ClearOne Advantage is advising consumers against charging holiday shopping to credit cards, especially when many stores—e.g., Kmart, Sears, Walmart, Best Buy—offer consumers layaway payment plans.

 Baltimore, MD, December 25, 2011 –(PR.com)– Executives at ClearOne Advantage, a Maryland-based debt resolution company, are encouraging holiday shoppers to avoid additional credit card debt and instead to use cash or sign up for layaway payment options available at large stores such as Walmart, Kmart, Sears, Best Buy, and other furniture and department stores.

While many credit card companies offer incentives for purchases, these offers rarely result in significant savings for consumers. Instead, ClearOne Advantage executives are urging consumers who cannot afford to pay cash for last-minute holiday purchases, to choose layaway over charging purchases to their credit cards.

“It’s easy to overspend spend on loved ones this time of year, sometimes despite financial realities,” said ClearOne Advantage Executive Vice President John Repetti. He emphasized that paying cash for holiday spending can not only help consumers spend less overall, but will let shoppers start the New Year with less credit card debt.

However, he acknowledged that many shoppers simply don’t have the upfront cash, which is why layaway payment plans are available. Layaway lets consumers spread payments over a series of weeks or months. Shoppers can lock in holiday sale prices, avoid additional credit card debt, avoid interest payments, and spend within their means on major holiday gifts.

“Most of the big stores let shoppers pay for major purchases over several weeks, which not only helps them avoid charging purchases, but also provides an opportunity to start the New Year with a monthly budget in place,” explained Repetti. “Plus consumers can avoid the inevitable interest payments that accompany charging holiday purchases.”

In addition to Kmart and Walmart, other large retail stores that offer layaway include Marshalls, T.J. Maxx, Burlington Coat Factory, Sears, Best Buy, and Toy “R” Us. As with all financial agreements, shoppers should understand the payment terms before signing up.

“It is easy to rack up debt—especially when more and more consumers are forced to depend on credit to meet monthly expenses,” said Repetti. “Exploring layaway options may help some people at precisely the time of year many tend to overspend.”

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ClearOne Advantage is a full-service debt settlement company providing settlements of credit cards and other unsecured debts. Our executive leadership team is comprised of financial industry professionals with expertise in many of the industries that provide consumer lending services, making ClearOne Advantage the obvious choice when looking to settle debt. To learn more about the products and services that make ClearOne Advantage an easy choice in debt settlement call 1-888-785-5376 or visit ClearOneAdvantage.com.

Spend or save? It was once a fairly straightforward question: You spent what you needed and saved the rest. But as mass consumption has become a dominant force in the U.S. economy, the tension between spending and saving has become far more acute.

After a grudging, three-year experiment with thrift, Americans now seem to be rediscovering retail therapy. Spending is up about 5 percent this year, a healthy rise considering that unemployment is high and the housing market remains depressed. But incomes have risen by less than spending, which suggests that people are saving less and turning once again to credit cards to fund purchases when they don’t have the cash. For some shoppers, renewed spending power may even be coming from defaulting on past loans, which eases the crush of debt and frees cash.

A sustained boost in spending is just what the economy needs to get out of the doldrums. But if it brings with it a return to bad financial habits, then the economy could end up worse off overall. Many consumers still have too much debt, and millions of homeowners have lower net worth than they did a few years ago, due to punishing declines in home values. Plus, a lot of baby boomers are unprepared for retirement, which means they’ll need to build up their nest eggs in a hurry. Spending too much now could leave a big hole later, cutting into spending indefinitely.

In the aftermath of a grueling recession, spending habits are changing in ways that economists and marketers are eager to understand. With money more scarce than it used to be, some changes are fairly predictable, such as the substitution of store brands for costlier designer brands. Other changes may be more subtle. And on some things, Americans may be trying out new ways of handling their money, only to settle back into familiar patterns.

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by Patrick Lunsford – insideARM.com – December 16, 2011

The average charge-off and delinquency rates among five of the largest U.S. credit card issuers was unchanged in November, according to documents filed Thursday with the SEC.

