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Banks Prepare for Consumers to Stop Paying Off Their Credit Cards

Posted on July 26, 2024by Admin

Big banks, like JPMorgan Chase, Bank of America, Wells Fargo and Citigroup are preparing to face more risk when it comes to their lending practices. With interest rates sitting at a two-decade high and inflation rates rising, these banks have raised their provisions for credit losses from the previous quarter.

These provisions are the money that financial institutions set aside to cover any potential losses from credit risk, including delinquent or bad debt and lending, like commercial real estate (CRE) loans.

JPMorgan built up $3.05 billion in provision for credit losses in the second quarter; Bank of America had $1.5 billion in stores; Citi’s allowance for credit losses totaled $21.8 billion at the quarter’s end, more than tripling its credit reserve built from the prior quarter; and Wells Fargo had provisions of $1.24 billion.

A recent analysis by the New York Fed found that Americans owe a collective $17.7 trillion on consumer loans, student loans and mortgages. Credit card balances totaled $1.02 trillion in the first quarter of the year.

Credit card issuance and, subsequently, delinquency rates are also on the rise.

With rents up more than 30% nationwide (between 2019 and 2023) and grocery costs rising 25% in that same period, renters who did not lock in low rates and are struggling with rental prices that have exceeded wage growth are seeing the most stress in their monthly budget.

A recent survey found that 48% of Americans depend on credit cards to cover essential living expenses. As consumer’s pre-pandemic savings dwindle down, the reliance on credit for necessities, such as gas and groceries, has become the norm for many.

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If you have any questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Bankruptcy Law, Credit, Credit Score

The Impact Bankruptcy Has On Applying for Loans and Credit Cards

Posted on August 24, 2023by Admin

While not all bankruptcies cause a huge drop in a person’s credit score, it is possible a person’s score could rise after bankruptcy.

A consumer’s FICO score is one of the biggest determining factors in whether a person will receive approval for credit or financing. The FICO score will also help determine the interest rate a person receives on a credit card. Some lenders are willing to accept credit applications even with lower scores. However, if this happens, it is unlikely that the terms of the credit application will be favorable to the consumer.

The bankruptcy filing may or may not have a significant impact on the consumer’s credit score, depending on what the score was before the filing. The consumer’s payment history makes up approximately 35% of the person’s credit score. If the person had a poor payment history to begin with, the bankruptcy filing will not have as much of a noticeable impact on the score. If the person had an excellent credit score previously, the effect the bankruptcy will have on the credit score will be more significant.

Consumer Bankruptcy, Credit, Credit Score

How to Repair Credit History After Filing for Bankruptcy

Posted on August 8, 2023by Admin

Once a consumer has filed for bankruptcy, he or she will almost certainly notice a drop in their credit score. This drop is to be expected, and while it does temporarily affect a person’s credit, it is by no means permanent. In fact, with good financial habits a consumer can rebuild his or her credit to better than it was before filing for bankruptcy.

Following the closure of the bankruptcy case, certain steps can be taken to bring that credit score back to where it once was or even higher.

Credit, Credit Card Debt

Common Credit Card Misconceptions to Avoid

Posted on November 2, 2022by Admin

Many consumers handle their finances under the assumption that carrying a balance from month-to-month on their credit card(s) will give their credit score a boost. This common misconception will not only keep the consumer with a credit card balance, but it also may not do anything beneficial for their credit score.

Consumer News, Credit, Credit Card Debt

The Best Ways to Handle Your Credit During Inflation

Posted on July 6, 2022by Admin

The cost of living has continued to rise throughout the first half of 2022, leaving many consumers struggling to make ends meet. It seems the cost of everything has skyrocketed, from groceries to gas. As a result, three in five American consumers say they are living paycheck to paycheck. Many of these individuals are relying on credit cards to pay for necessary expenses, but unfortunately, adding to their credit card debt only complicates financial problems.

Credit, Credit Score, Financial Advice

Why Your Debt-to-Income Ratio Is So Important

Posted on March 31, 2021by Admin

A person’s credit score is not the only figure lenders look to when determining whether to approve an application for financing. Many times, lenders will also look to the applicant’s debt-to-income ratio (DTI) when making a determination to approve financing.

A consumer’s debt-to-income ratio looks at whether the individual is bringing in enough income to meet his or her monthly bills. The actual DTI figure is computed by taking the consumer’s gross monthly income and dividing it by his or her monthly debt payments. The result is the person’s DTI.

Credit, Credit Score

Three Ways to Remove Collections Accounts from your Credit Report

Posted on September 24, 2020by Admin

Having a debt in collection on a person’s credit report will almost certainly bring that individual’s credit score down. Regardless of whether the debt is paid or unpaid, a collection account will normally remain on a consumer’s credit report for up to seven years. If that person plans on obtaining financing in the future, this blemish can cause serious problems. However, it is possible to remove a collection account from a person’s credit report by taking the following steps.

Submit a Goodwill Letter

This first option is one that is oftentimes overlooked, but it can be successful in many situations. Consumers should first try to remove the collections account on their credit history by sending the collection agency what is called a “goodwill letter.” Make sure this goes to the collection agency and not the original creditor since, at this point, the debt has already been sold to a third-party collection agency.

Bankruptcy Law, Credit, Credit Card Debt, Timothy Kingcade Posts

Top Reason Americans Are Carrying an Average Credit Card Balance of Over $6,200

Posted on February 27, 2020by Admin

Credit card debt is a burden for many consumers. Most have a complicated relationship with their credit cards. On one hand, disciplined and modest use of a credit card to make certain purchases can help establish a good credit score. On the other hand, if the balance on a credit card is not paid in full each month, and on time, the balance can quickly spiral out of control.

According a recent study by CompareCards, American consumers are carrying an all-time high of $1.1 trillion in credit card and other types of revolving debt. This figure is up nearly 20 percent from where it was just ten years ago.

Bankruptcy Law, Credit, Credit Card Debt, Debt Relief

Credit Card Debt and the Effects It Can Have on Your Health

Posted on October 23, 2019by Admin

Credit card debt can be a necessary evil, especially when it comes to establishing one’s credit score. However, the problems arise when that credit card balance gets out of hand to the point where the cardholder can no longer pay down the balance. The stress of mounting credit card debt can also affect a person’s health, according to a study from CompareCards.com.

The study shows that credit card debt is taking its toll on the health and well-being of many American consumers. According to the report, fewer cardholders can pay their balances in full at the end of each month. Anything left on those balances roll over to the next month and are compounded even more by interest. Before long, those balances inch closer and closer to the allotted credit limit. One in three consumers surveyed by WalletHub reported being fearful that they will max out their credit cards.

Bankruptcy Law, Credit, Credit Card Debt

Steps to Remove Judgments and Collections from your Credit Report

Posted on September 20, 2019by Admin

Every consumer should review his or her credit report at least once a year to confirm that there are no inaccuracies. Lenders look to a person’s credit score to determine whether he or she is a lending risk. The lower the score, the harder it will be for that person to obtain financing. It can also affect the interest rate on the loan.

Certain actions, such as a judgment against the consumer or a collections action, can negatively impact a person’s credit score. However, if a consumer does have judgments or collections actions on his or her report, it is possible to have this information removed.