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  • Do something now about credit card debt

    Do something now about credit card debt

    With credit card debt inching back up again, many Americans could soon be in over their heads.

    Since the peak of the recession, consumers have been cutting back credit card use, but in September, the numbers started to rise, according to figures from the Federal Reserve.

    The Fed’s latest report — for October — shows revolving debt went up 0.6 percent, rising $300 million nationwide to $792.3 billion according to CreditCards.com. That works out to an average of more than $6,500 per card, the Washington Business Journal reports.

    Experts offer a number of theories for the increase — everything from being unable to maintain financial discipline to being unable to put off certain purchases any longer.

    Whatever the case, with holiday shopping wrapping up, the figures for November and December are likely to go higher still.

    “There’s a psychological pent-up need to shop,” explains finance professor Tony Plath of the University of North Carolina at Charlotte. “Essentially, it’s a little shot of nostalgia for the good old days.”

    But that could mean trouble down the road, Plath warns.

    “Come March and April, this nostalgia will see a wake-up call from a sick economy,” he says.

    The good news: There are ways out from under your credit card debt. You have to start somewhere, though — contact us for some options.

  • CFPB Ombudsman oversees consumer complaints

    CFPB Ombudsman oversees consumer complaints Beginning in the near future, credit cardholders' complaints will be addressed by a new arm of the federal agency in charge of protecting consumers from predatory or questionable lending practices from financial institutions.

    The Consumer Financial Protection Bureau opened its Office of the Ombudsman on December 8, under the direction of acting ombudsman Wendy Kamenshine, according to a report from U.S. Rep. Carolyn Maloney of New York, writing for the Huffington Post. The purpose of this part of the agency is currently only to advise financial institutions on the way the CFPB will be implementing various aspects of the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act.

    But beginning this spring, it will also be able to field consumers' complaints related to the way their lenders are handling their outstanding credit card debt, the report said. In addition, it will work to provide information to consumers about their rights when trying to get out of debt.

    Currently, the CFPB has a hotline set up on which consumers can lodge complaints about their credit card accounts, particularly if they believe they have been hit by unfair lending practices.

  • Ways to cut credit card debt

    Ways to cut credit card debt Millions of consumers are always looking for ways to get out of debt as quickly and easily as possible, but experts say one problem many may face is that they simply don't know how to begin doing so the right way.

    Consumers who want to reduce debt and then keep their credit card balances low in the future need to do all they can to prepare for the process, according to a report from the New York Daily News. And often, experts recommend that the best way to do so is to start at the beginning. That means consumers should take the time to make a careful accounting of everything they owe.

    When doing so, consumers should consider everything about these balances, such as how much they owe, how much will be added in interest or by fees on the accounts, and how much they would like to contribute to those debts every month in an effort to reduce them reasonably, the report said. Doing so for all credit card accounts they have will give them the full picture of their financial situation and help them to be realistic about how they'll be able to cut those debts.

    When going through these accounts and seeing how much you'll need to contribute to the monthly bills to get out of debt within a given timeframe, consumers might also want to look at other aspects of their finances, particularly how much they spend every month, the report said. That's because taking the time to identify areas of inefficient spending might help them find places they can shore up their finances and cut out the waste, then put that money toward cutting outstanding balances.

    In addition, consumers may want to look for new ways to increase their income, which can also help them reduce debt more quickly, the report said. This can include getting a job on the weekends or seeking out more overtime from their current employer when they have the time.

    In recent years, consumers have been far more conscientious about cutting their credit card debt, and as a consequence have been successful in doing so. Rates of delinquent and defaulted credit card debt have fallen precipitously for all major lenders in the U.S. as a result of consumers increasing the value of their payments and borrowing less.

  • Republican senators delay appointment for CFPB head

    Republican senators delay appointment for CFPB head The new federal agency in charge of protecting consumers from financial institutions' predatory lending practices will have to wait at least another month for a chief executive.

    Richard Cordray, the former Ohio attorney general who was tabbed by the Obama administration to lead the new federal Consumer Financial Protection Bureau, will have to wait at least until Congress comes back from its holiday break on January 23 to be approved by the U.S. Senate, according to a report from Reuters. In its last day of business prior to the recess, GOP lawmakers decided to block his appointment, and that of three other nominees for banking regulation positions, because the White House would not give Republicans assurances about recess appointments.

    The Senate will also hold "pro forma" sessions during the recess to make sure no such appointments are made, the report said.

    The CFPB's primary stated task is to create more protections for consumers when it comes to handling their credit card debt more effectively, such as building a national credit card offer database and starting a hotline where Americans can report complaints about these accounts.

  • Lenders may soon start issuing more cards

    Lenders may soon start issuing more cards Millions of Americans have made significant progress in the last few months when it comes to getting their bills paid on time and taking steps to reduce debt, and that new trend may prompt lenders to further expand efforts to issue more cards in the new year.

