Research of the Week: 3 Ways to Tell America Has Too Much Credit Card Debt

From hitting debt records to influencing interest rate hikes, this is how you know we may be headed for trouble.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

Each year, the credit experts at WalletHub release a Credit Card Debt Study that reveal trends in consumer credit and debt over the past year. The 2017 study was just released last week.

The big result

There are three key findings revealed in the study that point to the fact that American consumers are headed for a credit crisis:

1. Outstanding credit card balances are at their highest level since the end of 2008
2. We added $89.2 billion in credit card debt in 2016 alone – the highest one-year gain since 2007
3. The $60.4 billion added in the last quarter of last year is 54% above average growth following the Great Recession

In the words of WalletHub, “It’s clear that we’ve reverted to pre-downturn bad habits.”

The fascinating details

The WalletHub study is not the only report released recently that points to how bad this crisis really is as we finish off the first quarter of this year:

• MarketWatch released a report this week that says Americans may pay an extra $1.6 billion in credit card fees due to the Federal Reserve .25% interest rate hike that occurred this week.
• At the same time, Forbes explains that the interest rate hike might have been higher, but financial experts at the Fed worry that America’s household-debt-to-GDP ratio is so much higher than the rest of the world (we’re at 10.7% compared to the UK at 7.2%)
• And, of course, there is the Nilson report released earlier this year that showed total U.S. credit card debt did, in fact, hit the dubious milestone of $1 trilliion.

Getting back to the WalletHub study, average debt per household sits at $8,377. However, keep in mind that figure includes households that shy away from credit cards completely. If you only look at households that actually carry credit card debt, that figure doubles to $16,748.

What you can do

“Stop charging and start eliminating your debt as soon as possible,” advises Gary Herman, President of Consolidated Credit. “You don’t want to get caught with that much debt if the economy takes another turn. And even if it doesn’t, too much credit card debt is a bad prospect even in a good economy.”

Let’s say your credit card debt load matches the national average exactly at $16,748. Then let’s assume you have that debt on cash-back credit card that currently has an average APR of 15%.

• The minimum payments alone would be $418.70 on a standard credit card payment schedule
• If you stick to minimum payments, it will take 321 payments to pay off – that’s just under 17 years
• In total, you would pay $33,130.26 – that’s $16,748 for the actual debt and $16,382.26 in total interest charges
• Even if you could increase the payment amount slight and make fixed payments of $500 per month:
  • It would still take 44 months to pay off your debt, so almost 4 years
  • Total interest charges would equal out to $5,087.56

You can do calculations like what we’ve done above using a credit card debt calculator.

“In many cases people have past the point where they can pay back everything they owe in a reasonable amount of time using traditional means,” Herman explains. “That means most Americans will have to look to alternate forms of debt relief, such as debt consolidation. It may be the only way to achieve stability quickly.”

If you have credit card debt and worry about how you’ll pay everything back, call Consolidated Credit today at [PHONE_NUMBER]. You can also complete an online application to request a confidential debt and budget analysis from a certified credit counselor.

The post 3 Ways to Tell America Has Too Much Credit Card Debt appeared first on Consolidated Credit US.

Research of the Week: Keeping Up with the Jones’ Credit Scores

Compare your credit to the best and worst credit scores across the country.

The interesting study

WalletHub conducts an annual study of the best and worst credit scores throughout the country. They just released the list of best and worst city scores for 2017.

Congratulations, residents of The Villages, Florida! You have the highest average credit score for any city in the nation. And you beat the second place finishers in Los Altos, California by more than 20 points!

The big result

You might think that the big result would be us announcing the winner, but the real news is just how much credit scores can vary in a municipal area. And those totals don’t always follow income trends.

The fascinating details

Looking at the map, you can tell there is a mix of high a low credit scores in most concentrated urban populations. So we were curious if the differences in credit scores followed areas of affluence – i.e. do high income earners always have better credit scores?

With that in mind, we chose 5 different cities from our home state of Florida. Then we compared their credit scores and ranks to the per capita income in each city.

So the city with the highest average credit score is nowhere close to having the highest per capita income. And the two most affluent Florida cities we checked didn’t even make the Top 500 in credit scores.

“Income level has very little to do with your ability to achieve and maintain a high credit score,” explains Gary Herman, President of Consolidated Credit. “Credit scores don’t care if you’re rich or poor. If you use credit responsibly and pay your bills on time, you can have good credit even in a low-income bracket.”

 What you can do

First, we encourage you to play around with the map and the city list we linked to at the top of the post. It’s a fun diversion to see where average credit scores sit in the area where you live.

Once you’re done, ask yourself a few questions about your credit:

1. Do you know your own credit score? If so, what is it?
2. Have you reviewed your government-mandated free credit reports this year?

If you answered no to that last question, going to download your credit reports is a good first step. By law you can download copies free copies of your credit reports once every 12 months through annualcreditreport.com. If you go through that website, there are really no strings attached or hidden fees.

Once you have your reports, review them and look for 2 things:

1. Are there any errors or mistakes that you can correct?
2. How many correct negative items does your report list?

Mistakes and errors should be disputed. If the information can’t be verified by the credit bureau within 30 days, the item must be removed. This is an easy way to bump your credit score a little if mistakes drag your score down.

Once the mistakes are gone, look at how many legitimate negative items exist. These are the things in your credit that may contribute to a lower credit score. Take note of when the penalty was incurred to see when it should be removed. Most negative items disappear after seven years. In the meantime, you can offset those negative items by taking positive steps for your credit. These include making payments on time and keeping your debt low compared to your total available credit line.

For more information on how to build the best credit score possible, visit Consolidated Credit’s Comprehensive Credit Guide.

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Research of the Week: Will You Live to Be Debt Free?

More Americans are feeling optimistic when it comes to debt elimination.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

CreditCards.com recently released their 3^rd annual survey about financial optimism. Each year, the company completes a telephone survey of 1,000 adult consumers in the U.S. to see if they’re feeling optimistic about their chances of being completely free of debt.

The big result

Americans are fairly optimistic in 2017 about debt elimination. Only 12% of indebted consumers believe they will never pay off what they owe. That’s a distinct reduction from last year when 21% of everyone surveyed gave that same response.

The fascinating details

In spite of reports that Americans are reaching critical levels of debt, those polled by CreditCards.com seem to share a distinctly positive outlook.

• Almost one in four (24%) said they’re debt-free right now
  • That number was only 22% last year
  • In 2014 in was 14%
• Most people believe they will be debt free by age 53
  • Most Millennials (60%) think they can achieve freedom by 30
  • Gen X is less optimistic, with more saying they’ll achieve freedom after 60 or never at all
• Once they’re free of debt…
  • 72% would save or invest
  • Only 6% would splurge on a big ticket item
  • 32% would specifically save for retirement

What you can do

One part of those results that concerns April Lewis-Parks, Director of Education for Consolidated Credit is that consumers seem to treat debt elimination and savings as a tradeoff.

