Latest news with #highInterestRates
South China Morning Post
3 days ago
- Business
- South China Morning Post
Deep Dive: How loan sharks target Hongkongers desperate for cash
Deep Dive delves into hot issues in Hong Kong and mainland China. Our easy-to-read articles provide context to grasp what's happening, while our questions help you craft informed responses. Check sample answers at the end of the page. News: How one person can fall victim to loan sharks in Hong Kong High interest rates on loans can lead people to borrow more money to cover their payments When his grandmother died, Hongkonger Fai Chan inherited her flat in eastern Kowloon valued at HK$3 million in 2023. But first, he had to pay a HK$1.2 million premium to the Housing Authority. He did not have the money. That was the start of his journey into the world of borrowing at high interest rates and sinking deep into debt. He had been shunned by banks due to a past bankruptcy. So he turned to two well-known finance companies for the money. Each lent him HK$600,000, and he paid the Housing Authority. But their 40 per cent annual interest rate over 10 years meant he had to repay HK$22,000 a month, which swallowed almost his entire salary of HK$20,000 to HK$30,000. The punishing monthly payments became unbearable, and he turned to smaller, less regulated lenders to borrow even more. Soon, he was juggling loans from six different places, all licensed lenders. He was taking on new debt to pay off his old ones. Chan never missed a payment but lived in constant anxiety. His phone number was shared among lenders. These loan sharks bombarded him with offers of 'help' if he needed more cash. Deep Dive: Hong Kong's gig workers call for more industry regulation 'Over WhatsApp, they will say, 'just come over and get money in 30 minutes',' Chan recalled. 'But once you get there, they will scrutinise your request and get all your information, your family's telephone numbers too.' He learned that hidden handling fees were the biggest trap. A borrower taking out a HK$10,000 loan might only receive HK$8,000 after a 20 per cent fee was deducted. However, they would still have to repay the full HK$10,000 plus interest. The law prohibits lenders from charging fees over the stated interest rate. Seeing him struggle, a friend lent Chan HK$180,000. The loan enabled him to break the cycle of borrowing and sinking deeper into debt. By then, Hong Kong's property market had slumped. The value of his grandmother's flat sank to HK$1.2 million. He sadly gave up the flat he inherited, selling it for HK$1.8 million. After repaying his friend and settling his debts with the finance companies, he was left with virtually nothing. Even now, his phone still occasionally buzzes with messages from lenders. Some falsely claim he still owes them money. Looking back, he said he never would have accepted his inheritance if he had known the trouble it would bring. Staff writers Question prompts 1. According to News, which of the following is true? (1) Chan had to borrow money because of a flat he inherited from his mother. (2) At one point, Chan was dealing with loans from six places, none of which were licensed lenders. (3) Lenders are not allowed to charge fees over the stated interest rate. (4) Chan got out of debt after a friend lent him money. A. (1), (3) only B. (2), (3) only C. (2), (4) only D. (3), (4) only 2. Name at least TWO ways predatory loan companies manipulate their victims. 3. List ONE positive and ONE negative outcome based on how Chan's experience with predatory loan companies ended. Illustration Question prompts 1. What is being depicted in this illustration, and how does it relate to the information in News? 2. Based on your own knowledge and what you learned in News, how did predatory lenders get the nickname 'loan shark'? Issue: Main targets of loan sharks and ideas for industry reform Elderly Hongkongers, gamblers and students have all been identified as victims of moneylending schemes Many have called for more industry regulation and tougher licensing requirements Amid Hong Kong's economic downturn, a growing number of residents have been driven into the web of moneylenders, many of whom operate outside the law. Lawyer Lau Kar-wah said elderly residents may be targeted by financial intermediaries offering older homeowners a lower mortgage rate for their flats. These intermediaries encourage them to sign fabricated documents showing proof of income or cash flow and transfer their mortgage to another bank. To get the money for their fabricated monthly income, the mortgagor would be asked to borrow from a lender at a high interest rate. Lau said many of the victims were elderly people who wanted to help their children or