Category Archives: credit cards

Pay Off Your Credit Card Debt Now

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If I could give you just six words of advice, they’d be “pay off your credit card debt.” If I could add one more word, it would be “now.”

All this week CNN.com is running excerpts from CNN chief business correspondent Ali Velshi‘s new book,”Gimme My Money Back: Your Guide to Beating the Financial Crisis,”published by Sterling & Ross.  The quotation above is the last paragraph of today’s excerpt.

Credit card debt is extremely expensive. Interest rates range up to 30 percent a year. That means for every $1,000 you carry on your balance, the credit card company could be charging you $300 each year.

That $300 can mean a lot of things — a decent TV, a car payment or new clothes for the kids. Or you could invest that $300, so it would make more money for you. The one thing none of us should do is take that hard-earned money and send it to the credit card companies just for letting us spend more than we can afford.

If you have credit card debt, then those seven words will probably be the best advice you get all day.  Make it a good one.

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Seniors Credit Card Debt

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For some seniors, their biggest debt load comes from their credit cards. Mortgages can be a burden too but at least the mortgage interest rate is usually at an affordable level.  That is not so with credit cards.  In the present tough times the high interest rates that credit cards charge can be an almost impossible burden for seniors.

It is good to see that the credit card companies are now willing to make deals over debt.

Bank of America says it eased off on more than 700,000 credit card holders in 2008, lowering interest rates and some balances.  After helping to foster the explosive growth of consumer debt in recent years, credit card companies are realizing that some hard-pressed Americans will not be able to pay their bills as the economy deteriorates.

Banks are putting in place a system for  Credit card debt forgiveness.

Big banks have formed an unusual alliance with consumer advocates to urge the government to allow huge portions of credit card debt to be forgiven, a turnabout from recent years when the banking industry lobbied strenuously to make it harder for consumers to erase their credit card debts in bankruptcy.  The new pilot program, which the banks hope will become permanent could involve as many as 50,000 people struggling with credit card debt. On an individual basis, the amount of debt to be forgiven would rise according to the severity of the borrower’s financial situation, up to a maximum of 40 percent.

The largest credit-card banks in the US have each set aside between $1 billion and $3.5 billion in the third quarter for losses on credit card loans as their profits plummeted.  It does not remove the debt load problem but hopefully in some cases reduces the problem to a manageable level.

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Lowest Gas Prices Help

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The lowest gas prices in five years may help to alleviate some of the economic hardship.

The national average price of regular unleaded gasoline falls to $1.63 a gallon matching a level not seen since February 2004.  Drivers returning home from the Christmas holiday this weekend will be paying less for gasoline than they have in in five years, according to a survey of credit card swipes at service stations across the nation..

The national average price dropped for its eighth consecutive day to $1.630 a gallon, down 1.2 cents from the previous day, according to the motorist group AAA.  The national average last hit close to the current price on Feb. 18, 2004, when it averaged at $1.63.  Prices are down 60% from the record high of $4.114 a gallon touched on July 17.

As Douglas McIntyre points out these low gas prices may help recovery from the global recession.

The price of gas may be one of the few “recession busters” of this downturn. The most obvious reason is that families who drive even modest distances for work will save several hundreds dollars a month. That leaves more cash to pay for mortgages and to lower credit card balances. That in turn helps arrest falling housing prices as fewer home fall into default and then foreclosure. The ability to make credit card payments should cut bank losses. In other words, low gas prices send a positive ripple though the economy and may boost consumer spending or at least keep it from falling further.

The impact on businesses may be even greater. The largest beneficiary of low fuel prices is airlines which were nearly driven to bankruptcy earlier this year as jet fuel price spiked. But, industries from newspapers to overnight delivery to trucking could be significantly helped as gas drops.

Lower gas prices alone are only a partial solution, but it may be that this will alleviate some of the worst effects of the recession.

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