“Waiting until you’re debt free to start saving is usually a good way to ensure you never end up saving anything at all,” Lewis-Parks explains. “Households often make the mistake of focusing too much on one aspect of finance instead of striking a balance. Savings can’t wait on freedom from debt.”

Creating balance is part of what Consolidated Credit’s counselors help clients to do as they work their way out of debt. When clients enroll in a debt management program, they work with the counseling team to create a balanced budget. This includes setting aside 5-10% of your household income for savings. That occurs simultaneously as those clients pay off their debt through the debt management program.

“If you’re wholly focused on debt elimination and you’re not saving anything, you essentially set yourself up for failure,” Lewis-Parks explains. “One emergency expense can put you in a hole with debt again because you don’t have savings to cover it. That’s why you need a financial strategy that balances both.”

If you’re working to eliminate debt, but you’re worried that savings is falling through the cracks, we can help. In the right circumstances, a debt management program can reduce your total monthly payments by 30 to 50 percent. That frees up more money that can be used to balance your budget and save. Call Consolidated Credit today at [PHONE_NUMBER] or complete an online application to request a free debt and budget analysis from a certified credit counselor.

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Research of the Week: Do You Live Where It’s Easy to Repay Debt?

Where you live can have a major impact on how easy it is to get out of debt.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

The financial experts at SmartAsset have released their second annual study on the Best Cities to Get out of Credit Card Debt. The idea is that where you live can have a significant impact on your ability to get out of debt. It’s based on factors, like:

• How much the average resident earns
• The average cost for housing in that area
• The cost of living in that area
• Taxes

If you live where income levels are high relative to total cost of living, then it’s easier to eliminate debt. You should have more cash flow available to pay more than the minimum payment requirements on your credit cards. As a result, it’s easier to pay off your debt quickly and minimize interest charges.

The big result

The cities where it’s the easiest are highly specific and not isolated in one particular region of the country. In other words, just 50 miles difference in where you live can significantly affect how easy it is to eliminate debt.

The fascinating details

Let’s take Smart Asset’s Number One Easiest City to Get Out of Debt: Anchorage, Alaska:

• In this study, Anchorage is at the top largely because residents have a robust average salary. Median income is $78,662 in Anchorage
  • That’s notably higher than $69,629 average annual income nationwide reported by the Bureau of Labor Statistics
  • Even residents with only a high school diploma earn $37,422 average annually
  • So as a result, residents who focus can pay off their average credit card balance of $5,323 within about 6 months
• HOWEVER…
  • That ease of debt repayment doesn’t carry over to other parts of Alaska.
  • As a result, the state as a whole sits at Number One on the list of states with the highest debt burdens, sharing the spot with New Mexico
  • Alaskan borrowers as a whole also have higher rates of default, so they have more debts in collections, along with higher student debt burdens

The same logic can be applied to the Number 3 spot on this list, Bakersfield, California. While it may be easy to repay debt in Bakersfield, the rest of California’s residents are not as lucky. Residents in San Diego, Los Angeles and Long Beach are reportedly being priced out of homeownership. Housing costs are so high that residents have limited resources for everything else in their budget. In San Francisco, rental costs rose by almost 15% in one year. It’s one of the least affordable places to live in the country now.

What you can do

“Moving to make it easier to repay debt as a short-term strategy doesn’t make much sense,” says Maria Gaitan, Housing Director of Consolidated Credit. “However, you should carefully consider things like cost of living and affordability as you plan for the long-term. As you sign your next rental agreement or apply for a mortgage, cost of living concerns need to be a big part of that discussion.”

Gaitan encourages people to reach out to speak with a HUD-certified housing counselor. Counselors may be able to help you identify ways overcome cost of living challenges. This is especially true if you live in an area which high median mortgage and rent levels.

“These days, housing costs and cost of living can vary greatly, not just by state or by county, but even by municipality,” Gaitan explains. “Moving 30 minutes away may increase your commute time, but it may also make it easier for you to manage your finances in the long-term.”

Gaitan also explains that certain municipalities can be more favorable for first-time homebuyers. They may offer homebuyer assistance programs that can help reduce housing costs so you have more money available for things like debt elimination.

“The way money is divided at the federal, state and even local municipal levels is very specific,” Gaitan says. “As a result, it’s in your best interest to talk to a housing counselor who is familiar with all of the assistance options available in your area.”

If you’re thinking about buying a home or making a move this year and you need some help, call Consolidated Credit at 1-800-435-2261. Our HUD-approved housing counselors are trained to help Florida homebuyers where we’re based. However, they can also refer you to other HUD-approved agencies where you live.

The post Do You Live Where It’s Easy to Repay Debt? appeared first on Consolidated Credit US.

Research of the Week: Seniors’ Student Debt Burden

Seniors’ student debt total has more than doubled in the past decade.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

The Federal Reserve of New York released a new report last month on the burden that older Americans face from student loan debt. The report finds that increasingly, seniors face a much tougher battle with debt than they did twelve years ago.

The big result

Overall, the debt burdens of borrowers age 50 to 80 increased by over 60 percent in the past 12 years. A big part of that increase stems from student loan debt, where the average borrower’s balance has more than doubled.

The fascinating details

The report finds that the average levels for most types of debt are fairly constant. Seniors have the same levels of mortgage debt, home equity lines of credit, auto loan debt and credit card debt. However, student debt saw a serious uptick. And this increase in overall indebtedness is risky for a population that largely lives on a limited fixed income.

So why are seniors so overburdened by student loan debt? A Government Accountability Office report released in 2014 provides some insight:

• Only 27% of the student loan balances held by borrowers age 50 to 64 are for children
  • In other words, 73% borrow to fund their own education
• For borrowers 65 to 74, 82% funded their own education and 83% of borrowers over age 75 did the same

In the past people speculated that seniors faced increased student debt because of PLUS loans taken out for their children. However, this shows most of the debt results from personal education instead.

What’s more, seniors have higher levels of default on student loans:

• Borrowers age 25-49 default at a rate of 12%
• By contrast, borrowers age 65-74 default at a rate of 27%
• Even worse, over half of borrowers over the age of 75 defaulted on their student loans

It’s not surprising that garnishment from Social Security checks has increased by more than six times in the past 10 years. Federal law protects seniors by guaranteeing they receive at least $750 per month from Social Security checks. But that’s not enough to live on in most places these days.

What you can do

“A fixed income in retirement is not meant to support significant debt elimination,” argues Gary Herman, President of Consolidated Credit. “That’s why, traditionally, experts recommend that consumers should eliminate as much debt as possible prior to retirement. Even minimizing mortgage debt is helpful because fixed income is not designed to carry a high debt burden. That’s particularly true if you rely on Social Security as your primary source of income.”

