All Articles Tagged "credit"
Cleaning Up Your Credit is Killing the Economy
(Daily Finance) — America runs on credit. Before the recession in 2008, the U.S. consumer powered the economy forward with plenty of conspicuous consumption. Housing prices were on the rise, paychecks were plentiful, and the economy purred along as people used home equity loans and plastic to outspend their incomes. Three years seems like a lifetime ago. Since the fall of 2008, our relationship with credit has changed dramatically: More Americans have been cutting up their credit cards than opening new ones, according to data from the New York Federal Reserve. During the last 12 months, people cancelled 199 million credit cards and only opened 168 million new accounts. And since peaking at the end of 2008, the average balance has declined more than 20%. Unfortunately, our newfound fiscal restraint is killing the economy.
You Can Always Consolidate, But Should You?
(BET) — Debt: It’s a word that many Americans do not like to hear, but lots of people—and governments—have it and must find ways to pay it off. Americans love their credit cards. So much so that the average credit card holder has 3.5 cards, with the average debt per household reaching over $15,000. Though we love our credit cards, amid last week’s new federal debt deal and the U.S.’s 70-year credit rating being downgraded from AAA to AA+, it’s not very comforting to know that America going deeper in debt could make your personal finances fall down a steep slope as well. Americans could be faced with higher interest rates and ultimately, a slower economy.
Debt Downgrade to Up Pressure on Consumers
(Wall Street Journal) — Cash-strapped Americans are bracing for a further squeeze following last week’s downgrade of U.S. government debt, as interest rates on deposits continue to fall and some borrowing costs edge higher. Consumers have already been struggling with high unemployment and elevated levels of personal debt incurred during a pre-recession spending binge. Now they are grappling with shrinking retirement accounts, as major stock indexes nose-dive and yields on U.S Treasurys touch new lows amid the market turmoil.” ”People are going to feel less rich and that will make them hold back on spending, which would be a further blow to the economy,” said Beth Ann Bovino, a senior U.S. economist at Standard & Poor’s. On Friday, the firm lowered its rating of government debt one notch to AA-plus, the first time the U.S. has lost its top-ranked standing.
11 Common Credit Card Mistakes
(Kiplinger) — Whether due to confusion or carelessness, credit card mistakes are all too common. The fallout can be costly, no matter what the cause. Even a single slip-up can result in higher interest rates, lower credit limits, unwanted fees or dings to a credit score. New rules put in place by the Credit CARD Act of 2009 and the Dodd-Frank Act of 2010 help, as does the formation of the Consumer Financial Protection Bureau, which monitors the credit-card industry. But ultimately it’s up to you to use credit wisely. Take a look at 11 of the most common credit card mistakes and learn how to avoid making them.
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What a Debt Collector Can Tell You About Avoiding a Hassle
(Sacramento Bee) — Debt collectors. Next to the dreaded taxman, they’re probably the most-feared financial folks around. And chances are, if you owe money on a delinquent loan, a credit card bill or a medical payment, you’ve heard from a debt collector. Some work in-house for creditors; some are hired to collect on a company’s behalf; others buy up bundles of old debts and try to pursue repayment.
Before You Make a Credit Card Balance Transfer
(Daily Finance) — If your credit is great, or even just in fairly decent shape, you may regularly receive offers for credit card balance transfers in the mail. Whether or not you should accept a balance transfer deal depends on many factors, including thefine print of the balance transfer agreement and whether or not you can successfully use the balance transfer to better manage your overall debt. Shifting debt from one credit card to another is more art than science, but done properly, it can save you lots of money — particularly if you’re taking debt from one high interest rate card and putting it on another, lower interest rate card. Balance transfers can also help you improve your credit score.
Robbing the Cradle: Opening Accounts in Kids’ Names
(Rolling Out) — With the rise in foreclosures, bankruptcies, long-term unemployment and other recession-related financial disasters, some desperate people have resorted to stealing the identities of children to apply for credit. It is estimated that as many as 400,000 kids per year are having their pristine credit histories hijacked — a crime that doesn’t impact them today, but can have devastating financial repercussions when they reach adulthood. Adam Levin of Credit.com reports, “The crime generally goes undetected unless and until the child applies for a license, a credit card, a loan for college or, perhaps, requires a medical procedure.”
Debt Collectors Have Feelings Too
(New York Times) — As a longtime debt collector, Lesllie Rogers has been routinely insulted, pummeled with obscenities, crudely propositioned and threatened with violence by the people she calls. “They want you to feel as small and insignificant as possible,” said Ms. Rogers, who works for a collection agency in Rochester, Minn. “The guy who sits across from me just was threatened with getting his legs and arms cut off.” Debt collectors like Ms. Rogers are well aware that they are not a sympathetic lot. But now they are saying enough is enough. The trade association that represents them is engaged in an unlikely charm offensive to change their lowly image, while also trying to shape the rules that govern them as they face the prospect of a tough new regulator. Debt collectors as human beings? It could be their toughest commission yet.
New Proposed Credit Rules Threaten To Disenfranchise Low-Income Buyers
By Charlotte Young
After the housing industry crisis in 2008, there was a nationwide recognition that the credit rules needed to be changed. But the new proposed credit rules are threatening to shut down the home-ownership dreams for potential low-income buyers altogether.
MSNBC reports that the rules are jointly proposed by the Federal Reserve, the Department of Housing and Urban Development, the FDIC, the Federal Housing Finance Authority, the Office of the Controller of the Currency and the Securities and Exchange Commission.
Among many of the proposed regulations for “Qualified Residential Mortgages,” borrowers need a 20 percent down payment and debt cannot exceed more than one-third of the borrower’s income.
A combination of mortgage lenders, consumer advocates, housing industry officials and lawmakers have formed a coalition to oppose the rules.
Critics claim that minority and first time home-buyers will be charged higher prices to borrow money and families in high-cost markers will have to come up with more money to meet the 20 percent down payment requirements. The housing market will face a significantly smaller pool of potential, credit-worthy home buyers just as it’s struggling to recuperate.
Opponents also fear that the new rules would “create a two-tiered mortgage market.” Borrowers with larger savings will pay less as those struggling to save are faced with higher charges.
A JP Morgan report estimates the disadvantage could add up to about 3 percentage points, which could be the difference between an affordable mortgage payment or continuing to pay rent.
While the regulators gave no comment on the proposed rules, they have extended the comment period from Friday to August 1, in efforts “to allow interested persons more time to analyze the issues and prepare their comments.”
How To Fix Errors on Your Credit Report
(New York Times) — Credit reports have increasingly become consumers’ passport to the financial world. Whether you want to rent an apartment, get car insurance or apply for a credit card, the data in your credit report will be one of the crucial measures used to judge you. That’s why you want to ensure that the information in your report — which is used to formulate your credit score — is free of any inaccuracies. Even if you’re not denied credit, a small error here or there can cost you more in interest. The three big credit bureaus — Equifax, Experian and TransUnion — and the entities that provide them with data (like lenders) are required to investigate any potential errors. But, as I reported in a recent story, their investigations aren’t very thorough. So as with most everything else, you need to be your own advocate. Here are several tips on the right way to file a dispute, compiled from consumer attorneys, credit experts and consumer advocates.
