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SnakebyteXX
09-29-2005, 05:01 AM
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.

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DickLeonard
09-29-2005, 08:12 AM
Snakebytex. Credit Card co. are just like borrowing money from Vito and Guido. They bribed Congress to create New Bankruptcy Laws making it harder for people from going bankrupt. Corporations can still file Chapter 11 with ease. A late payment to one Card Co. becomes a late payment to all then your paying 30% to all your cards. I am in the process of getting rid of all my cards but my debit card. Every time I get a offer I call that bank and tell them don't send me another offer.####

eg8r
09-29-2005, 10:10 AM
[ QUOTE ]
Snakebytex. Credit Card co. are just like borrowing money from Vito and Guido. They bribed Congress to create New Bankruptcy Laws making it harder for people from going bankrupt. Corporations can still file Chapter 11 with ease. A late payment to one Card Co. becomes a late payment to all then your paying 30% to all your cards. I am in the process of getting rid of all my cards but my debit card. Every time I get a offer I call that bank and tell them don't send me another offer. <hr /></blockquote> That is a great idea. Removing yourself from CC debt is a great thing. What you are doing though is different than most of the people being mentioned. Most people who cannot pay their credit bills are still out using the dumb things.

Enforcing a little self-responsibility, creating a budget, etc are things that would help most people with their debt problems. The problem with this is dependency. Our government steps in and helps too often, maybe it is time to say NO, fix your own mess and quit asking your fellow tax payers to help carry your burden while you are driving around in your new car and taking extravagant vacations.

eg8r

Gayle in MD
09-29-2005, 04:18 PM
Hey Dick, I think it's a new game created by Bush, Called "How many homeless people can one administration create in four years"

The new Bush Bankruptcy policies were designed to put more real estate in the hands of the rich. I'm just so glad that his compassionate conservativism prompted him to reach out to the poor suffering credit card companies....

Gayle in Md.

pooltchr
09-29-2005, 04:28 PM
<blockquote><font class="small">Quote Gayle in MD:</font><hr> Hey Dick, I think it's a new game created by Bush, Called "How many homeless people can one administration create in four years"

The new Bush Bankruptcy policies were designed to put more real estate in the hands of the rich. I'm just so glad that his compassionate conservativism prompted him to reach out to the poor suffering credit card companies....

Gayle in Md. <hr /></blockquote>

Damn, Gayle, I am truely impressed. A thread about how people living beyond their means and getting into debt due to poor judgement, and you find a way to blame Bush.
You are GOOD!!!!!!!!!!

Rich R.
09-30-2005, 03:08 AM
I think the credit card companies are creating a lot of this mess themselves.

They continually send pre-approved credit cards to people with bad credit and to young people who have never held a job, let alone established a credit history.

Should we be surprised when these people don't pay their bills on time?

Then, on the other hand, if you pay your total bill every month, like a responsible person, they cancel your credit card. /ccboard/images/graemlins/confused.gif

The bottom line is, credit card companies do not make enough money from people who manage their finances well. They make money from the people who can not properly manage their credit. I don't see this situation getting any better, until someone makes the banks be more responsible.

eg8r
09-30-2005, 03:56 AM
[ QUOTE ]
I think the credit card companies are creating a lot of this mess themselves.

They continually send pre-approved credit cards to people with bad credit and to young people who have never held a job, let alone established a credit history.

Should we be surprised when these people don't pay their bills on time? <hr /></blockquote> No one is acting surprised. People with bad credit did not get there by being responsible. When are the people using the credit cards going to be held responsible. Quit blaming the CC companies and blame the people who are out of control spending every last cent they can borrow. Or better yet, since blaming does not do any good, go out an help those who have the problem and help them see it was not the mean ole CC company that got them there in the first place. Help them recognize it was their own self that did it and no one else is to blame (accept responsibility for you own actions). At that point maybe they will get it and start paying off the debt.

eg8r

Rich R.
09-30-2005, 06:49 AM
<blockquote><font class="small">Quote eg8r:</font><hr> Quit blaming the CC companies and blame the people who are out of control spending every last cent they can borrow. Or better yet, since blaming does not do any good, go out an help those who have the problem and help them see it was not the mean ole CC company that got them there in the first place. Help them recognize it was their own self that did it and no one else is to blame (accept responsibility for you own actions). <hr /></blockquote>
IMHO, the CC companies have to take at least a portion of the blame.
They continue to provide more and more credit to people who have already proven that they can not handle the responsibility. Before you know it, people are so over extended, there is no other alternative but to file for bankruptcy. Indirectly, that debt is absorbed by everyone else, through higher prices. It is really a snowball effect.

When someone has a bad credit rating, the CC companies should not give them more credit, until they have cleaned up their act. Then, these people may learn a lesson.

eg8r
09-30-2005, 10:28 AM
[ QUOTE ]
IMHO, the CC companies have to take at least a portion of the blame. <hr /></blockquote> I agree, they do push their wares. I just don't think they need to be attacked first. It is ultimately the responsibility of the person receiving their mail to cut it up and turn it down. The individual is 99% of the problem.

