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December 6th, 2009
So far, following a popular nationwide debt free effort, keeping down or staying out of debt seems to be the focus for consumers across the United States this holiday season. Both brick and mortar and online stores saw an increase in shoppers over last year, but those shoppers were looking more and spending less.
A report from the National Retail Federation (NRF) states that 195 million consumers either visited stores and web sites over the traditional post Thanksgiving shopping weekend. This was an increase of 23 million more shoppers than the same period in 2008. Over a quarter of Americans shopping over the weekend shopped online and of those visiting stores, nearly half visited at least one department store, breaking the previous pattern of shopping discount and outlet stores.
While the number of consumers that visited stores either physically or online up, per person spending was down according to NRF. The average amount spent was $343.31 per shopper as compared to $372.57 one year ago suggesting that Americans are concentrating on staying within a budget and spending less this year.
Of interest in these hard economic times, is a swing away from using credit cards for holiday purchases. Responding to a Reuters poll, 26 percent of those participating said that used a credit card for their Black Friday weekend shopping, while 74 percent said that they used only cash or debit card.
Staying the course and keeping debt down is always a battle during the holiday season. Many Americans are forced by unemployment to cut back, but for many others, the recent recession has been a wake-up call. Staying on track and cutting spending and credit card debt is a goal worth trying for.
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November 27th, 2009
Millions of American consumers hit the stores this morning to grab for the Black Friday sale items in an attempt to save on holiday spending. Retailers are hopeful that sales will be high but recent polls suggest that financial stress and personal debt will have consumers with a tighter hold on their purse strings this year.
According to an Associated Press poll, 93 percent of Americans indicate that they will spend less or about the same as last year. Credit card debt is playing a large part in how consumers are viewing their holiday spending with half of those responding to the poll saying that they are feeling at least some debt related stress. Showing an increase of 17 percent over a last spring, 22 percent of those polled stated that they were feeling a high amount of debt related stress.
A survey conducted by the National Retail Foundation demonstrates that holiday shoppers intend to buy with cash this year and cut credit card buying by 10.2 percent from last year. Spending cash for gifts means spending less. This seems to be confirmed by a Visa poll of 1000 people that shows that consumers plan on spending 20 percent less on holiday shopping this year.
The goal for American consumers is to get out of debt and stay out of debt. How they will fare this holiday season remains to be seen but surveys say that at least the intention to keep spending in line is strong. Will the lure of holiday festivities be stronger?
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November 23rd, 2009
Unemployment, high personal debt, and the general economic climate in the United States is hitting homeowners hard. The Mortgage Bankers Association (MBA), which has been tracking mortgage data since 1972, is reporting that the number of mortgage delinquencies as hit a record high of 9.64 percent in the third quarter of 2009. This figure includes all consumers that have missed at least one mortgage payment and for whom no foreclosure proceedings have begun. According to TransUnion mortgage delinquency rates have risen for 11 straight quarters in the US.
Unemployment is thought to be the strongest cause of mortgage delinquencies. Nationwide, the unemployment rate has reached over 10 percent. Little or no income, excessive debt loads, and little or no savings provide the American consumer with a lethal combination in staying out of foreclosure. Credit card debt delinquencies have also been reported as increasing over the last few months even though consumers seem to be intent on getting out of debt and staying out of debt.
Those who are fearful of these tougher financial times are right to be so. While the situation may be showing some glimmer of improvement overall with the stabilization of rampant inflation, the United States have been riding a rollercoaster of financial ups and downs since 2007. Getting out of debt, staying out of foreclosure and trying to save more money will help add some protection to what is sure to be a rocky road ahead. Experts expect a slow recovery. Now is the time to be cautious and live within one’s means.
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November 19th, 2009
Soon to be in effect credit card reform laws designed to protect consumers and limit the ways that credit card companies can make extra profit by raising interest rates and charging late fees has raised concerns that are being addressed in Washington, DC. One proposal, introduced by Senator Bernie Sanders of Vermont, would add legislation that would place a limit of 15 percent on credit card and personal loan interest rates.