low-income households whose properties were likely their main assets. Terence Mok, a social worker at the Smart i-Change Gambling Counselling Service, said problem gamblers were also lured by ads for online loans that often charged interest rates of more than 48 per cent, after exhausting their credit cards and borrowing from family. These unlicensed loan sharking operations used unregistered prepaid SIM cards or overseas numbers, making them nearly impossible to trace. Innocent family members and friends sometimes end up harassed due to these debts. Leung, who asked only to be identified by her surname, said she and more than 10 relatives found themselves targeted by debt collectors after a family member gave their names and personal details as 'referees' on a loan application without their knowledge or consent. Under the licensing conditions for money lenders, a referee cannot be held liable for a loan and must provide written consent. But in reality, debt collectors are known to hound family members and put pressure on the actual borrower. Deep Dive: Hong Kong authorities aim to boost 'silver economy' by encouraging elderly spending Emails were sent to their employers, stating their names, addresses and company details, and false claims that they had borrowed money. 'Shouldn't the referee be informed ... for checking?' she asked. 'These processes seem to be completely non-existent, and personal privacy has also been violated.' Lawmaker Johnny Ng Kit-chong highlighted another predatory pipeline involving young people being duped by direct sales investment schemes. He said scheme organisers would persuade students to 'invest' in products by taking out high-interest loans, with false promises of being able to repay the debt quickly from the sales profits. Hong Kong's money lending industry is governed by the Companies Registry, but the city's Consumer Council has long advocated for this system to be consolidated into a single, industry-specific regulator to improve governance. Meanwhile, social worker Mok suggested the government tighten its licensing procedures, as some lenders who were denied renewals might open new ones. Staff writers Question prompts 1. According to Issue, which of the following is true? (1) Loan sharks usually charge gamblers interest rates of less than 30 per cent. (2) Predatory lenders go after students by enticing them to invest in products by taking out high-interest loans. (3) Unlicensed loan sharks can be tough to trace because they often use overseas numbers or unregistered prepaid SIM cards. (4) Under current regulations, if a moneylender is denied a license renewal, they cannot open a new one. A. (1), (2) only B. (2), (3) only C. (3), (4) only D. (1), (4) only 2. Using Issue, identify THREE groups of people targeted by loan sharks and ONE characteristic that unites these different groups. 3. List TWO measures that have been proposed to reform the moneylending industry. Graph Question prompts 1. What is being depicted in the graph? 2. What steps should the government take to address the issues presented in the graph? Explain using News, Issue and your own knowledge. Glossary bankruptcy: a legal process that helps a person or business who cannot repay their debts. Bankruptcy grants them relief by either wiping out what they owe or making a plan for them to pay over time. However, they may be forced to sell things they own, and it could be more difficult for them to get loans in the future. interest rates: the amount you are charged for borrowing money – a percentage of the total amount of the loan. For example, if you borrow HK$1,000 at a 10 per cent interest rate, it means you will repay HK$1,100. loan sharks: people or businesses that lend money but charge extremely high interest rates and may even use threats of violence to collect debts asset: anything valuable that a person owns which can provide economic benefits in the future. Assets could include real estate, vehicles, personal belongings, cash savings, or stocks and bonds direct sales investment schemes: business models that require people to buy products from a parent organisation and sell them directly to customers Loan sharks prey on vulnerable people, causing them a lot of stress. Photo: Shutterstock Sample answers News 1. D 2. One way loan sharks manipulate their victims is by bombarding them with messages and offers of 'help'. Even after Chan paid off all his debts, loan sharks continued to contact and harass him, falsely claiming that he still owed them money. This can stress out vulnerable and unaware individuals. Additionally, moneylenders collect all of a borrower's contact information, as well as that of their family and friends, so they can harass others in the victim's network. Finally, loan sharks charge hidden handling fees, which take advantage of vulnerable individuals who lack the funds to repay their debts. They may resort to borrowing more money from other loan sharks to pay the fees, continuing the cycle. 