There was a little movement individually in the performance reports of the master credit card trusts of Bank of America, Capital One, Chase, Citi, and Discover. But the small changes cancelled out and the averages among the banks remained unchanged in November compared to October.

The average credit card net chargeoff rate among the five was 4.51 percent, down from 8.08 percent a year ago.

Meanwhile, the average delinquency rate among credit cards was 3.14 percent, also unchanged from October, but down from 4.53 percent in November 2010.

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posted by Bob Lawless

On a year-over-year basis, the U.S. bankruptcy filing rate dropped for the 13th consecutive month in November. According to statistics from Epiq Systems, Inc., the November daily bankruptcy filing rate was 4,923, a decline of 12.5% from one year ago. November marks the first time that the daily bankruptcy filing rate has dropped below 5,000 since January 2009.

Although the past seven months have seen double-digit year-over-year drops, these drops have consistently stayed between 10-17%. In other words, there is no increase in the rate of decrease. Extrapolating from this trend, we simply would expect to see about 10-17% fewer filings over the coming year than in the past year. Whether this trend continues, however, will depend principally on the ups and downs of the consumer credit market (not unemployment or foreclosure rates as conventional wisdom holds). In the next few weeks, I plan to be do my annual and slighlty more formal analysis of how these variables might interact and come up with a projection for 2012 U.S. bankruptcy filings.The chart to the right shows the daily bankruptcy filing rate since 2004. (Clicking on the chart should open up a bigger version in a pop-up window.) The red line running across the middle of the chart is the daily filing rate in 2004, which allows for comparison between current filing rates and the filing rates prior to the 2005 changes in the bankruptcy law. The figures are population adjusted (using November 2011 as the base rate) such that the chart shows the daily bankruptcy filing rate after controlling for population growth. In 2004, the U.S. had 5.44 bankruptcy petitions per 1,000 persons. For the past twelve months, we have averaged 4.46 bankruptcy petitions per 1,000 persons. After accounting for the fact that the U.S. is almost 7% bigger now than it was in 2004, the per capita bankruptcy filing rate has dropped by 23%.

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By ANNAMARIA ANDRIOTIS

For customers angry about rising debit card fees, banks are promoting an alternative that, they say, is just as convenient, but with lower fees and better rewards. They call it a “credit card.”

Until recently, debit cards have been popular among consumers, offering convenience without the risk of going into debt and, often, generous rewards programs. But as banks have cut back on debit card rewards and, recently, started imposing fees, credit cards have begun to look attractive by comparison. Several banks have actually sweetened their credit card rewards programs; Discover will eliminate charges for cardholders traveling abroad as of Nov. 6. And interest rates are low: The average fell to 12.28% in August, the lowest it’s been since February, 2009, according to the most recent data from the Federal Reserve.

At least one bank seems to be encouraging its customers to make the switch from debit to credit. Last month, Bank of America announced that it was discontinuing the rewards program on its Merrill Lynch debit card, which is used by its brokerage clients. Those cardholders have until May to redeem their rewards — or they can transfer their rewards to the Merrill Visa Signature credit card. A Bank of America spokeswoman says the bank isn’t steering clients to credit cards but only offering them the alternative.

Debit vs. Credit: The Plastic War Heats Up

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For customers angry about rising debit card fees, banks are promoting an alternative that, they say, is just as convenient, but with lower fees and better rewards. They call it a “credit card.” AnnaMaria has details on Lunch Break.

It’s part of an overall push by banks to attract new credit card customers, says Bill Hardekopf, chief executive at LowCards.com, which tracks credit card offers. After taking losses on credit cards during and after the recession, banks are once again seeing potential in credit cards. Just 3.5% of cardholders are a month or more behind on their payments, the lowest level since 1994, according to CardHub.com, a credit card comparison site. And banks are writing off about 5.6% of credit card debt that they don’t expect will be repaid, compared to 11% a year ago. At the same time, banks now receive less money when customers pay with debit cards, while credit card revenues remain unchanged.

