Overdue Credit Card Bills Hit Record High

[Squirt]

Overdue Credit Card Bills Hit Record High
Sep 28 5:12 PM US/Eastern


By JEANNINE AVERSA
AP Economics Writer


WASHINGTON


Charge it! That familiar refrain is producing an unwanted response for more Americans: Your bill is overdue! Surging energy prices, low personal savings and the higher cost of borrowing have combined to produce a record level of overdue credit card bills.

The American Bankers Association reported Wednesday that the percentage of credit card accounts 30 or more days past due climbed to an all-time high of 4.81 percent in the April-to-June period. It could grow in the months ahead, experts said.

The previous high of 4.76 percent came during the first three months of the year, in keeping with a generally steady rise over the past several years.

"The last two quarters have not been pretty," said Jim Chessen, the association's chief economist.

Chessen and other analysts mostly blamed high prices for gasoline and other energy products, but said that low savings and higher borrowing costs also played a role.

"The rise in gas prices is really stretching budgets to the breaking point for some people," Chessen said. "Gas prices are taking huge chunks out of wallets, leaving some individuals with little left to meet their financial obligations."

Pump prices were high before hurricanes Katrina and Rita hit the Gulf Coast. After Katrina, prices jumped past $3 a gallon. Prices have moderated since but remain high.

The personal savings rate dipped to a record low of negative 0.6 percent in July. The negative percentage means that people did not have enough left over after paying their taxes to cover all of their spending in July. As a result, they dipped into savings to cover the shortfall.

When people have less money available money to pay for energy costs or emergencies such as a big car repair, many resort to credit. That option is getting more expensive, too.

The Federal Reserve has been tightening credit since June 2004. That has caused commercial banks' prime lending rate to rise to 6.75 percent, the highest in four years. These rates are used for many short-term consumer loans, including credit cards and popular home equity lines of credit.

Late payments may be bad news for consumers, but credit card companies do not necessarily mind them because late fees are a source of revenue.

"Credit card companies are increasingly addicted to their fees," said Daniel Ray, editor-in-chief at Bankrate.com, an online financial service. "Six years ago, all fees _ including late fees _ contributed only a minor portion to overall revenue. Today it accounts for more than 30 percent."

About half of all credit problems stem from poor money management. Credit problems due to the loss of a job, sickness or divorce play less of a role, said personal finance expert Susan Tiffany, director of consumer publishing at the Credit Union National Association.

"That tells us people have some ability to do a better job. They are not completely helpless in the situation, and that's good," said Tiffany, whose trade group also is involved in efforts to improve people's financial literacy.

Getting back on the road to financial health takes discipline and hard choices about what can be cut back or eliminated. If credit card problems are plaguing a family, all the members should work together to come up with a plan and pare down spending.

From an economic perspective, the current rise in delinquent credit card payments is not overly worrisome. But if the trend were to continue for a sustained period, it could spell trouble for the overall economy, said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group.

"It's a flashing yellow light that we need to watch," she said. FULL STORY


------------

Interesting we have a record number of millionaires now in America , yet overdue credit card bills hit record high.

The rich keep getting richer and the poor keep getting poorer. :whip:

What's your opinion on this?

[Paco]

Not a huge shocker, especially when a large majority of people refuse to be accountability for the actions:

How can someone blame the price of gas (Other countries in the world pay way more than $3/gal, daily.) for his or her credit problems? If you feel your car is too much of a burden on your pocket book, use your bicycle, feet or bus pass to get around, and live a frugal life (ensure you only purchase that which you NEED) until you've dug yourself out of the hole your in. And when it comes to WANTS, find a honourable way to acquire that which is not a necessity!

[RANT]
I hear and see the word bankruptcy more and more everyday (I am very happy to see the laws in the US are changing and hope the same happens in Canada). Pinheads yakin about how they loaded-up their credit cards with all sorts of unnecessary toys (iPod, Plasma TV, bedroom suit, $350 pair of jeans, $1500 lap dog, porn, yadda yadda), yet I rarely hear how they have had to modify their budget or acquire a second job to pay for their impulsive ways (more like them merely trying to be like Mike, or Paris)!

I am not saying ALL persons that declare chapter 7 or 11 (or whatever the proper form is titled) are doing such wrongfully ... some people do try to live a honourable life, but are not able to get ahead, because of things such as deadbeat husbands etc.

As far as I am concerned, any person that acquires unnecessary goods on credit and declares bankruptcy without returning the goods is no better than a thief!
[/RANT]
Edit: I guess blaming corporate greed is easier than working for or earning your wants.

[Squirt]

As far as I am concerned, any person that acquires unnecessary goods on credit and declares bankruptcy without returning the goods is no better than a thief! I guess blaming corporate greed is easier than working for or earning your wants.

It would be wonderful if those who declare bankruptcy were able to return the good for what they owed on them, unfortunately if they did that, the companies that sold them the good wouldn't have as big a write off as they do when someone goes chapter 11.

Unfortunately in today's society there is a big payoff for credit card company, and corporations, to over extend credit to people. If corporations didn't get write offs for non pays, they'd be much more frugal who they give credit to. If our society didn't put so much value on consumerism and having what you do gives you worth, less people would feel they need those things to be accepted in society.

If we delve deeper into why most people over extend themselves, it's because they are buying things they are conditioned to think they need to have to be a "normal" part of society. If business didn't perpetuate this myth of "consumerism is good" then we'd have far less debt, happier citizens, and less worldwide conglomerates.

Ultimately we are each responsible for ourselves... but it's important to remember that a lot of people work 9-5, or two jobs, believe what they are fed, and act what they are told is appropriate. They are the sheep, and they are being hearded. It's just the way things are.

[jIgG]

if everyone listened to Suze Orman we'd have a lot less people in debt.

[Squirt]

if everyone listened to Suze Orman we'd have a lot less people in debt.

Ah I luv that chick!

[Paco]

It would be wonderful if those who declare bankruptcy were able to return the good for what they owed on them, unfortunately if they did that, the companies that sold them the good wouldn't have as big a write off as they do when someone goes chapter 11.

Unfortunately in today's society there is a big payoff for credit card company, and corporations, to over extend credit to people. If corporations didn't get write offs for non pays, they'd be much more frugal who they give credit to. If our society didn't put so much value on consumerism and having what you do gives you worth, less people would feel they need those things to be accepted in society.

If we delve deeper into why most people over extend themselves, it's because they are buying things they are conditioned to think they need to have to be a "normal" part of society. If business didn't perpetuate this myth of "consumerism is good" then we'd have far less debt, happier citizens, and less worldwide conglomerates.

Ultimately we are each responsible for ourselves... but it's important to remember that a lot of people work 9-5, or two jobs, believe what they are fed, and act what they are told is appropriate. They are the sheep, and they are being hearded. It's just the way things are.

I've worked for many large companies/corporations that gladfully accepted back merchandise, which was then reduced in price and sold ... to people like me.

As for that sheepish comment ... amen brudda ! I must admidt, trend does show me what not to do.