTs.
- Create NFTs and sell them.
- Broker a transaction between buyers and sellers for royalties.
Happy sailing.
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Max K. Erkiletian began writing for newspapers while still in high school. He went on to become an award-winning journalist and co-founder of the print magazine Free Bird. He has written for a wide range of regional and national publications as well as many on-line publications. That has afforded him the opportunity to interview a variety of prominent figures from former Chairman of the Federal Reserve Bank Paul Volker to Blues musicians Muddy Waters and B. B. King. Max lives in Springfield, MO with his wife Karen and their cat – Pudge. He spends as much time as possible with his kids, grandchildren, and great-grandchildren.
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