    Declining rates of credit card default and increased spending may be enough to entice the nation's top credit card lenders to continue their efforts to broaden lending standards so that more Americans have access new accounts, according to a report from The Associated Press. The credit monitoring bureau TransUnion recently reported that these efforts were already under way earlier this year, as more than a quarter million new cards were issued to those with moderate credit ratings who would not have had access to these accounts just a year prior.

    Lenders significantly tightened lending restrictions during and immediately following the recession as default rates climbed to all-time highs as a result of extreme economic difficulties faced by most consumers. However, those rates have since fallen to near-record lows in the past year.

  • Consumers may soon see more offers for retail credit cards

    Consumers may soon see more offers for retail credit cards Most consumers who have gone shopping at major retailers in recent months have probably noticed that more are offering store-branded credit cards – usually with the promise of a moderate discount on the cost of their purchase that day. And those efforts will likely expand in the coming months.

    One reason for this is that Citi will soon rename its private-label credit card business and focus on expanding its offerings not only with current partners, but new ones as well, according to the lender. The new company, known as Citi Retail Services instead of the current name (Retail Partner Cards) will also aggressively work to expand available loyalty rewards programs for consumers.

    The company also recently added Ford Motor Company to its list of card partners, meaning it will provide financing for parts and service at 3,000 dealerships nationwide, the report said. Currently, Citi has issued close to 90 million accounts through its retail card business.

    Retailer cards are generally frowned upon by experts, however, because they carry higher interest rates than regular accounts, which can lead consumers to have more credit card debt than they are comfortable with and make it harder to get out of debt if they fall behind.

  • CFPB wants consumer input on credit card agreements

    CFPB wants consumer input on credit card agreements With millions of Americans still dealing with credit card debt on accounts they may not fully understand, the new federal bureau is asking for the public's help in shaping a new document to help clarify many aspects of a lending agreement.

    The federal Consumer Financial Protection Bureau is seeking public comment on its new proposed credit card lending agreement, which is designed to clarify some parts of a deal by listing the terms in simple language and larger print, according to a report from ABC News. Americans can visit the CFPB's website, view the document as proposed and enter their suggestions at the bottom of the page.

    The proposed document cuts the number of words in a credit card agreement from the current average of about 5,000 to a little more than 1,000, the report said. However, once finalized, the document will not be mandatory for lenders to use, which may cause its adoption to be slow at first.

    Experts believe that the CFPB's efforts will eventually lead to clearer agreements between lenders and consumers for all financial products, though the agency is currently focusing on credit cards and mortgages.

  • Uncertainty leading fewer to use credit card rewards

    Uncertainty leading fewer to use credit card rewards For those who earn rewards such as cash back or points for every dollar of credit card debt they take on, it may often be difficult to determine exactly how they're earning those benefits.

    Experts say that a lack of disclosure from the nation's top credit card lenders might lead consumers to not earn as many points as they might otherwise was be able to, according to a report from Smart Money. In most cases, lenders send statements that only outline the total number of points earned in a given month, rather than an itemized list. In the best cases, consumers may receive a breakdown of points earned by spending category.

    And while advocates say greater disclosure would be a boon to borrowers, lenders believe that adding any more information to a statement would make the document too cluttered and difficult to understand for consumers, the report said.

    Consumers who want to better understand the way they earn rewards on their credit card accounts may want to consider closely reviewing their lending agreement to find ways they can maximize their benefits.

  • Fewer willing to take on holiday credit card debt

    Fewer willing to take on holiday credit card debt The number of consumers who are comfortable taking on credit card debt this holiday season fell significantly even as Americans say they plan to spend more on gift shopping.

    The amount the average consumer plans to spend on holiday gift shopping has increased 22 percent from 2010, up to a total of $751, but at the same time, fewer are willing to take on credit card debt that they can't afford to pay back in full at the end of the month, according to the latest CNBC All-America Economic Survey. In all, just one in five consumers say they're planning to carry their credit card debt into the new year. Instead, they plan to rely more heavily on cash, checks, their debit cards.

    The consumers groups most eager to avoid running up their credit card debt are those in the Midwest, those who are between 35 and 49, those who have a high school education or less, blue collar workers and African-Americans, the survey found.

    Consumers have recently been increasing the amount they borrow on their credit cards, but spending hasn't even begun to approach pre-recession levels.

  • Consumers borrowed more on credit cards in October

    Consumers borrowed more on credit cards in October The amount of credit card debt consumers carried nationwide increased once again in October.

    Americans' credit card debt climbed 0.6 percent in October, just as it did in September, according to the latest monthly statistics on consumer credit from the U.S. Federal Reserve Board. At the end of the month, consumers owed lenders a total of $792.3 billion, up from September's total of $792 billion. This was also the highest total observed in several months.

    At the same time, consumers seemingly felt more comfortable dealing with other types of debt, such as student or auto loans, the report said. The amount of money borrowed on this type of loan – known as nonrevolving credit – rose 5.3 percent to a total of close to $1.67 trillion.

    In general, Americans have been feeling better about their finances in recent months and consequently may believe that they are also in a more advantageous position when it comes to dealing with debt. However, experts recommend that consumers carefully review all aspects of their finances before obtaining new lines of credit.