This means if you’re nearing retirement and thinking of going back to school, consider how to fund those continuing education costs carefully. Student loan debt cannot be discharged by bankruptcy, so you can’t just default and declare bankruptcy to get around repayment. If you incur the debt, it’s going to follow you until you pay it back.

With that in mind, make sure to explore all of your options. Look into local community colleges and search online to explore grants and scholarships specifically targeted to your age group. This will help minimize the cost of going back to school so you can expand your mind without increasing your debt burden.

Of course, that advice only helps those who haven’t yet slipped in to the student debt trap. What about seniors who already face an uphill battle to repay their student loans?

“If you took out federal loans, whether they’re subsidized or unsubsidized, you can apply for a hardship-based repayment plan,” Herman explains. “These programs set monthly payments based on what you can afford. That makes it easier to repay what you owe on a fixed income.”

An income-based repayment plan rolls all eligible loans into a single monthly payment. The specific amount you pay is based on your Adjusted Gross Income (AGI) and family size. In most cases, it equals out to roughly 15% of your income. If you took out your loans recently – i.e. after 2011 – then you may qualify for the Pay as You Earn program. This drops the monthly payment amount even lower, usually around 10% or less.

For more information on student loan repayment plans, visit Consolidated Credit’s free guide to Student Debt Repayment.

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Research of the Week: On Par with Average Credit Card APR

Are your credit card interest rates on par with national averages?

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

CreditCards.com publishes a Credit Card Rate Report each week. The most recent report is notable because the average interest rate on new credit card offers remains at record highs.

The big result

The national average APR now sits at 15.42 percent. That’s a quarter of a percentage higher than it was just six months ago when rates hit a record high at 15.18 percent.

The fascinating details

CreditCards.com determines average credit card APR by looking at rate offers on the 100 most popular cards from major issuers. They also break rates down by the type of credit card:

The rates listed are all for APR on standard purchases. So they don’t factor in any introductory periods where APR may be lower. For example, most balance transfer credit cards offer 0% APR for anywhere from 6-24 months. The 14.67 percent rate is what gets applied once the introductory period ends.

What you can do

“Although these new national averages are record highs, often cardholders will find their own rates may be even higher. Looking at national average rates offered on new cards can help cardholders assess their current rates,” explains Gary Herman, President of Consolidated Credit. “If you have a good credit score and a solid credit history with a particular creditor, then it may be time to call them to ask for a rate reduction.”

Herman advises credit card users to take some time to evaluate the rates on each of their credit cards. If the rates are higher than the average listed above, it’s time to call your creditors to negotiate. These tips can help you secure the rate reductions you need:

1. Know where your credit stands – if your score is high and your credit report is free of negative items, then you’re in a good position to negotiate
2. Get the facts about your account before you call – know how long you’ve been a customer and how long you’ve paid on time without any late or missed payments
3. Now call to speak with customer service – after you make the initial request, they may pass you up the chain to someone who’s authorized to negotiate with you

For more tips to help you negotiate effectively with your creditors, visit Consolidated Credit’s guide to Credit Card Negotiation Strategies.  And remember, if you can’t negotiate lower rates on your own, we can help. Call Consolidated Credit today at [PHONE_NUMBER] or complete an online application to request a free debt analysis from a certified credit counselor.

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Research of the Week: Feeling Debt Shy?

A new study finds 80% of borrowers worry about their current debt levels.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

Recently a leading financial research institute named Filene asked more than 1,100 Americans how they feel about debt. They wanted to see how everyday borrowers felt now that we’re seven years out of the Great Recession.

The big result

More than half of those surveyed report that plan to avoid debt this year unless it’s completely necessary. That makes sense, given that 80% of respondent said they have serious concerns about their current debt levels.

The fascinating details

And while 80% of respondent worry about current debt levels, 93% are resistant to taking on more debt:

• 41% would not feel confident taking on more debt within the next 6 months
• 51% will only take on more debt if a specific need arises
• Only 7% feel confident about taking on more debt

According to the survey results, consumers are most stressed about:

1. Credit card debt
2. Student loans
3. Medical bills

They’re least stressed about:

1. Mortgage debt
2. Entertainment costs
3. Auto loan debt

What’s more, 12% of respondents say debt has become a major source of stress in the household. They also have key concerns about why taking on more debt is risky:

1. 49% say they lack the earning power necessary to manage debt
2. 36% have concerns about how they would maintain good credit
3. 35% report poor economic conditions make them nervous

What you can do

“If you’re concerned about debt, there are really two steps you need to take,” says Gary Herman, President of Consolidated Credit. “Avoiding new debt is only one of those steps. At the same time, you need an aggressive strategy to eliminate the debt you already carry.”

Herman encourages distressed borrowers to reach out for free credit counseling. This allows you to see where you stand and learn about options for relief.

“In many cases people are in a situation where high debt levels drain income,” Herman explains. “This makes budgeting difficult, which leads to more debt. You use credit cards to cover shortfalls and emergencies. Even though you don’t want to take on more debt, you charge because it seems like the only option available when the need arises.”

What credit counseling can help you do:

1. See where you stand with your current debt load
2. Identify options that allow you to get out of debt faster
3. Restructure your budget so you can really afford to live without any reliance on credit

For more information, call Consolidated Credit today at [PHONE_NUMBER] or complete an online application to request a free debt and budget analysis from a certified credit counselor.

The post Feeling Debt Shy? appeared first on Consolidated Credit US.

Research of the Week: Does Your Debt Scare You?

A new survey finds 65% of people have a fear of debt.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

The financing experts at Affirm – a lender that offers alternative financing options for people with less than perfect credit – recently released a survey of over 1,000 adults age 22-44. The goal was to determine how consumers really feel about their debt.

The big result

People are afraid of debt – nearly 2/3 of survey takers reported they have a fear of debt. However, it’s not exactly the debt that people fear; it’s the uncertainty that comes with it.

The fascinating details

If people truly feared debt, they’d stay away from it completely. But that’s not what Affirm’s results show:

• 86% of respondents have at least one credit card; 31% have three or more cards
• 57% of people who carry a balance over on at least one credit card have a balance of $1,000 or more
• 48% of those borrowers say it will take more than 6 months to pay off what they owe
• 93% of respondents have a weekly or monthly spending plan; only 5% don’t budget at all
• 49% of those who carry a balance say it was generated by an emergency or unexpected cost
• 46% say they enjoyed the purchase less because of the lingering debt

The survey also found 68% they would prefer simple, fixed payments instead of a revolving debt repayment scheduled. That may explain why 86% would opt for a simpler repayment system versus a credit card.

What you can do

“You don’t have to use credit cards to fund major purchases,” explains Gary Herman, President of Consolidated Credit. “And you should consider all of your financing options before you make any key decision.”

