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  • New GAO report sheds light on issues with credit card ‘swipe fees’

    A new GAO report calls for reform on credit card swipe fees A newly released report by the Government Accountability Office confirming that credit card interchange fees increase costs for merchants has led to many organizations calling for Congress to enact reforms.

    Following the report’s release, the National Association of Convenience Stores issued a statement calling the fees, which are assessed on a merchant every time a credit card is used as a payment, as "a cash cow for credit companies and banks" instead of the processing cost they claim it to be.

    "[The GAO] found that the 10 largest banks have a stranglehold on this market, have used it to raise their fees, which all consumers pay, and that small businesses and low-income, cash-paying consumers get the worst deal from this arrangement," said Lyle Beckwith, NACS senior vice president of government relations.

    He added that the GAO report "solidly debunks" claims from creditors such as Visa and MasterCard that swipe fees had not been increasing and that credit cards increased sales for merchants.

    "The GAO report should sound the alarm that it is time for Congress to reform swipe fees," he added.

    The National Retail Federation also issued a statement "welcoming" the report and hoped that its presence would lead to Congress passing legislation "to bring these fees and practices under control."

    As merchants pay increasing amounts of swipe fees to creditor, they must raise their prices in order to maintain profits, making it tougher for those looking to consolidate debt to afford shopping at the retail locations.

  • Unemployment rate to remain above 10 percent through 2010, says Kiplinger’s

    Unemployment will likely remain high through the end of 2010 Unemployed workers are unlikely to see much relief as they look to consolidate debt while looking to restart their careers, as Kiplinger is forecasting unemployment rates to remain above 10 percent through both 2009 and 2010.

    In an article written by The Kiplinger Letter associate editor Jerome Idaszak, he warned that national unemployment figures stood to increase further in 2010 before finally recovering.

    He added that the rate could increase to as high as 10.5 percent by the spring before declining closer to 10 percent by the end of the year.

    Idaszak said even as companies begin seeing better financial prospects, total employment would likely only increase by about 1 million workers. This lack of new jobs will be due to companies’ preferences of transitioning part-time employees to full-time positions as they become less wary of expanding and begin to increase production.

    "It will take years to return to pre-recession employment totals, rehiring the nearly 8 million folks who have been laid off, plus the 1.5 million new workers who enter the labor market each year," he
    wrote. "And that doesn’t take into account the 9 million part-time workers who want to hold down a full-time job."

    The unemployment rate for October sat at 10.2 percent, its highest rate since 1983.

  • America’s ‘wealthy’ still wary of economic recovery

    Wealthy Americans are wary of the economic recovery In the aftermath of having to consolidate debt and adjust their financial ways in the wake of the Great Recession, America’s more well-to-do population is still bracing for more economic troubles before a recovery is truly felt.

    According to a survey by PNC Wealth Management, only 20 percent of "ultra-wealthy" Americans felt the nation’s economy was showing signs of improvement. Forty percent felt that an economic recovery was still at least one year away.

    Additionally, the survey found that current economic conditions had
    adjusted how the wealthy had adjusted their investment strategies,
    with 34 percent saying they were more conservative with their money.

    All of the 1,046 respondents with at least $500,000 in valuable assets also stated they had be negatively affected by the economic downturn.

    "There is no doubt that the last year has taken its toll on wealthy investors," said Thomas P. Melcher, executive vice president and managing director of Hawthorn, a division of PNC Wealth Management. "Unfortunately it often takes a severe crisis and a significant loss
    of capital for investors to discover their true risk tolerance."

    However, showing that having more money lessened the financial blow experienced by so many during the recession, fewer respondents (68 percent) with $500,000 to $1 million in assets reported a negative effect to their finances, while 48 percent of those with $5 million or more saw money troubles.

  • Obama outlines new initiatives to reduce U.S. unemployment

    Obama highlighted new economic plans while visiting Asia President Barack Obama’s most recent weekly radio address outlined his hopes that renewed engagement with the East may help to spur domestic job growth and reduce the amount of unemployed workers looking to consolidate debt.