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TransUnion released its annual forecasts today on consumer credit, which indicate that national mortgage loan delinquencies (the ratio of borrowers 60 or more days past due) will decline to about 5% by the end of 2012 from just under 6% at the conclusion of 2011. After six consecutive quarterly declines between Q4 2009 and Q2 2011, 60-day mortgage delinquencies are expected to rise through Q1 2012, peaking at 6.02%. TransUnion forecasts mortgage delinquencies, a statistic generally considered a precursor to foreclosure, to decline for the last three quarters of 2012.

“Although house prices and unemployment will likely face continued pressure next year, this forecast calls for gradual improvements in the second half of 2012 to other key variables, like improving credit quality of new originations, consumer confidence and GDP, that will positively influence homeowners’ ability and willingness to pay their mortgages,” said Tim Martin, group vice president of U.S. housing in TransUnion’s financial services business unit. “If things go as expected, there are no additional negative shocks to the U.S. economy and the average borrower’s situation, mortgage delinquencies could fall as much as 16% in 2012 compared to 2011.”

The expected mortgage delinquency decline in 2012 would follow recent yearly trends, including an expected 7% decrease by the end of this year and a 7% reduction in 2010. This is in contrast to more than 50% year-over-year increases between 2006 and 2009.

TransUnion is projecting 2012 declines in mortgage delinquencies for 38 states with the largest percentage declines expected in Arizona (-46.25%), Wisconsin (-45.52%) and Colorado (-40.34%). Twelve states and the District of Columbia are expected to see increases.

Credit Cards

Credit card delinquency rates (the ratio of bankcard borrowers 90 days or more delinquent on one or more of their credit cards) reached their lowest levels in 17 years during the second quarter of 2011 (0.60%) and TransUnion expects them to remain relatively low in 2012, decreasing approximately 7% from 0.74% in Q4 2011 to 0.69% in Q4 2012.

“Credit card delinquencies are expected to remain fairly steady in 2012 ranging between 0.69% and 0.76% — levels far below those typically observed in the last 15 years,” said Steve Chaouki, group vice president in TransUnion’s financial services business unit. “In today’s uncertain economy, consumers have found that credit cards are among their most valued assets due to the flexibility they provide. As a result, consumers have made a concerted effort to make on-time payments and maintain relatively low balances. In fact, credit card debt per borrower in the third quarter of 2011 stood at $4,762, approximately $1,000 less than the second quarter of 2009, the quarter in which the recession ended.”

Thirty-nine states and the District of Columbia are projected to see credit card delinquency declines in 2012 with only 11 experiencing increases. States expected to see the largest credit card delinquency declines in 2012 include Delaware (-30.74%), Oklahoma (-23.74%) and California (-22.97%). The largest increases are expected in Connecticut (14.87%), Missouri (12.46%) and Louisiana (10.11%).

TransUnion’s forecasts are based on various economic assumptions, such as gross state product, consumer sentiment, unemployment rates and real estate values. The forecasts would change if there are unanticipated shocks to the global economy affecting recovery in the housing market, or if home prices fall more than expected.

The most current mortgage and credit card delinquency data for the nation and every state can be found at www.transunion.com/trenddata.

TransUnion’s Trend Data database TransUnion’s Trend Data is a one-of-a-kind database consisting of 27 million anonymous consumer records randomly sampled every quarter from TransUnion’s national consumer credit database. Each record contains more than 200 credit variables that illustrate consumer credit usage and performance. Since 1992, TransUnion has been aggregating this information at the county, Metropolitan Statistical Area (MSA), state and national levels. For the purpose of this analysis, the term “credit card” refers to those issued by banks.

As a global leader in information and risk management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering high quality data, and integrating advanced analytics and enhanced decision-making capabilities. For consumers, TransUnion provides the tools, resources and education to help manage their credit health and achieve their financial goals. Through these and other efforts, TransUnion is working to build stronger economies worldwide. Founded in 1968 and headquartered in Chicago, TransUnion reaches businesses and consumers in 23 countries around the world.

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