Herman argues that if you have a balanced budget so you don’t have to use credit to cover daily expenses, then you should have savings available. You can save up in advance and pay for the purchase in cash rather than paying off the debt once it’s incurred.

“Either way, you’re going to pay,” Herman argues. “It’s just a matter of when and at what cost. Saving up ahead of time takes diligence. But if you incur a debt to pay for an item, the cost is monetary – you add to the cost of your purchase with interest charges.”

Herman also argues that people often turn to credit when they should be looking to loans. Things like home renovation costs and car repairs may be funded in a more manageable way with a loan.

“If you can get a loan for $10,000 to cover the cost of a home remodeling job instead of putting all that debt on a high interest rate credit card, it may be better for your finances overall” Herman says. “The loan will generally be financed at a rate of less than 10% while a credit card may be upwards of 20%. Your total cost will be lower overall. So it’s worth it to take out the loan to cover such an expensive project.”

Herman advises borrowers to look into the following when considering any loan:

1. Can you afford the monthly payments?
2. What will be the total interest charges and the total cost of the loan?
3. How long will it take to pay off the debt?
4. Are there any penalties for early repayment?

For more information about managing your debt and effective methods of debt repayment, call Consolidated Credit today at [PHONE_NUMBER]. You can also complete an online application to request a confidential debt analysis from a certified credit counselor at no charge.

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Research of the Week: Save Your Refund for Better Things

Record numbers of Americans plan to save their tax refund this year.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

For the past 10 years, the National Retail Federation has conducted a survey of American consumers about tax returns. NRF’s goal is to find out how consumers plan to use their tax refunds each year.

The big result

“A record low number of Americas will spend their tax returns this year while the second highest number on record will put the money into savings.”

Essentially, the survey finds that most Americans plan on squirrelling that money away for a rainy day. And those who will spend their refund this year plan on using it to pay off debt. Apparently, gone are the days that most people used their refund to splurge.

The fascinating details

Of those surveyed, roughly 66% said they expected to receive a tax refund this year. Over half of people surveyed planned to have their filing completed by the end of February. And two thirds of people now plan to file electronically.

The uses for refunds are almost wholly focused on promoting financial stability:

• 48% plan to put the money in savings
• 5% will pay down debt
• 9% will use the money to help cover everyday expenses
• 7% will use it to take a vacation that doesn’t rely on credit cards
• 7% will fund a major purchase, like new electronics or a car
• 6% will splurge
• 0% will use it for “other” purposes

What you can do

“It’s encouraging to see so many Americans plan to use their tax refund for practical purposes,” says Gary Herman, President of Consolidated Credit. “Even if you use it for a major purchase or to fund a vacation that’s not splurging. You’re avoiding the debt that you would have taken on otherwise, which means it’s a good move for your finances.”

That may seem counterintuitive, but spending your refund on something nice doesn’t necessarily mean you’re splurging. For instance, if your laptop is dying and you need a new one, that’s a necessary expense for many Americans because they use laptops for work.

“The same is true for a vacation,” Herman explains. “Vacations often seem like luxuries, but most of us really need time off and away from home to unwind. It’s hard to maintain your sanity and keep up a grueling schedule if you never take a break. So even if you use your refund on a vacation, you’re spending the money strategically.”

So what does count as splurging?

“Splurging is when you buy something you don’t need because it makes you feel good, but not because you have a clear need,” Herman says. “So in that sense the same purchase made in different situations may be splurging or it may not be. If you buy a TV because yours broke, it’s not splurging. But if you buy a new TV because it’s larger, it’s a little harder to justify that as a necessary expense.”

Finally, Herman advises debt management program participants that they can use a tax refund to make an extra payment on their program.

“There is no penalty for paying off your debt management program faster than on the assigned payment schedule,” Herman concludes. “So if you don’t have another use for your refund, call the credit counseling team to request an extra payment on your program. We’ll distribute it accordingly to your creditors and you can be out of debt that much sooner.”

To speak with a credit counselor about making an extra debt management program payment with your tax refund, call [PHONE_NUMBER].

The post Save Your Refund appeared first on Consolidated Credit US.

Research of the Week: Credit Card Debt Decreases in January

Are consumers finally starting to see the light about curbing debt levels?

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

The Federal Reserve released its latest consumer debt report on Tuesday.

The big result

Total consumer credit card debt in the U.S. decreased by $3.8 billion in January. It’s the first time credit card debt has decreased since February of last year. It’s also the single biggest decline in consumer credit card debt since October 2010.

The fascinating details

Total borrowing actually rose by $8.8 billion in January. But that’s the smallest monthly gain since July 2012. It’s also notably smaller than the $14.8 billion increase in December of last year.

What drove that increase?

• Auto loans and student loan borrowing increased by $12.6 billion in January.
  • Debt in these categories along with credit cards is now up to $3.77 trillion – a record high.
• Total household debt not including mortgages rose to $12.58 trillion at the end of last year.
  • We’re only about $100 billion below the all-time high set in 2008 (i.e. just prior to the crisis)

So auto loan debt and student loan debt both saw increases in the first month of this year. Experts are already warning auto loans are at high risk for delinquencies along with credit cards.

What you can do

“Debt levels for most households are getting dangerously high,” explains April Lewis-Parks, Education Director for Consolidated Credit. “Average credit card debt per household is now up to $8,377. At this point, slowing down isn’t enough. Americans need to stop spending and start eliminating their debt.”

Lewis-Parks warns that families are leaving themselves open to the same risks we saw just prior to the recession in 2008. When the real estate market collapsed and the economy to the most severe downturn since the 1930’s, people were forced to make some tough choices. Acting now before a crisis can make those choices easier.

“You don’t want to wait for the economy to take a turn again before you take control of your finances,” Lewis-Parks encourages. “Starting working to find a solution that will eliminate your debt now so you can start saving. That way, even if the economy takes another turn, you won’t be left in a tailspin, wondering how you’re going to make ends meet.”

If you owe more than $5,000 in credit card debt, start exploring options for debt consolidation. For a free debt evaluation from a certified credit counselor, call Consolidated Credit today at [PHONE_NUMBER]. You can also request help now through our online application.

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Research of the Week: 3 Ways to Tell America Has Too Much Credit Card Debt

From hitting debt records to influencing interest rate hikes, this is how you know we may be headed for trouble.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

Each year, the credit experts at WalletHub release a Credit Card Debt Study that reveal trends in consumer credit and debt over the past year. The 2017 study was just released last week.

The big result

There are three key findings revealed in the study that point to the fact that American consumers are headed for a credit crisis:

1. Outstanding credit card balances are at their highest level since the end of 2008
2. We added $89.2 billion in credit card debt in 2016 alone – the highest one-year gain since 2007
3. The $60.4 billion added in the last quarter of last year is 54% above average growth following the Great Recession

In the words of WalletHub, “It’s clear that we’ve reverted to pre-downturn bad habits.”