3. A positive outcome for Chan was that he managed to break the cycle of borrowing and repaying, thanks to a friend lending him money. He was no longer in debt. However, the value of the flat he inherited dropped by more than half, forcing him to sell it. Unfortunately, he was left with very little money after paying off his debts. Illustration 1. This cartoon shows a man stranded on a boat surrounded by sharks. The man seems desperate to grab the money being handed to him by a 'finance company', as it says on the sleeve. This is a nod to the information in the news because the man is in a vulnerable situation and needs cash. He is willing to take the money from this so-called finance company. All the while, he is surrounded by sharks - which represent loan sharks - that are ready to prey on him. 2. Loan sharks likely got their name because sharks are predatory creatures that hunt their prey. Similarly, loan sharks also seek out vulnerable people, hunting them down and preying on their assets. (accept all reasonable answers) Issue 1. B 2. According to Lau, loan sharks sometimes target the elderly, while Mok explains that they also target gamblers, and Ng notes that they also target students. While these three groups seem very different, they are similar in one way: they are vulnerable. The elderly are particularly vulnerable to scams because they may not understand the details of the loans. Gamblers may be down on their luck after exhausting all other options for cash. Therefore, they are likely to be desperate and will resort to borrowing to repay their debts. Students are vulnerable because they likely do not have much money and may need to borrow funds to establish their lives and careers. They might not know how loan sharks and borrowing work. 3. The Consumer Council believes that the current system should be consolidated. Currently, the Companies Registry handles licenses, the police, and the Licensing Court. Consolidating these duties into a single, industry-specific regulator might create more fairness for lenders and borrowers, according to the Consumer Council. In addition, Mok thinks that the government should tighten the reins on licensing. He reasoned that some lenders who are denied renewals might just open new ones. Graph 1. This graph shows the number of complaints relating to money lenders in Hong Kong from 2018 to 2025. Although the trend is not steady, the primary concern is that Hong Kong is on track to record 112 complaints in 2025, given that there were 28 complaints in the first quarter of the year. This number is much greater than any other year. 2. The Hong Kong government needs to provide better education on the dangers of loan sharks. This information should be readily available to vulnerable groups that tend to use loan shark services. Lectures can take place at elderly community centres and universities. (accept all reasonable answers)
South China Morning Post
3 days ago
- Business
- South China Morning Post
Spark Deep Dive: How loan sharks target desperate Hongkongers
Deep Dive delves into hot issues in Hong Kong and mainland China. Our easy-to-read articles provide context to grasp what's happening, while our questions help you craft informed responses. Check sample answers at the end of the page. News: How one person can fall victim to loan sharks in Hong Kong High interest rates on loans can lead people to borrow more money to cover their payments When his grandmother died, Hongkonger Fai Chan inherited her flat in eastern Kowloon valued at HK$3 million in 2023. But first, he had to pay a HK$1.2 million premium to the city's Housing Authority. He did not have the money. That was the start of his journey into the world of borrowing at high interest rates and sinking deep into debt. He had been shunned by banks due to a past bankruptcy. So he turned to two well-known finance companies for the money. Each lent him HK$600,000, and he paid the Housing Authority. But their 40 per cent annual interest rate over 10 years meant he had to repay HK$22,000 a month, which swallowed almost his entire salary of HK$20,000 to HK$30,000. The punishing monthly payments became unbearable, and he turned to smaller, less regulated lenders to borrow even more. Soon, he was juggling loans from six different places, all licensed lenders. He was taking on new debt to pay off his old ones. Chan never missed a payment but lived in constant anxiety. His phone number was shared among lenders. These loan sharks bombarded him with offers of 'help' if he needed more cash. 