Consumers $1 Trillion More In Debt In Just 5 Years

MoneyTips

How would you handle $4 trillion of debt? Hopefully, you’ll never have to answer that question – but America’s total outstanding non-mortgage consumer debt is nearing the $4 trillion mark. (Add mortgage debt, and our total consumer debt tops $13.5 trillion.)

According to Federal Reserve data as of October 2018, non-mortgage consumer debt was just over $3.96 trillion and is on pace to break the $4 trillion mark before year’s end. This debt includes revolving debt like credit cards ($1.037 trillion) and non-revolving debt including auto loans, student loans, and personal loans ($2.926 trillion).

LendingTree highlights the rise in consumer debt in their November 2018 debt report. Using Federal Reserve data, the report finds that our consumer debt has quadrupled over the last 24 years.

We passed the $3-trillion mark in 2013, and we’ve added $1 trillion to that in the subsequent five years. In contrast, it took us ten years to go from $2 trillion to $3 trill…

10 Tips For Dealing With Holiday Debt, Part 2

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Holiday Debt On the Increase

Are your credit cards still smoking from holiday overuse? Based on a recent MagnifyMoney survey, it wouldn’t be surprising.

Consumers who financed their holiday spending averaged $1,230 in holiday spending debt – a sharp increase from 2017’s $1,054 average and 2016’s $1,003 average. Increases in wages and consumer confidence are at least partly to blame. Did a personal increase in wages and confidence lead you into a mountain of holiday debt?

We’ve given previous tips on dealing with excessive holiday debt. You’ve got more debt – so we’ve got five more tips, for a total of 10.

6. Slice Your Budget Further

To pay off holiday debt, you can’t settle for paying o…

10 Tips For Dealing With Holiday Debt, Part 1

MoneyTips

Santa was not so kind to your friends and relatives this year, so you felt the need to fill the gap. You overspent on holiday gifts, and now you are stuck with a significant amount of holiday debt. Gratitude from gift recipients is a great feeling, but gratitude is not going to pay off your MasterCard bill. If it’s any comfort, you’re not alone; according to one report, Americans racked up an average of $1,230 in debt last holiday season.

What do you do? Start with the classic bit of advice – “if you are in a hole, stop digging.” Recognize that you overspent, and freeze your spending until you can take the following steps.

How to Reduce Holiday Debt

  1. Assess the Situation and Rebalance the Budget – Face up to your debt and total up the damage. Rebalance your budget to account for this new debt, and look for any budgeted spending that you can temporarily drop. You will need to eat out less often and delay other discretionary spendi…

2 Out Of 3 Loans Used for Credit Cards and Loan Consolidation

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What do you do with debts that have unfavorable interest rates or difficult payment terms? If you can, consolidate them into one debt stream with more favorable terms. Balance transfer credit cards exist for this purpose, but personal loans may be an even better alternative.

November 2018 data from LendingTree shows that over two-thirds of all personal loan inquiries are for debt consolidation (37%) or credit card refinancing (31%). Personal loans generally offer lower interest rates for equivalent credit profiles, and consumers are taking advantage of the difference.

The lowest average annual percentage rate (APR) for all credit cards is 17.15% according to CreditCards.com, and balance transfer cards aren’t much better at a 16.33% average lowest APR offer. According to LendingTree, borrowers with excellent credit averaged 9.62% APR on pers…

Forced Credit Account Closures Rising While More Applications Denied

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According to Federal Reserve data, serious credit card delinquencies rose sharply in late 2016 and continued to grow through 2018, nearing 5% of cardholders. Similarly, involuntary account closures rose from 4.2% in 2016 to 7.2% in 2018 – but why?

If the economy is doing so well, why are people having trouble paying credit card bills and having accounts closed? Credit scores provide a clue.

A low credit score is a solid indicator of risk for credit card companies. Involuntary account closures are approaching 20% for consumers with credit scores below 680, while transitions into serious delinquency are approaching 25% for those with scores below 620.

In addition, overall revolving debt (mostly credit card debt) has grown from $969 million in 2016 to $1.037 trillion as of the third quarter of 2018.

Given increases in debt and delinquency, card issuers believe they were too free with post-recession credit – and they are reacting accordingly. In t…

Nearly 1 In 4 Feel They’ll Never Escape From Significant Debt

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According to the latest Household Debt and Credit Report from the New York Federal Reserve, America’s total household debt has surpassed $13.5 trillion. Do you sometimes feel like $13 trillion of that debt is yours?

Based on a recent survey by LightStream, almost one-quarter (23%) of Americans believe that it’s nearly impossible to climb out of significant debt once you acquire it. The sense of hopelessness can lead to bad decisions and a treadmill of running debt. In that harmful mindset, $13,000 might as well be $13 trillion – you’ll never pay it off anyway.

Don’t let despair blind you from alternatives. According to LightStream senior vice president Todd Nelson, “People who are carrying debt often overlook cost-reducing solutions.” Nelson adds that debt consolidation can be a smart strategy that can benefit Generation Xers (ages 36-51) with good credit.

Why does Nelson highlight Generation Xers? LightStream found that while large majorities of adult …

2019 Housing Market Predictions

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Is 2019 the year you finally buy that starter home? Are you upgrading or downsizing to a new home? Are you interested in how your home value is likely to change over the next year? We offer these 2019 housing market predictions to consider as you review your housing plans for the year.

Inventory Will Ease a Bit, but for the Wrong Reason ­– Inventory is expected to increase slightly but that increase will stay below 7%, according to Realtor.com. Unfortunately, that reflects people being priced out of the market as much as it reflects a supply of new homes. Growth in new home construction is expected to stay relatively flat, while overall demand is likely to decrease.

Inventory gains are concentrated in higher-priced homes and markets, implying that there are plenty of homes available for people who can’t afford them.

Talk of a recession starting as early as late 2019 may also scare off potential homebuyers who fear buying at the crest of…

How The Interest Rate Increase Affects You

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Your Christmas gift from the Federal Reserve is here. Surprise! It’s another 0.25% hike in the Federal Funds rate. Sure, you’ve already gotten this same gift three other times in 2018, and nine times since late 2015 – but what else would you expect to receive from the Fed?

Interest rate hikes from the Fed really can be a positive gift to you, but it’s more likely to be a negative – depending on whether you’re a saver or a spender.

The Federal Funds rate is the benchmark rate used to transfer money between banks. This rate is generally passed on to consumers. Borrowers are charged higher interest rates on the money they borrow, while savers are eventually offered better interest rates on checking and savings accounts as well as certificates of deposit (CDs).

In some cases, the changes are passed on directly to consumers. For example, credit cards and adjust…

How To Protect Yourself From Mobile Malware

MoneyTips

Do you take mobile device security as seriously as you should? You probably connect to the Internet more on mobile devices than you do on desktops – especially on smartphones, since you’re likely never far away from yours.

According to the 2018 Symantec Internet Security Threat Report, newly discovered malware for mobile devices increased by 54% in 2017 compared to 2016. According to the report, over 26,000 mobile malware variations exist for your security system to fend off – and surely more appeared during 2018.

In 2017, malware was blocked from mobile devices nearly 24,000 times per day on average – and those are just known failed attempts. In addition, over 3,500 ransomware apps were blocked each month.

Even if your system successfully fends off malware, you could be plagued with “grayware” – programs that aren’t classified as malware but are annoying and potentially harmful. (Spyware and adware are prime examples.)

In 2017, 63% of graywar…