The fascinating details

The WalletHub study is not the only report released recently that points to how bad this crisis really is as we finish off the first quarter of this year:

• MarketWatch released a report this week that says Americans may pay an extra $1.6 billion in credit card fees due to the Federal Reserve .25% interest rate hike that occurred this week.
• At the same time, Forbes explains that the interest rate hike might have been higher, but financial experts at the Fed worry that America’s household-debt-to-GDP ratio is so much higher than the rest of the world (we’re at 10.7% compared to the UK at 7.2%)
• And, of course, there is the Nilson report released earlier this year that showed total U.S. credit card debt did, in fact, hit the dubious milestone of $1 trilliion.

Getting back to the WalletHub study, average debt per household sits at $8,377. However, keep in mind that figure includes households that shy away from credit cards completely. If you only look at households that actually carry credit card debt, that figure doubles to $16,748.

What you can do

“Stop charging and start eliminating your debt as soon as possible,” advises Gary Herman, President of Consolidated Credit. “You don’t want to get caught with that much debt if the economy takes another turn. And even if it doesn’t, too much credit card debt is a bad prospect even in a good economy.”

Let’s say your credit card debt load matches the national average exactly at $16,748. Then let’s assume you have that debt on cash-back credit card that currently has an average APR of 15%.

• The minimum payments alone would be $418.70 on a standard credit card payment schedule
• If you stick to minimum payments, it will take 321 payments to pay off – that’s just under 17 years
• In total, you would pay $33,130.26 – that’s $16,748 for the actual debt and $16,382.26 in total interest charges
• Even if you could increase the payment amount slight and make fixed payments of $500 per month:
  • It would still take 44 months to pay off your debt, so almost 4 years
  • Total interest charges would equal out to $5,087.56

You can do calculations like what we’ve done above using a credit card debt calculator.

“In many cases people have past the point where they can pay back everything they owe in a reasonable amount of time using traditional means,” Herman explains. “That means most Americans will have to look to alternate forms of debt relief, such as debt consolidation. It may be the only way to achieve stability quickly.”

If you have credit card debt and worry about how you’ll pay everything back, call Consolidated Credit today at [PHONE_NUMBER]. You can also complete an online application to request a confidential debt and budget analysis from a certified credit counselor.

The post 3 Ways to Tell America Has Too Much Credit Card Debt appeared first on Consolidated Credit US.

Research of the Week: Keeping Up with the Jones’ Credit Scores

Compare your credit to the best and worst credit scores across the country.

The interesting study

WalletHub conducts an annual study of the best and worst credit scores throughout the country. They just released the list of best and worst city scores for 2017.

Congratulations, residents of The Villages, Florida! You have the highest average credit score for any city in the nation. And you beat the second place finishers in Los Altos, California by more than 20 points!

The big result

You might think that the big result would be us announcing the winner, but the real news is just how much credit scores can vary in a municipal area. And those totals don’t always follow income trends.

The fascinating details

Looking at the map, you can tell there is a mix of high a low credit scores in most concentrated urban populations. So we were curious if the differences in credit scores followed areas of affluence – i.e. do high income earners always have better credit scores?

With that in mind, we chose 5 different cities from our home state of Florida. Then we compared their credit scores and ranks to the per capita income in each city.

So the city with the highest average credit score is nowhere close to having the highest per capita income. And the two most affluent Florida cities we checked didn’t even make the Top 500 in credit scores.

“Income level has very little to do with your ability to achieve and maintain a high credit score,” explains Gary Herman, President of Consolidated Credit. “Credit scores don’t care if you’re rich or poor. If you use credit responsibly and pay your bills on time, you can have good credit even in a low-income bracket.”

 What you can do

First, we encourage you to play around with the map and the city list we linked to at the top of the post. It’s a fun diversion to see where average credit scores sit in the area where you live.

Once you’re done, ask yourself a few questions about your credit:

1. Do you know your own credit score? If so, what is it?
2. Have you reviewed your government-mandated free credit reports this year?

If you answered no to that last question, going to download your credit reports is a good first step. By law you can download copies free copies of your credit reports once every 12 months through annualcreditreport.com. If you go through that website, there are really no strings attached or hidden fees.

Once you have your reports, review them and look for 2 things:

1. Are there any errors or mistakes that you can correct?
2. How many correct negative items does your report list?

Mistakes and errors should be disputed. If the information can’t be verified by the credit bureau within 30 days, the item must be removed. This is an easy way to bump your credit score a little if mistakes drag your score down.

Once the mistakes are gone, look at how many legitimate negative items exist. These are the things in your credit that may contribute to a lower credit score. Take note of when the penalty was incurred to see when it should be removed. Most negative items disappear after seven years. In the meantime, you can offset those negative items by taking positive steps for your credit. These include making payments on time and keeping your debt low compared to your total available credit line.

For more information on how to build the best credit score possible, visit Consolidated Credit’s Comprehensive Credit Guide.

The post Keeping Up with the Jones’ Credit Scores appeared first on Consolidated Credit US.

Research of the Week: How Much Does a Rate Hike Cost You?

The latest interest rate hike by the Federal Reserve affects your finances directly.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

The Federal Reserve raised interest rates by 0.25% in March. It’s the second rate hike this year, for a total increase of 0.5%. However, while that percentage may seem negligible, a new report from MarketWatch explains exactly how much it will impact your bottom line.

The big result

That seemingly small increase in the Fed’s rate equals out to $1.6 billion in additional credit card fees this year.

The fascinating details

While it’s remarkable that a small hike can have such a big impact, the good news is that cost is spread out. According to CreditCards.com, there are approximately 167 million credit card users in the U.S.

As a result, that $1.6 billion in added fees equals out to roughly $17 in added charges per household each year. Total annual interest charges increased from $1,292 before the latest rate hike to $1,309 after it.

Still, experts warn that this may not be the last hike in interest rates we see this year. The Fed has indicated they may raise rates again if market conditions continue to improve. Interestingly enough, the current consumer credit card debt load may be the thing holding the Fed back. A report by Forbes suggests the Fed may hold back because household debt is high compared to current income levels.

What you can do

“Eliminate your debt quickly and move the money you save into savings and investing,” advises Gary Herman, President of Consolidated Credit. “When the Federal Reserve raises rates, it costs borrowers but it helps savers. It makes it that much more beneficial to be on the right side of your budget.”

The reason for this advice lies in the relation of Federal Reserve prime rate and interest rates on savings accounts. When the Fed raises rates, credit card companies raise your APR accordingly, too. At the same time, financial institutions also raise APY on savings tools like savings accounts and CDs. APY is the annual percentage yield on a savings tool. It’s like an interest rate for how much your accounts accrue each month.