'Over WhatsApp, they will say, 'just come over and get money in 30 minutes',' Chan recalled. 'But once you get there, they will scrutinise your request and get all your information, your family's telephone numbers too.' He learned that hidden handling fees were the biggest trap. A borrower taking out a HK$10,000 loan might only receive HK$8,000 after a 20 per cent fee was deducted. However, they would still have to repay the full HK$10,000 plus interest. The law prohibits lenders from charging fees over the stated interest rate. Seeing him struggle, a friend lent Chan HK$180,000. The loan enabled him to break the cycle of borrowing and sinking deeper into debt. By then, Hong Kong's property market had slumped. The value of his grandmother's flat sank to HK$1.2 million. He sadly gave up the flat he inherited, selling it for HK$1.8 million. After repaying his friend and settling his debts, he was left with virtually nothing. Even now, his phone still occasionally buzzes with messages from lenders. Some falsely claim he still owes them money. Looking back, he said he never would have accepted his inheritance if he had known the trouble it would bring. Staff writers Question prompts 1. According to the news, which of the following is true? (1) Chan had to borrow money because of a flat he inherited from his mother. (2) At one point, Chan was dealing with loans from six places, none of which were licensed lenders. (3) Lenders are not allowed to charge fees over the stated interest rate. (4) Chan got out of debt after a friend lent him money. A. (1), (3) only B. (2), (3) only C. (2), (4) only D. (3), (4) only 2. According to the news, list TWO ways loan sharks manipulate their victims. 3. List ONE positive and ONE negative outcome of Chan's experience with predatory loan companies. Illustration Question prompts 1. What is being shown in the illustration? How does it relate to the information in the news? 2. Based on your own knowledge and what you learned in the news, how did predatory lenders get the nickname 'loan shark'? Glossary bankruptcy: a legal process that helps a person or business who cannot repay their debts. Bankruptcy grants them relief by either wiping out what they owe or making a plan for them to pay over time. However, they may be forced to sell things they own, and it could be more difficult for them to get loans in the future. interest rates: the amount you are charged for borrowing money – a percentage of the total amount of the loan. For example, if you borrow HK$1,000 at a 10 per cent interest rate, it means you will repay HK$1,100. loan sharks: people or businesses that lend money but charge extremely high interest rates and may even use threats of violence to collect debts scrutinise: to examine something very carefully in order to discover information Sample answers News 1. D 2. One way loan sharks manipulate their victims is by bombarding them with messages and offers of 'help'. Even after Chan paid off all his debts, loan sharks continued to contact and harass him, falsely claiming that he still owed them money. This can stress out vulnerable and unaware individuals. Additionally, moneylenders collect all of a borrower's contact information, as well as that of their family and friends, so they can harass others in the victim's network. Finally, loan sharks charge hidden handling fees, which take advantage of vulnerable individuals who lack the funds to repay their debts. They may resort to borrowing more money from other loan sharks to pay the fees, continuing the cycle. 3. A positive outcome for Chan was that he managed to break the cycle of borrowing and repaying, thanks to a friend lending him money. He was no longer in debt. However, the value of the flat he inherited dropped by more than half, forcing him to sell it. Unfortunately, he was left with very little money after paying off his debts. Illustration 1. This cartoon shows a man stranded on a boat surrounded by sharks. The man seems desperate to grab the money being handed to him by a 'finance company', as it says on the sleeve. This is a nod to the information in the news because the man is in a vulnerable situation and needs cash. He is willing to take the money from this so-called finance company. All the while, he is surrounded by sharks - which represent loan sharks - that are ready to prey on him. 2. Loan sharks likely got their name because sharks are predatory creatures that hunt their prey. Similarly, loan sharks also seek out vulnerable people, hunting them down and preying on their assets. (accept all reasonable answers)
Yahoo
18-06-2025
- Business
- Yahoo
Worried about tariffs & high interest rates? Here are 3 tips.