    In his address, Obama detailed his recent trip to Asia in the last week as an opportunity to "open a new era of American engagement" and discuss the nation’s financial relationship as the U.S. looks to continue its economic recovery from the Great Recession.

    Noting that the U.S. and Asia do a great deal of commerce that can have a pronounced effect on the U.S. job market, Obama said that an increase of 5 percent in the nation’s exports to Asian Pacific nations could add "hundreds of thousands" of jobs across the country.

    "In order to keep growing, we need to spend less, save more, and get our federal deficit under control," he said. "We also need to place a greater emphasis on exports that we can build, produce, and sell to other nations – exports that can help create new jobs at home and raise living standards throughout the world."

    Obama also announced plans for a White House forum featuring CEOs, small business owners, and economists to discuss further solutions to the nation’s economic rebound.

  • Unemployment rate rises in 29 states in October, says DOL

    The unemployment rate rose in 29 states in October Month-by-month unemployment rates increased in 29 states and Washington D.C. in October as more workers lost their jobs and have been forced to consolidate debt, the Department of Labor’s Bureau of Labor Statistics reported on Friday.

    Alaska and Wyoming saw their unemployment rates see the largest increases, with growth of 0.6 percentage points to 8.9 and 7.4 percent respectively. Arkansas and Washington D.C. followed with 0.5 percentage point increases over September’s figures to 7.6 and 11.9 percent respectively.

    Additionally, 14 states reported unemployment rates of more than 10 percent, while five states – California (12.5 percent), South Carolina (12.1), Florida (11.2), Delaware (8.7), and Washington D.C. – set record highs with their October rates.

    Compared from figures from October 2008, Michigan recorded the largest increase in its unemployment rate form September figures, growing 6 percentage points to hit 15.1 percent.

    Michigan also had the highest statewide unemployment rate across the country, followed by Nevada at 13 percent and Rhode Island at 12.9 percent.

    Nationwide, the unemployment rate rose to 10.2 percent in October, hitting its highest point since March 1983.

  • Thanksgiving travel to increase, says AAA

    Thanksgiving travel is set to see an increase this year After a precipitous decline in 2008, travel during the 2009 Thanksgiving holiday weekend is expected to increase despite consumers’ continued efforts to consolidate debt and limit their expenses in the wake of the Great Recession.

    According to a recent study conducted by AAA, Thanksgiving weekend travelers will increase by 1.4 percent from 2008’s figures with 38.4 million Americans embarking on trips of 50 miles or longer.

    "Although far too many Americans remain unemployed or under other financial stress, AAA’s projected increase in Thanksgiving travel from one year ago is another hopeful sign that economic conditions are stabilizing and improving in some areas, said AAA’s director of Travel Services Glen MacDonell.

    In 2008 Thanksgiving holiday travel saw a 25.2 decrease as the economic crisis in the housing and financial markets worsened. The increased travel in 2009 is likely a sign that consumer confidence in the economy is recovering.

    While automobile travel will be the most popular mode of transport and will be used by 33.2 million travelers, a 2.1 percent increase from 2008, more expensive air travel continued to see a drop in usage by 6.7 percent with only 2.3 million customers.

    Since 2000, the number of Americans traveling by air during the Thanksgiving holiday weekend has dropped by 62 percent.

  • ‘Flash sales’ can provide savings this holiday season

    Flash sales are looking to catch on this holiday season A new type of sale being utilized stateside by some online retailers this holiday season may provide opportunities for those consolidating debt to get their holiday shopping done without breaking the bank.

    According to online discount website Totsy.com, "flash sales" are a type of promotion being used by an increasing amount of U.S. retailers this year. The deals offer deep discounts that consumers only have access to if they get an exclusive invitation.

    By using the sales, retailers are able to offer lower prices than they would be able to the general public, while also specifically involving groups of consumers who are interested in their product.

    "The US market has recently adopted the online flash sales model that has been incredibly popular in France and throughout Europe," said Guillaume Gauthereau, co-founder and CEO of Totsy.

