Tag: credit cards

Auto Loan Debt, Credit Card Debt

Federal Reserve Cut and What It Means for Mortgages, Credit Cards, Car Loans

Posted on by Admin

The Federal Reserve cut its standard interest rate for the first time in nine months. Since the last cut, Americans are dealing with more inflation and a challenging job market.

The federal funds rate, set by the Federal Reserve, is the rate at which banks borrow and lend to one another. While the rates that consumers pay to borrow money are not directly linked to this rate, shifts in Fed policy affect what people pay for credit cards, auto loans, mortgages, and other financial products.

The Fed projected it will cut rates two more times before the end of this year.

Mortgages will be affected gradually.  

For prospective homebuyers, the market has already priced in the rate cut, which means it is “unlikely to make a noticeable difference for most consumers at the time of the announcement,” according to Bankrate financial analyst Stephen Kates. It is anticipated that the declining interest rate environment will provide relief for borrowers over time.

Auto loans are not expected to decline soon.

Americans have faced steeper auto loan rates since early 2022, which are not expected to decline anytime soon.  Prices for new cars have leveled off recently, but remain at historically high levels, not adjusting for inflation. An auto loan annual percentage rate can run from about 4% to 30%. Bankrate’s most recent weekly survey found that average auto loan interest rates are currently at 7.19% on a 60-month new car loan.

Credit card rate relief could be slow.

Interest rates for credit cards are currently at an average of 20.13%, and the Fed’s rate cut may be slow to be felt by anyone carrying a large amount of credit card debt.  The best thing for anyone carrying a large credit card balance is to prioritize paying down high-interest-rate debt, and to seek to transfer any amounts possible to lower APR cards or negotiate directly with credit card companies for accommodation.

Click here to read more.

If you have 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 McMaken 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 McMaken website at www.miamibankruptcy.com.

Credit Card Debt

Average American Household Has More Than $10,000 in Credit Card Debt

Posted on by Admin

As of the third quarter of 2024, the average American household credit card balance was about $10,757.

The personal-finance website WalletHub released a new credit card study, which found that consumers added $21 billion in debt during the third quarter of 2024.

Early results for the fourth quarter of the year show preliminary data for October at a record high for credit card debt.

The record-high credit card debt in October reflects a 3% year-over-year increase after inflation adjustments, driven by rising interest rates and holiday spending. While Q3 debt growth slowed compared to 2023, total debt remains high at $1.29 trillion.

With the holidays winding down, many Americans are expected to add more to their credit card balances before the end of the year.

As bankruptcy attorneys, we see credit card debt as one of the most common problems facing those with serious financial challenges.  It is not surprising with the high interest rates, unreasonable fees, harassing debt collection calls, penalties and never-ending minimum payments that do not even make a dent in your actual debt.

Filing for bankruptcy is a viable option for those struggling with insurmountable credit card debt. Chapter 7 is the fastest form of consumer bankruptcy and forgives most unsecured debts like credit card debt, medical bills, and personal loans.  There are certain qualifications a consumer must meet regarding income, assets, and expenses to file for Chapter 7 bankruptcy, which is determined by the bankruptcy means test.

If you have 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 McMaken 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 McMaken website at www.miamibankruptcy.com.

SOURCE: https://www.thecentersquare.com/national/article_408ef9cc-b429-11ef-8570-fb91e62992d2.html

Credit Card Debt, Credit Score

What To Know Before Closing a Credit Card with a Balance

Posted on by Admin

While you can close a credit card with a balance, there are a few things you should keep in mind. At $17.69 trillion in the first quarter of 2024, United States consumer credit card debt is at its highest level ever recorded by the Federal Reserve Bank of New York. Per household, that totals to about $10,848.

It can be tempting to want to close these cards out, and for good reason. But doing so may not lead to what you expect- especially if you have had the card for a long time.  By closing the credit card, you are skewing your credit utilization ratio.

Credit history encompasses 15% of your credit score. Closing a credit card means you lose that credit limit. In addition, you are at risk of accruing additional fees if the minimum payment you can afford is smaller than the interest added each month.

Another common mistake credit card users make when closing out their account is not verifying whether their account is closed. Without written confirmation, the cardholder may continue accumulating fees and penalties, unknowingly.