Many Americans are still feeling the pinch as tariff concerns and high interest rates linger. Bankrate senior economic analyst Mark Hamrick joins Wealth to share practical tips for easing the pressure, including building emergency savings, cutting back on non-essentials, and avoiding costly credit card debt. To watch more expert insights and analysis on the latest market action, check out more Wealth here. Now with all these challenges here, what are some practical steps consumers can take to try and ease some of that financial burden? I think one of the most important things that we counsel here at Bankrate is to talk about prioritizing emergency savings. We've said for years now our our surveys that we do at least on an annual basis have found that most Americans do live paycheck to paycheck. And in the current still somewhat high interest rate environment, it's not that difficult. In fact, it's fairly easy to find a high yield savings account that pays an annual return of 4% plus. Number one, focus on essentials. Live beneath your means. Don't live sort of on the cutting edge or the edge of the envelope. I'm just trying to keep up with the Joneses, so to speak. Pay down high cost debt. New offers on credit cards going out there right now for the best qualified users at 20%. That means a lot of people are paying 25, 30% if they're maintaining those balances. Mark, appreciate those tips. Thanks so much. Thank you. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
06-05-2025
- Business
- Yahoo
Best money market account rates today, May 6, 2025: Earn up to 4.41% APY before the Fed cuts rates again
Find out which banks are offering the top rates. Money market accounts (MMAs) can be a great place to store your cash if you're looking for a relatively high interest rate along with liquidity and flexibility. Unlike traditional savings accounts, MMAs typically offer better returns, and they may also provide check-writing privileges and debit card access. This makes these accounts ideal for holding long-term savings that you want to grow over time, but can still access when needed for certain purchases or bills. Where are the best money market interest rates today? The national average interest rate for money market accounts is just 0.63%, according to the FDIC. However, the best money market account rates often pay above 4% APY — similar to the rates offered on high-yield savings accounts . Here is a look at today's highest money market account rates: Interested in earning the best possible interest rate on your savings balance? Here is a look at some of the best savings and money market account rates available today from our verified partners. This embedded content is not available in your region. Historical money market account rates Money market account rates have fluctuated significantly in recent years, largely due to changes in the Federal Reserve's target interest rate, known as the federal funds rate . In the wake of the 2008 financial crisis, for example, interest rates were kept extremely low to stimulate the economy. The Fed slashed the federal funds rate to near zero, which led to very low MMA rates. During this time, money market account rates were typically around 0.10% to 0.50%, with many accounts offering rates on the lower end of that range. Eventually, the Fed began raising interest rates gradually as the economy improved. This led to higher yields on savings products, including MMAs. However, in 2020, the COVID-19 pandemic led to a brief but sharp recession, and the Fed once again cut its benchmark rate to near zero to combat the economic fallout. This resulted in a sharp decline in MMA rates. But starting in 2022, the Fed embarked on a series of aggressive interest rate hikes to combat inflation. This led to historically high deposit rates across the board. By late 2023, money market account rates had risen substantially, with many accounts offering 4.00% or higher. Throughout 2024, MMA interest rates remained elevated, and it was possible to find accounts that paid well above 5% APY. Today, rates remain high by historical standards, though they've begun a downward trajectory following the Fed's most recent rate cuts later in late 2024. Today, online banks and credit unions tend to offer the highest rates. What to consider when choosing a money market account When comparing money market accounts, it's important to look beyond just the interest rate. Other factors, such as minimum balance requirements, fees, and withdrawal limits, can impact the total value you get from the account. For example, it's common for money market accounts to require a large minimum balance in order to earn the highest advertised rate — as much as $5,000 or more in some cases. Other accounts may charge monthly maintenance fees that can eat into your interest earnings. However, there are several MMAs available that offer competitive rates without any balance requirements, fees, or other restrictions. That's why it's important to shop around and compare accounts before making a decision. Additionally, ensure that the account you choose is insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA), which guarantees deposits up to $250,000 per institution, per depositor. Most money market accounts are federally insured, but it's important to double-check in the rare case the financial institution fails. Read more: Are money market accounts safe? Sign up for the Mind Your Money weekly newsletter Subscribe By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy Money market account rates: Frequently asked questions What are money market rates right now? Today, money market account rates are still quite high by historical standards. The best accounts provide over 4% APY, with the highest rate available today at 4.51% APY. How much will $10,000 make in a money market account? The amount $10,000 will earn in a money market account depends on the annual percentage yield (APY) offered by the account, as well as how long you keep your money in the account. Let's say you choose to deposit $10,000 in a money market account that earns 4% APY with monthly compounding interest. After one year, you would earn $407.44 in interest, for a total balance of $10,407.44. What is the downside of a money market account? Money market accounts are generally safe and flexible savings options, but like any other financial product, they come with some downsides, too. For instance, some MMAs require a high minimum balance to open the account or to earn the advertised APY. Failing to maintain that minimum balance can result in penalties or reduced interest rates. Additionally, money market rates are variable, which means they can change at any time at the bank's discretions. If interest rates drop, so will your account APY, which can make future earnings unpredictable compared to fixed-rate products like CDs.
