The number of Americans paying their credit-card bills late is on the rise, according to American Express.
"Business conditions continue to weaken in the U.S. and so far this month we have seen credit indicators deteriorate beyond our expectations," said company CEO Kenneth Chenault. American Express adopted a "cautious view" after cardholder spending slowed and overdue payments rose in December.
As credit conditions worsen, more Americans are turning to alternate sources of funds such as cash advances -- which can be repaid quickly, allowing the borrower to avoid high interest payments. Payday advance applications are expected to increase as Americans find paying their bills increasingly challenging.
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Monday, July 14, 2008
CASH ADVANCES RISE AS AMERICANS CUT BACK ON CREDIT
Once crazy for credit, Americans have been cutting back on the use of their cards -- or in some cases, cutting them to shreds.
Tired of paying for purchases made long ago (such as gas or a restaurant meal), people such as "Suzi" from Indianapolis have decided to go cold turkey, and closed their credit-card accounts. "If we want something (now), we pay for it in cash," she says. "If we can't afford it, we do without or wait."
The upside? "We no longer have to dread our bills in January," says Suzi.
Not surprisingly, this corresponds with the increase in payday advances taken out, as many people have found the single short-term fee preferable to ongoing interest charges.
Related Story
Tired of paying for purchases made long ago (such as gas or a restaurant meal), people such as "Suzi" from Indianapolis have decided to go cold turkey, and closed their credit-card accounts. "If we want something (now), we pay for it in cash," she says. "If we can't afford it, we do without or wait."
The upside? "We no longer have to dread our bills in January," says Suzi.
Not surprisingly, this corresponds with the increase in payday advances taken out, as many people have found the single short-term fee preferable to ongoing interest charges.
Related Story
CREDIT CARDS FOR SUBPRIME CUSTOMERS FACE NEW SCRUTINY
CREDIT CARDS FOR SUBPRIME CUSTOMERS FACE NEW SCRUTINYCredit cards issued to customers with lesser credit are facing a new round of regulations designed to protect the cardholder from being overcharged.
These typically low-limit cards, sometimes known as "fee harvesters" because of their financial benefits to the issuer, carry fees and charges that aren't always readily obvious to the cardholder. However, there are signs that the gold mine may be closing, as the proposed regulations would require creditors to list fees upfront, especially if they exceed 25 percent of the customer's credit limit. Additionally, card issuers would have to include examples of the projected change in balance once these fees have been assessed.
Such developments should be of note to payday loan seekers, many of whom fall into the subprime category.
Related Story
These typically low-limit cards, sometimes known as "fee harvesters" because of their financial benefits to the issuer, carry fees and charges that aren't always readily obvious to the cardholder. However, there are signs that the gold mine may be closing, as the proposed regulations would require creditors to list fees upfront, especially if they exceed 25 percent of the customer's credit limit. Additionally, card issuers would have to include examples of the projected change in balance once these fees have been assessed.
Such developments should be of note to payday loan seekers, many of whom fall into the subprime category.
Related Story
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