Neglecting any residual balance repayment after the card is closed can lead to an increase in debt. Paying close attention to those payments is essential, even if you have decided to close the account.

Click here to learn more.

If you have 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 McMaken 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 McMaken website at www.miamibankruptcy.com.

Credit, Credit Card Debt

Banks Prepare for Consumers to Stop Paying Off Their Credit Cards

Posted on by 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.

Click here to read more.

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.

Credit Card Debt

U.S. Debt Levels Are on the Rise as More Americans Fall Behind on Their Credit Cards

Posted on by Admin

American consumers are adding more to their credit card balances and falling behind on current payments, according to data from the Federal Reserve Bank of New York’s latest Quarterly Report on Household Debt and Credit.

According to this report, credit card balances hit a high of $1.08 trillion, increasing $48 billion from the previous quarter and increasing a record $154 billion from the previous year. This year-over-year increase is the largest one seen since the New York Fed began tracking this data back in 1999.

Credit Card Debt

Four Ways to Get out of Credit Card Debt

Posted on by Admin

Credit cards are among the most expensive ways to borrow- especially these days. The Federal Reserve’s war on inflation, marked by interest rate hikes, has lifted credit card rates to record highs. According to a recent NerdWallet American Household Credit Card Debt Study, the average amount of revolving credit card debt owed per American household is $7,486. Getting out of this debt can be difficult, but it is not impossible with proper planning. The following strategies are proven to be successful when getting out of credit card debt.

Determine a Payment Strategy

The first step to paying down credit card debt is to determine what type of payment strategy would work best for the consumer.  Paying more than the minimum monthly payment posted is always the best place to start since the monthly minimum payment is normally only two percent of the balance and pays more for interest accrued every month than the principal owed.

Consumer News, Credit Card Debt

Credit Card and Car Loan Defaults Hit 10-Year High

Posted on by Admin

A number of consumers are defaulting on their credit cards and car loans to the point where the number of defaults reported are the highest seen since the financial crisis. With inflation not nearing an end any time soon and interest rates continuing to rise, the number of consumers defaulting is expected to grow.

This information comes from data provided by the credit agency, Equifax. The agency found that credit card delinquencies have hit 3.8 percent while car loan defaults have hit 3.6 percent. These figures are the highest ones seen in more than 10 years.

Bankruptcy Trends, Consumer Bankruptcy, Consumer Debt

Five Reasons People Go Bankrupt

Posted on by Admin

The number of bankruptcy filings across the U.S. are on the rise. Common reasons that people file for bankruptcy include loss of income, medical bills, a mortgage payment that is too high, spending beyond their means, or lending money to loved ones.

Many times, it is not just one simple cause, but rather a combination of factors that contribute to why someone has filed for bankruptcy. Here are some common reasons people file bankruptcy.

Consumer Debt

Over 40 Percent of Consumers Plan to Take on More Debt Despite Rising Interest Rates

Posted on by Admin

Approximately 43 percent of American consumers say they intend to accrue more debt in the next six months.  This is despite interest rates increasing, making the cost of borrowing more expensive. This information comes from a recent study published by LendingTree.

LendingTree surveyed more than 1,000 individuals regarding their spending habits. They found that 61 percent of them already carry some level of debt. Approximately 80 percent of consumer debt is linked to expenses that are considered necessary, such as healthcare expenses or other emergencies.

Credit Card Debt

Red Flags That Indicate Dangerous Credit Card Habits

Posted on by Admin

Credit card spending can quickly become a bad habit that can get out of control. Certain behaviors can end up dragging the consumer deeper into debt. It is important that the consumer identify these spending habits ahead of time and spot red flags before falling deeper into a debt trap.

Many consumers fall into the trap of only making the minimum monthly payment listed on their credit card statements. It can be tempting to make that small payment instead of paying off the balance in full or making at least a substantial payment towards the principal. However, minimum monthly payments only end up covering the interest accrued during that month. In the end, the consumer makes absolutely no progress towards paying down the balance owed, and the consumer will find that the balance never goes down. At the very least, the consumer should make more than the minimum payment on a monthly basis in order to avoid falling into this debt trap.