    Gauthereau added that Vente-Privee, a French company that helped popularize the private flash-sales concept in 2001, had been so successful that it attracted 8 million members may generate $1 billion in revenue in 2009.

    Consumers seem to be adamant in their desire to spend less this holiday season. According to a recent survey from Experian’s Price Grabber, 54 percent of consumers expected to reduce their spending, while only 5 percent said they planned on increasing how much they were going to spend.

  • Fed issues new rule proposals regarding gift card fees

    New Fed rules would limit how often gift cards can have fees implemented on them The U.S. Federal Reserve has announced a new set of proposed rules regarding the shelf life of gift cards and how often fees can be applied to them.

    Under the proposed rules, no dormancy, inactivity, or service fee could be applied to any gift or prepaid card until the card had been issued for a minimum of five years and inactive for at least one year. Once fees could be applied, the rules would prohibit more than one fee from being applied every month.

    Card issuers would also be required to clearly disclose all fees and expiration dates to the consumer upon purchase or "reloading" of the card.

    The rules will undoubtedly help those who looking to consolidate debt by ensuring that gift cards retain their value over time.

    "Consumers who do not use the value of the card within a short period of time may be surprised to find that the card has expired or that dormancy or service fees have reduced the value of the card," the Fed said of their decision, according to the Associated Press. "Even where fees or terms are disclosed on or with the card, the disclosures may not be clear and conspicuous."

    The Fed’s proposal on gift cards completed a charge given to them as part of the Credit Card, Accountability, Responsibility and Disclosure Act of 2009 to reform the gift card system and issue new regulations.

  • Debt settlement more effective than credit counseling, says TASC

    The Association of Settlement Companies is claiming that debt settlement is better for consumers than credit counseling In an attempt to prevent the Federal Trade Commission from passing amendments to the Telemarketing Sales Rules that could harm the debt settlement industry, the Association of Settlement Companies has come out in support of the industry and detailed why it better serves consumers in need than credit counseling.

    For consumers who are struggling to consolidate debt, the TASC argued that debt settlement programs not only take less time than credit counseling – with the former usually lasting three years while the latter can take up to five years – but are also significantly cheaper and easier to afford.

    Dan Leuthold, the TASC’s executive director, added that while debt settlement companies work on the consumer’s behalf to reduce outstanding debt balances, credit counseling services often have other interests they seek are looking to satisfy as well.

    "Credit counseling companies in essence work as a collector and agent for the credit card companies,” he said. "As such, they not only receive fees from the consumer but they also receive compensation from the banks, so they may not have the client’s best interest at heart."

    The TASC’s differentiating between debt settlement and credit counseling programs comes as the FTC considers changes to the Telemarketing Sales Rule what would effectively ban the use of advance fees. The TASC stated that eliminating the fees would fore debt settlement programs to essentially for free for much of the settlement process and therefore force many out of business.

  • Unemployment has more than just financial repercussions on families

    Families with unemployed parents are more likely to repeat a grade in school While the spike in unemployment seen during the recession has led to many jobless workers who must deal with debt consolidation and other financial problems, the effects of joblessness may reach beyond only financial problems.

    According to a newly released report from the National Bureau ofEconomic Research studying the short-run effect that the job loss of parent on their children’s academic achievement, a parent’s unemployment increases the probability that a child will repeat a grade by almost 15 percent.

    The report also cites other studies before stating that the involuntary loss of a job can have notable consequences on the psyche and health of the adult as well.

    In addition to a permanent lowering of earning by up to 25 percent documented by three studies from the 1990s, another 2009 report was referenced that showed a "substantial" increase in mortality among workers who had lost their jobs in plant closings.

    In a recent New York Times Report, Fishers, Indiana resident Robert Syck said that the relationship between him and his stepson had become strained since his firing from the position of a call-center manager in March.

    "It’s only been particularly in the last few months that it’s gotten really bad, to where we’re verbally chewing each other out," Syck told the Times. "A lot of that is due to the pressures of unemployment."