[ QUOTE ]
When someone has a bad credit rating, the CC companies should not give them more credit, until they have cleaned up their act. Then, these people may learn a lesson. <hr /></blockquote> I agree. This is where they should take some blame.

eg8r

SPetty
10-01-2005, 05:53 PM
<blockquote><font class="small">Quote Rich R.:</font><hr>Then, on the other hand, if you pay your total bill every month, like a responsible person, they cancel your credit card.<hr /></blockquote>Huh? I've never heard this, and it hasn't happened to me...

Drop1
10-01-2005, 06:27 PM
The problem is in the hard wiring of a consumer driven economy,and a mentality of a public that accepts dept as part of life,and a government that operates on a paper future. Per square foot price for a two bedroom one bath home in So. Calif, is almost five hundred dollars,and that house can be eighty years old. If you don't believe it,go to Realtor.com,and check San Pedro. Its kind of like the Democrats,and the Republicans, everything is screwed up but no one is to blame.

sack316
10-02-2005, 05:21 AM
Well, I must say that I'm not too proud to be a part of the negative side of this stat. But I do admit that I got there by my own mistakes. WHen I first moved out of the folks house and was establishing credit I did well. Always paid off any credit given as quickly as possible. Car loans were paid in half the time required, and my credit was so good I was actually approved for a six figure home on my own credit (my fiance at the time hadn't been at her job long enough to count) which was very good to me considering I only made a little under 30K per year. Lucky for me I didn't buy a house, because as most of you here know I'd soon run into many problems and personal demons to contend with. Eventually I left said job that I was then at the time making over 30K, which was over twice as much as my living expenses.
But the problem was I refused to stop living the way I was when the money wasn't there. My solution? I had good credit and a few credit cards. So I'd use one up, get another one to "pay off" the other card with, and start all over again, thinking once I got back on my feet I'd catch it all back up. Of course that doesn't work out too well. As I said earlier, I got myself to that point, that was was fault.
Where I think a lot of people blame card companies and such, and possibly rightly so, is when I got to the point where I was late or missing payments because I didn't have money to give, they would charge higher interests and fees above the payments that I couldn't afford already. Kind of a "black hole" if you will. Now the same company that I paid off three car loans ranging from $4000-$12,000 in under 2 years to would not consider loaning me a nickel because I couldn't pay off my orignal card I got to establish credit ($500 limit which I now owe $1800 on from fees and interest). But I can't blame them for not wanting to give me any credit, yet at the same time it's rediculous that something with a $500 limit can grow to almost 4 times that amount when you can't pay it (and on another topic, what's the point of a "limit" if you are allowed to exceed said limit on basic charges anyway?).
But enough rambling, as I said I got myself here and it is my own doing, but I also see the side where the companies do take advantage of the situation. I can also see how easily someone who doesn't have the means to live by that I did at one time, may get into trouble if they have kids and not a great healthcare plan etc, I can see how easy it could be to get into debt just doing the things you need to survive without being irresponsible. Same can be said with starting a business.
For me personally it's looking like bankruptcy may be the ONLY option, as much as I hate it. I still don't have a good job again yet, only a few mediocre jobs to live from month to month. I know now that I've got my life back on track I'll get it all straight again eventually, but it's a long road. And it's also kind of disheartening knowing that only a year or two of screwing up will take 10-20 years of repairing (and a possibility of never fixing). Just a crazy case of the American way conflicting directly with... the American way.

Rich R.
10-02-2005, 06:04 AM
<blockquote><font class="small">Quote Rich R.:</font><hr>Then, on the other hand, if you pay your total bill every month, like a responsible person, they cancel your credit card.<hr /></blockquote>
<blockquote><font class="small">Quote SPetty:</font><hr> Huh? I've never heard this, and it hasn't happened to me... <hr /></blockquote>
It has happened to me twice. /ccboard/images/graemlins/confused.gif

Although credit card companies receive something like 4% to 7% on purchases, from the seller, they also want interest from the buyer. If you pay your total credit card bill, every month, you do not pay interest. This makes the greedy credit card companies a little bit irritable.

SnakebyteXX
10-02-2005, 07:39 AM
<blockquote><font class="small">Quote Rich R.:</font><hr>

Although credit card companies receive something like 4% to 7% on purchases, from the seller, they also want interest from the buyer. If you pay your total credit card bill, every month, you do not pay interest. This makes the greedy credit card companies a little bit irritable. <hr /></blockquote>

Unless the interest rate charged to businesses for processing credit card charges has gone up recently it's more like 3 1/2% per charge.

I pay my card charges in total every month. Every couple of months or so I will get a letter in the mail from the credit card co. asking me 'if everything is all right'? Because they've noticed the monthly pay down. Monthly pay downs upset credit card companies because (among other things) they can signal that you're getting ready to jump ship to another credit card co. I never respond to the letters and even though I've been paying off monthly charges for several years now - no effort has been made to cancel my card.

Snake