It is not known whether this legislation will become a reality. It has yet to win the support of President Obama and is not favored by representatives of some states that rely heavily on their banking industries. It is also not know what effect, if any, the passage of such legislation would have on credit card and loan accounts that have already had their interest rates raised in an effort by banks and lenders to protect their profit after the already passed credit card reform laws go into effect. The effective date has not been determined yet. The original date was set as February 2010, but talks are underway to change that to December 2009.
Creditors are required to give 45 days notice of increase in interest rates, allowing the consumer the option of accepting the increase, or allowing reasonable time to pay off credit card debt at the previous rate and canceling the account. Statistics have not yet been reported regarding the effect of the 45 day notice. It is expected that many will opt to close high interest accounts if at all possible and this could damage the credit card industry’s profits. Capping interest rates would possibly be a happy medium, allowing the careful consumer the freedom of credit without the fear of sudden interest rate increases. While limiting the creditor’s profits through high interest rates, profit would also increase due to the fact that more consumers will keep using credit cards.
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November 17th, 2009
In the United States, the holiday season will be kicking off with the so called “Black Friday†sales next week but with the seemingly nationwide movement toward getting out of debt and living as debt free as possible, both retailers and consumers are worried about how they will survive the usual holiday “buy-a-thonâ€. With high unemployment rates and tightened budgets, the National Retail Foundation is expecting that retail sales will be down just under $700.00 per person or 3.2 percent this year.
Some consumers have opted to scale back on gift giving and other holiday expenses this year and many are planning to avoid paying with credit cards and using cash, debit cards, or layaway plans to keep within their budgets.
Store layaway plans are nothing new. They became popular during the great depression of the 1930s and are now seeing a resurgence. While some retailers have always offered a layaway plan, others, concerned about the effects of an unstable economy and the general atmosphere of getting out of debt and increasing savings on their annual holiday profits, are adding a layaway plan this year.
Most retail stores charge a small fee and a percentage of the total purchase to hold the consumer’s selected items for a fixed period of time. During that time, the consumer must make regular payments toward the purchases.  The items can be picked up when they are paid in full.
Even though fees are charged, layaway makes sense for those hard hit by these tough economic times and battling to stay within a budget and not go further into credit card debt at this most expensive time of the year.
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November 13th, 2009
Recent Statistics have shown that large numbers of American consumers have been fighting to finally pay down their credit card debt and increase their savings. Those that are having the most difficult fight and are still heavily in debt may wonder what effect the high debt is impacting their credit score and how to improve their score while continuing to climb out from under financially. Here are some tips for improving your credit score the right way.
Know what your credit report contains: Federal law entitles you to get a free copy of your credit report once a year. If you haven’t done it yet, do it today. Make sure that the credit report is accurate and dispute anything that is in error. Remember that this is what a lender sees when they check your credit report before extending credit.
Keep careful control of your credit cards: Because lenders look at the number of accounts you have open, the total available credit, as well as the outstanding balances carried on those accounts over time, careful handling of your credit is important. In most cases it’s best to keep open only two or three of you older accoutns and cancel the rest after paying off the balance.
Don’t give up the battle to pay off your debt: Foreclosure and bankruptcy affect your credit score for seven years and are a red flag to most financial institutions when extending credit. Credit counseling or debt consolidation can be helpful for those who fear that they are at a point where they can’t get out of debt on their own. With careful planning and sticking to a budget, your credit rating can be repaired over time.
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November 11th, 2009
In another effort to stimulate the United States’ struggling economy and to help credit and debt laden citizens secure adequate housing, President Obama signed legislation last week that extends time limits of the first time homebuyers tax credit and adds a provision that allows those who already own a home to purchase a new home.
Under the first time homebuyers legislation a contract to purchase must be in place by April 30, 2010 and the buyer must close on that home by June 30, 2010. First time homebuyers who meet these rules as well as income limitations and sale price restrictions will be eligible to receive an $8,000 tax credit.
Allowable income levels have also been adjusted in the new legislation. Previously the amount of income allowed for an individual person was $70,000.00. This has been raised to $125,000.00. The income level for couples and families has been increased from $150,000.00 to $225,000.00.