For years, savings account growth has been dismal. When the Fed dropped the prime rate to near zero in the wake of the Great Recession, most savings account had paltry growth. However, now that the prime rate is higher, savings accounts may deliver better growth.

“This is the right time to take action so you can pay off your debt and start saving,” Herman explains. “Now that your debt will cost more and savings will deliver better gains, it’s even more imperative. It will also help you shore up your finances and financial safety net if the economy decides to take another turn.”

If you’re ready to eliminate your debt and start saving, call Consolidated Credit at [PHONE_NUMBER] or complete an online application. We can connect you with a certified credit counselor for a confidential debt and budget evaluation at no charge.

The post How Much Does a Rate Hike Cost You? appeared first on Consolidated Credit US.

Research of the Week: Are You and Your Neighbors Financially Literate?

Financial Literacy Month Map reveals the most and least literate consumers.

Please click the map to view the interactive version, brought to you by WalletHub

The interesting study

If you didn’t already know, April is National Financial Literacy Month. To mark the occasion, WalletHub released a new interactive map that reveals the results of their 2017 Financial Literacy Study. They conduct the study each year to identify the least and most financially literate consumers in the U.S.

The big result

Based on three key metrics that evaluate financial literacy, WalletHub named these states as the most financially literate:

1. New Hampshire
2. Minnesota
3. North Dakota
4. Maine
5. Virginia

On the other end of the spectrum, WalletHub declared these states as the having the lowest financial literacy scores:

46. Oklahoma
47. Mississippi
48. Kentucky
49. Rhode Island
50. Louisiana

WalletHub also counts the District of Columbia. Technically, Louisiana placed 51st because D.C. ranked 50th.

The fascinating details

The study breaks overall financial literacy down into several categories. Some notable categories include:

States with the highest and lowest number of households with rainy day funds:

States with the most and least unbanked consumers:

States with the most and least sustainable spending habits:

WalletHub also broke the results down by some demographics. Here are the highlights:

• Men scored higher than women (71 vs 66)
• Literacy increased on par with income level:
  • People who make less than $25,000 annually scored 57
  • Households at the middle-income range ($50-75K) scored 72
  • Those at the top (income over $150,000 per year) scored 78
• Married people had the highest scores versus other marital status groups, averaging 74
• Minorities tend to struggle more with financial literacy:
  • White, non-Hispanic averaged 72
  • Asian / Pacific Islanders scored 63
  • Black / African American averaged 59
  • Hispanic / Latino scored 58
  • Native Americas had the lowest scores at 54
• Literacy scores also go up on par in the following categories:
  • Age (older consumers are more savvy than younger)
  • Education level (higher education equals more financial literacy)

What you can do

What does “financially literate” mean?  Financial literacy refers to the ability to understand basic financial concepts. If you are financially literate, you are effective at managing your money day-to-day; you are also better equipped to address financial challenges.

“Without knowledge, you leave your finances up to guesswork,” says April Lewis-Parks, Director of Education for Consolidated Credit. “That can be a recipe for disaster if you run into any trouble. Improving your financial literacy level makes it easier to achieve and maintain lasting stability. You can address challenges with confidence, instead of facing them with uncertainty. As a result, becoming financially literate decreases stress caused by money concerns.”

Consider your comfort level with various financial topics:

• Do you know the differences between types of bank accounts so you can choose the right accounts for your needs?
• If you ever need debt relief, how familiar are you with different debt solutions, such as consolidation?
• How confident are you about investing? Can you explain the advantages and disadvantages of stocks versus cash equivalents?
• Do you know how your credit score is calculated and how long negative items can remain in your profile?

“Take the month of April to build your knowledge base in any areas where you don’t feel confident,” Lewis-Parks explains. “This is a great month for research, because companies release a range of free resources to boost financial literacy.”

Use these free financial literacy resources!

Consolidated Credit offers the following resources to help you get started:

• Financial Literacy Quiz: 20 questions test your knowledge of basic topics
• 30-Day Literacy Checklist: Not sure where to start? This gives you a new task to do each day that can improve your literacy level
• Join the conversation Facebook: Consolidated Credit’s social media team releases a new tip each day. We also post weekly videos and more great resources. It’s the best place to go to get connected to your finances!

The post Are You and Your Neighbors Financially Literate? appeared first on Consolidated Credit US.

Research of the Week: Hello, Record High Credit Card Debt

Experts recommend that you celebrate record high debt levels by paying some of it off.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

Each month the Federal Reserve releases new Consumer Credit numbers. The Fed just released new totals going through February 2017.

The big result

After a month of debt reduction in January, consumers went back to spending in the second month of the year. As a result, U.S. consumer credit card debt now sits solidly at more than $1 trillion.

The fascinating details

This is actually not the first time that credit card debt hit this dubious milestone. Following a record-breaking holiday shopping season at the end of the year, U.S. revolving debt hit $1 trillion by the end of December.

However, financial analysts found it encouraging that total debt dropped below the $1 trillion mark in January. Consumers paid off enough holiday debt to drop our total down to $997.4 billion. Unfortunately, spending went back up in February.

This is what America’s current revolving debt load looks like written out: $1,000,400,000,000

Total credit card spending in February increased by 3.5%. Even more concerning, we added installment debt at a higher rate than that. Nonrevolving debt increased by 5.3% in February for a total increase of 4.8% overall.

A report from CBS MoneyWatch on these Federal Reserve numbers explains the data in more detail. It explains, encouragingly, that the credit card debt default is steady at 2.3%. This is significantly below the Great Recession default rate of 6.8%.

What you can do

“Most household in the U.S. are in the same position,” explains Gary Herman, President of Consolidated Credit. “They’re carrying credit card balances over month-to-month, meaning increased costs in the form of interest charges. That’s not good for your budget or your credit score. So, it’s time to cut back and start cutting that debt down to size.”

In most cases, this means you need to stop charging and implement a targeted debt reduction strategy. To do so, you see how much money you have available for debt elimination in your budget. Cut back to only your necessary expenses and assess your free cash flow – i.e. the money you have left after bills and necessities.

Now set that amount that you determine as a fixed cost in your budget. This is now the set amount of money you pay each month on your credit cards. Pay the minimum requirements on all of your cards except the card with the highest APR. Use all of the money you have left after minimum payments to make the biggest payment possible on that debt.

Once the first debt is eliminated, move on to the debt with the next highest APR. Keep moving until you reach zero. You can use a debt repayment calculator to determine how long this will take. If it will take more than 60 payments, consider other options for debt relief. You can contact a credit counselor to review your options for free.

For more information on how to eliminate debt within your budget, watch Consolidated Credit’s free Managing Debt video.

The post Hello, Record High Credit Card Debt appeared first on Consolidated Credit US.

Research of the Week: Using Credit Cards for Everyday Purchases

More people are using credit for low-dollar purchases, but is it the right choice?

