Smart Borrower Blog

Archive for the ‘Credit Card Debt’ Category

More Seniors Start the Golden Years in the Red

Most people probably think of retirement as a period of life when the financial obligations hanging over your head fall away. Unfortunately, that is not a very accurate picture for many seniors today. According to a new survey by nonprofit CESI Debt Solutions, many seniors (54 percent) start their retirement with debt and 96 percent of those with debt at retirement age refused to delay their exodus from the work place. And now, not only are more than half of seniors retiring with outstanding debts, but more and more are getting into so much debt during retirement that they won’t... more »

Credit Card Usage Down by 8 Million Consumers

During the past year, over 8 million American consumers have stopped using credit cards for their purchases, according to credit bureau TransUnion. Gerri Detweiler of Credit.com was quoted in a CNN Money blog as saying it is “unprecedented” for consumers to “abandon” their credit cards. “I’ve been covering this since 1987 and I don’t recall numbers like that ever going down,” she said. “They’ve always gone up.” What can account for this dramatic drop in credit card use? There are basically two things at play here. First, many consumers with good credit are taking fewer financial risks and just paying... more »

Credit Card Delinquencies and Charge-Offs Continue to Show Improvement

Although the changes are still incremental, they are in the right direction. Delinquent credit card accounts decreased in October as did credit card company charge-offs for the most part. Charge-offs are the loans that card issuers basically give up on because the borrowers are highly unlikely to repay them. This means the card issuers take a loss on those accounts and move one. Delinquencies are often a good predictor of future charge-offs, so the fact that both of these moved downward last month is welcome news. “It’s nice to see that consumers feel more confident in at least being able... more »

Personal Loans: Regaining Popularity

Up until last year, personal loans were all but dead. Banks just weren’t promoting them when money was so easy to come by with home refinances, credit cards, or small business loans. Now that most of those sources have dried up for many people, personal loans are becoming an important source of funds for consumers. According to CBS’ MoneyWatch, many of the big banks are now advertising the personal loan again. Wells Fargo is offering $3,000 to $100,000 with a loan term of up to five years, while Citibank allows loans from $300 to $7,500. Discover Financial and CapitalOne are... more »

Consumers Choose Cash Again

For the sixth straight month, the amount of consumer credit debt decreased in July. Credit, including things like credit cards and auto loans, fell 1.8 percent or $1.02 billion, down to a total of $3.63 billion in outstanding debt, according to the Federal Reserve. This also marks the 17th decrease in 18 months. The same old issues seem to be responsible for the drop. “On the demand side, households continue to show signs of caution as they face high unemployment, minimal wage increases and poor housing conditions,” said Gregory Daco, senior U.S. economist at IHS Global Insight as quoted in... more »

Americans Now Owe More on Student Loans than Credit Cards

Student loans now comprise a bigger chunk of American consumer debt than do credit card charges, according to recent data from Mark Kantrowitz, of FinAid.org and FastWeb.org, a somewhat unexpected finding considering the rough state of the economy. Kantrowitz asserts that as of June, Americans owe about $826.5 billion in revolving credit (most of which is credit card debt), while student loans, both federal and private, all together have now grown to $829.8 billion. This economic twist has apparently caught many by surprise. “The growth in education debt outstanding is like cooking a lobster,” Mr. Kantrowitz said as quoted on... more »

Poor People Pay for Rich People Credit Card Rewards Programs

If you are not using a credit card to fund most of your purchases you are essentially subsidizing the rewards programs for those who do. At least that is what a recent study from the Boston Federal Reserve says. And it also says that it is the poor who are funding the programs for rich. According to the report, “Who Gains and Who Loses from Credit Card Payments? Theory and Calibrations,” the rich are the ones who use credit cards with reward programs the most. The poor generally use cash, check, or debit cards. “Merchant fees and reward programs generate... more »

The Credit Gap is Widening

The rocky economy is polarizing our nation’s consumers when is comes to credit scores. The latest study from FICO Inc. found that there are more and more Americans with really poor credit scores and really good scores, but fewer and fewer people with scores in the middle. There are now 25.5 percent, more than a quarter, of all American consumers whose credit scores fall under the “bad credit” category, a score of 599 or below. That accounts for 43.4 million people who are going to have a REALLY hard time getting mortgage loans, credit cards, and car loans for the... more »

Credit Card Companies Buying Their Way Into Universities

A recent article on the Huffington Post says that for years, America’s colleges and universities have been making money from the credit card companies for giving them access to student and alumni contact information as well as allowing them special visibility at school functions. These agreements, called Affinity agreements allow universities to earn a commission on every student or alumni credit card made through the affiliated bank, on average about $1 per student who keeps a credit account open for at least 90 days. And some agreements give schools up to $3 per card when students carry a balance. What’s... more »

TransUnion: America’s Debt is Diminishing…A Little

In a report released yesterday, credit reporting bureau TransUnion found that delinquency rates on auto and home loans, as well as on credit cards, fell in the first quarter – a sign that the economy is improving, however slowly that may be. The auto loan delinquency rate of those who are 60 days or more late on their payments dropped 18.52 percent from the fourth quarter of 2009 to 0.66 percent in 2010′s first quarter. And on a yearly basis, things look even better with a drop of 20.48 percent. “The national trend we are now seeing points to a... more »