New in this version of the bill is the addition of a smaller credit for those who already own a home but who wish to purchase a new home. A homeowner who has owned and lived in his home for at least 5 years will be eligible for a $6,500.00 tax credit on purchasing a new primary residence.
For consumers who have been conscientious about paying down debt and increasing savings, it will be easier than ever to move into home ownership and enjoy the benefits of the offered tax credits while beginning to build equity in a home of their own.
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November 9th, 2009
The United States Department of Labor reports a small drop in the number of initial unemployment benefits applications. Last week 512,000 citizens filed for benefits representing a reduction in new filings of 20,000 below those filings of the previous week. Experts are still expecting the unemployment rate to top the 10 percent mark in the near future and that those high figures will continue well into 2010.
At least part of the reduction in new filings could be the coming of the holiday season. While shoppers begin scurrying to make their holiday purchases, retail establishments hire larger numbers of seasonal employees and therefore reduces the number or people collecting unemployment benefits. Many of these seasonal employees are taking often minimum wage retail jobs to be able to take advantage of at least some income to use toward their outstanding debt and living expenses. With the new American trend toward paying down existing credit card debt, many also take advantage of seasonal jobs to keep their own holiday credit card spending lower.
It is possible that with a lower overall consumer confidence level, holiday shopping will be much lighter this year. If the retail sales figures for the holiday season is reduced this year it could have extended impact on economic recovery well into the first quarter of 2010. 2009 has seen American consumers spending less, saving more, and paying down debt at a phenomenal rate. This would seem to indicate that the same consumers will continue to try to stick within their budget throughout the holiday season.
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November 7th, 2009
The United States government says that economic indicators show that America is in recovery from the recession of 2007 – 2008. In the every day life of a majority of American consumers, one of the results of the recession is a certain attempt limiting spending, paying down credit card debt, and trying to budget. The latest figures from the U.S. Federal Reserve show that even though rampant inflation has eased up in the past few months, consumers are still being cautious, sticking to their budget plans and continuing to pay down their credit card debt.
The latest figures from the Federal Reserve show that outstanding consumer credit in the United States dropped 14.8 billion dollars or 7.2 percent in September making September the 7th straight month showing large decreases in consumer debt. Drops have occurred in 12 out of 14 of the last months and overall, consumer credit is down 4.7 percent from one year ago.
There have many issues plaguing American consumers since the beginning of the recession. Unemployment is extremely high, having reached 10.2 percent last month. Wages have become stagnant in many areas, showing little or no increase in income. Even though there have been some signs that the economy is on the upswing, consumers are still being careful to protect the assets they do have. Whether trying to keep their credit card debt low, or trying to pay down existing outstanding balances, the American consumer is wary after navigating through the difficult times of the past 2 years. It remains to be seen if the trend toward debt free living continues as the economy heals.
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November 4th, 2009
The latest numbers from the American Bankruptcy Institute (ABI) tell the whole story. Debt is still a serious problem for American consumers even though many financial experts say the recession is over. Personal bankruptcy filings jumped almost 9 percent in October according to ABI. Business bankruptcy filings also increased by 7 percent. It is expected that totals will reach 1.4 million bankruptcy cases in 2009. This will be the highest number of filings since 2005 when changes to the United States bankruptcy laws made it harder to get complete dissolution of personal debt.
High unemployment rates have left many consumers dealing with credit card debt and personal debts with much less hope of being able to pay the debt down. After exhausting unemployment insurance, using up any savings they might have had, and in some cases trying to sell their homes in a less than seller friendly real estate environment, many consumers have seen bankruptcy as their only real alternative. Some may have been helped by a solid debt consolidation plan but when there is little or no income even this can be difficult.
With news reports telling Americans that the unemployment numbers continue to increase each month and give no forecast as to when their might be a turn-around, hope among average citizens is still low. Â The government and the financial experts may see improvement in the economy, but until Americans are put back to work the recession is still raging. Managing debt takes a back seat when there is no food on the table.
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