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

CreditCards.com recently released their second annual survey of consumers that use credit cards for everyday purchases. The survey aims to estimate at the number of people who use credit cards for purchases of less than $5.

The big result

17% of card users pull out credit cards for everyday purchases of less than $5 made in-person. That’s a notable 11% increase from last year.

The fascinating details

Although credit cards usage for everyday purchases is on the rise, cash is still king.

• 55% of people still prefer to use cash (down 3% from last year)
• 24% of people use debit (also down 3% from last year)

At the other end of the spectrum, credit cards rule for purchases of more than $500:

• 57% of people use credit cards for big-ticket purchase
• 42% combined use checks (8%), debit or cash (10%) for these purchases

The survey also broke credit card usage down by generation. Looking at the data this way revealed Millennials may drive increased credit card use in the future.

• 53% of Millennials prefer plastic (debit or credit) for small-dollar purchases
• Meanwhile 70% of Baby Boomers and older Americans prefer cash
• Gen X falls somewhere into the middle – they’re the most likely to use debit cards

And while more people use credit cards for everyday purchases, many avoid big-ticket purchases altogether. Roughly one in four Americans has not made a purchase over $500 in the past 12 months.

What you can do

“There’s nothing wrong with using credit cards for everyday purchases,” says Gary Herman, President of Consolidated Credit. “As long as you have a strategy in place to manage the debt, you can use credit for any purpose. It only becomes an issue if you don’t pay off your balances in-full each month.”

In many cases, credit card companies give you an incentive to use credit for small purchases. American Express has a popular Everyday® reward credit card that gives you 20% more points if you make 20 purchases in a month. Making 20 large-dollar purchases every month isn’t a good idea; so, it makes sense to use this card for incidentals and trips to the convenience store.

However, as with most reward credit cards, the rewards you earn can be quickly offset by high interest charges. Interest charges get applied anytime you carry a balance over from one month to the next. If you pay off your balance in-full each billing cycle, you avoid interest charges to get the most out of those rewards.

Using credit cards for everyday spending becomes problematic if you can’t maintain a zero balance overall. If you see your balances creeping up, it’s time to stop spending and start reducing your debt. Otherwise, any points or cash back you might earn gets erased once the credit card company applies interest charges.

“At Consolidated Credit we advocate responsible credit use,” Herman continues. “There’s nothing wrong with using credit cards. In many cases, they offer advantages over other purchase methods. However, credit card use and credit card abuse are not the same thing. You have to use your cards strategically in a financially healthy way.”

If you’re working to get ahead of credit card debt, we can help. Call Consolidated Credit at [PHONE_NUMBER] or complete an online application for a free debt analysis from a certified credit counselor.

The post Using Credit Cards for Everyday Purchases appeared first on Consolidated Credit US.

Research of the Week: Do You Ever Redeem Credit Card Rewards?

3 in 10 Americans never bother to redeem credit card rewards, so why use reward credit cards?

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

Bankrate released a new survey this month that leads to a puzzling question about consumer credit card usage. The topic of the survey focuses on how Americans use and redeem credit card rewards.

The big result

Roughly 3 out of every 10 credit card users (31%) never bother to redeem the rewards from their rewards credit cards. Another 38% have not redeemed their rewards within the past 6 months.

The fascinating details

The survey also breaks down the most frequently used rewards. These are the rewards that get redeemed the most:

• Cash back 49%
• Airline miles 17%
• Gift cards 12%

The survey also breaks down how different generations use their rewards:

• Millennials are more likely to use cash back rewards (67% vs. 43% for older Americans)
• Old Millennials (ages 27-36) are now more likely to own a credit card than their Gen X counterparts (61% vs. 56%)
• Baby Boomers and the Silent Generation are still the most likely to own a credit card (64% and 69% respectively)

Finally, the survey asked card users about annual fees. Only one in four cardholders is willing to pay annual fees. Millennials are the least averse – 34% to 24% for the rest of the population.

What you can do

“Reward credit cards usually have higher interest rates by design,” explains Gary Herman, President of Consolidated Credit. “It’s not unheard of to have a rewards credit card with 18 or 19% APR or higher. If you don’t redeem the rewards, why face the higher interest charges?”

We looked at the CreditCards.com Weekly Rate Report from April 19. The national average APR sat at 15.72%. However, average rates for rewards credit cards were higher:

• Cash back credit card 15.77%
• Airline credit card 15.74%
• Point reward credit card 15.81%

Keep in mind that those are national averages. When you apply for a new credit card, the issuer tends to start you at a higher rate. In some cases, if you haven’t negotiated lately with your card issuers, your rates may be above 20%.

“Facing a 21% interest rate may make sense if you earn 3% cash back and manage your debt strategically,” Herman argues. “But if you can’t manage the debt effectively then that 21% APR will quickly offset any rewards you earn. It makes even less sense if you never bother cashing in on the rewards you earn.”

Herman recommends that anyone who wants to use credit cards needs to take time to develop an effective debt management strategy. The following resources can help you get started:

• Understanding Credit Card APR
• Balancing Credit Card Rewards against Interest Charges
• How Many Credit Cards Should You Have?

The post Do You Ever Redeem Credit Card Rewards? appeared first on Consolidated Credit US.

Research of the Week: Clearing the Down Payment Hurdle

A new survey finds down payments are the number one factor holding most would-be homebuyers back.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

Generating a down payment on a traditional mortgage can be daunting. You need 20% of the purchase price of the home. That means even for a modest $150,000 home you need $30,000.

That may explain the findings of Zillow’s semi-annual Housing Aspirations Report.

The big result

Nationwide, 67.9% of renters say saving for a down payment is the biggest hurdle they must overcome to achieve homeownership.

Most of those surveyed (63%) believe they will own a home one day. One in four believe that will happen within the next 3-5 years. Still, for most, it’s just a matter of generating that large down payment.

The fascinating details

• 66% of those surveyed believe homeownership is still a key part of the American Dream
• 72% believe becoming a homeowner increases your community standing

So, homeownership remains a primary goal for most Americans currently renting. However, the down payment amount holds most renters back from making the jump.

Demographics of down payment woes:

• Women worry more about down payment barriers than men (72.2% vs 62.2%)
• Down payment woes become less of a concern the older you get:
  • Millennials (18-34) – 69.2%
  • Gen X (35-54) – 68.5%
  • Baby Boomers (55+) –64.3%
• High income doesn’t mean you don’t worry about down payments. In fact, you may worry more:
  • Low income (Less than $35,000 per year) – 65.9%
  • Middle income – 70.4%
  • High income (More than $70,000 per year) – 67.3%

Other factors holding renters back from ownership:

• Qualifying for a mortgage – 53.2%
• Existing debt burden – 50%
• Concerns over job security – 38.5%
• Not being ready to settle down – 20.1%
• Not enough homes for sale – 11.2%

Interestingly enough, the cost to maintain a mortgage is often less than the rent in most places. At the end of 2016, the median homeowner spent 15.8% of their household income on mortgage payments. By contrast, the median renter spent 29.9% of their income on rent payments.

What you can do

“In today’s market it’s no longer necessary for the buyer to have the full 20% down to get a good mortgage,” says Maria Gaitan, Housing Director for Consolidated Credit. “FHA loans allow homebuyers to qualify with a down payment as low as 3%.”

So, instead of needing a $30,000 down payment to qualify for a $150,000 mortgage, the homebuyer would only need $4,500. That’s a much more feasible option for most prospective homebuyers.

Just be aware that if you put less than 20% down, your monthly payments may be higher at the start of your loan. Lenders require Private Mortgage Insurance (PMI) on the mortgage until the loan-to-value ratio hits 80%. Basically, you have to pay PMI for a period of time until you cover the full 20% down payment amount.  Still, even with PMI factored in many renters would pay less each month than they pay now in rent.

“There are also valuable down payment assistance programs available throughout the country,” Gaitan continues. “Various state, county and municipal programs may pay a portion of your down payment if you buy a home in that area. This reduces the amount you need to cover out-of-pocket.”

Gaitan encourages renters who lack the funds for a full down payment to reach out to a HUD-approved housing counseling agency. Housing counselors who are certified to give advice in the area where you want to buy know these programs. They can help you find down payment assistance, which could make it easier to clear that hurdle.

For more information, call Consolidated Credit’s HUD-certified housing counseling team at 1-800-435-2261.

The post Clearing the Down Payment Hurdle appeared first on Consolidated Credit US.

Research of the Week: Will You Ever Hit Your Retirement Goals?

Less than half of Americans think they can meet their savings goals before they retire.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

The American Institute of CPAs (AICPA) conducts some really interesting financial surveys each year. We’ve previously reported on their annual Pleasure and Pain Indexes and their Allowance Survey for parents. Now the AICPA conducted a new survey this year all about American’s Confidence in Retirement Savings.

The survey polled over 1,000 adults over age 18.

The big result

Only 46% of non-retired Americans surveyed had confidence they could reach their retirement goals. Of the other 49% who lacked confidence, 29% were “not sure” and 20% said they never would reach their goals.

The fascinating details

Interestingly enough, there is a small percentage of the population that’s sitting pretty. The survey found 5% of respondents already reached their goals. In other words, they could effectively work to save a little more, and then retire early.

The rest are not so lucky. In fact, 42% reported feeling anxiety about reaching their goals:

• 14% of non-retired Americans are “very anxious”
• 29% are “somewhat anxious”

Most of that anxiety stems from specific sources of retirement uncertainty:

• 71% worry about healthcare costs later in life
• 68% are uncertain about the future of healthcare, in general
• 67% wonder if they’ll be able to afford everyday expenses
• 62% fear what will happen to Social Security
• 52% have concerns about the future of tax rates

So, much of this anxiety comes from uncertainty. And a large source of that uncertainty may be rooted in the fact that 70% report they don’t know how much money they need.

What you can do

“The common wisdom is that you need about 75% of your annual salary for each year that you’re retired,” explains April Lewis-Parks, Education Director for Consolidated Credit. “If your household earns $60,000 annually, you would need $45,000 per year during retirement.”

This assumes, of course, that your standard of living will remain the same during retirement. You may need more or less, depending on your specific life goals during retirement. Still, how much money should you have saved?

“There’s an easy milestone goal system that marks savings goals for every 10 years starting at age 35,” Lewis-Parks explains. “By age 35, you should have one times your gross (pre-tax) annual salary saved for retirement. At age 45, this jumps to three times your salary; then 5 times by age 55 and 8 times by age 65 just before you retire.”

If you passed some of these milestones already and haven’t saved yet, there is still time to catch up. Start saving as soon as possible. If debt is in the way, consolidate to lower your payments so you can start a saving strategy now.

“A debt management program can lower your total monthly payments by 30 to 50%,” Lewis-Parks continues. “If you’re paying $1,000 towards your credit cards each month, and then that payment drops to $500, it gives you $500 to put towards retirement. You don’t have to wait to be debt-free before you start to save.”

For a free, confidential debt and budget evaluation with a certified credit counselor, call us at [PHONE_NUMBER] or complete an online application.

The post Will You Ever Hit Your Retirement Goals? appeared first on Consolidated Credit US.

Research of the Week: Financial Service Providers Fail to Serve Effectively

A new survey finds most people don’t feel their financial institutions effectively serve their needs.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

A marketing technology firm named Segmint recently published a survey through CreditUnionTimes.com. They wanted to see if consumers felt their financial institutions served their needs effectively.

The big result

81% of consumers expect their financial institution to provide information that helps them make better financial choices. However, only 28% say their bank or credit union performs that task.

The fascinating details

According to the survey, people want their financial institution to help them reach their financial goals:

• How to effectively pay for college
• Saving for a down payment on a house
• The financial side of engagements and wedding planning
• Planning effectively for retirement

Almost one in four consumers (22%) say they don’t have a good understand of the products their financial institution offers. This number gets even higher with Millennials. Almost one third of Millennials (33%) don’t feel adequately informed.

Part of the disconnect may come from the evolution of how people interact with their bank:

• 66% of survey respondent say they’d rather bank online or through an app than physically visit a branch.
  • 80% of Millennials prefer online and mobile
  • 77% of parents with kids do, too

Another part of the problem may be how financial institutions provide information. Often, pamphlets and webpages explaining services are readily available. However, the consumer has to ask or search the website for it, which means they often miss it.

• 52% consumers would prefer their financial institution to proactively provide this information
  • 62% of Millennials would prefer it this way

What you can do

“Financial institutions often have a wide-range of information about their products to share,” explains Gary Herman, President of Consolidated Credit. “But it’s up to to to ask. If you don’t feel like hunting the details you need down, call your financial institution. You can save a trip to the branch and ask them to send you the information directly.”

Open communication with your bank or credit union may help you find features that save you money. You can also identify customer services that can help you get from A to B on your financial goals.

“You may not be taking full advantage of the accounts that you have,” Herman continues. “Banks and credit unions have relationship managers. It’s their job to build a financial partnership with you. Start by ensuring you have the right checking and savings accounts for your needs. From there, start talking about your goals and how your financial institution can help.”

Here is you can do by talking to your financial service providers:

1. Ways to avoid account maintenance and penalty fees
2. Smart ways to connect the financial products you use for maximum efficiency
3. How to use financing effectively to avoid problems with debt
4. Using cash equivalents to improve your saving strategy

The post Financial Service Providers Fail to Serve Effectively appeared first on Consolidated Credit US.