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January 2013 Archives

Experts predict Americans' credit card debt will increase in 2013

Some Wisconsin families may not be surprised to learn that the Federal Reserve Bank of New York issued a year-end report showing that Americans' credit card debt rose nearly $2 billion in the third quarter, despite the fact that total debt decreased by $74 billion. The primary reduction in overall debt came from a decrease in mortgage balances. However, as Americans are putting more money into paying off their homes, they are running up other debts. In addition to credit card debt, car loans increased by $18 billion, while student loan debt increased by $23 billion. Despite the increase in debt, the American Bankers Association reported that defaults on credit card debt have decreased to an all-time low. However, TransUnion cautions that this decrease may be short-lived, as banks are starting to offer credit cards to higher-risk customers.

Southeast Wisconsin counties show fewer foreclosures in 2012

The housing market shows signs of slowly improving, as foreclosure filings declined for the third year in a row in 2012 in southeastern Wisconsin. According to court documents, filings dropped more than 2 percent from 2011, with about 10,500 foreclosures in seven counties. In some cases, Chapter 13 bankruptcy, which allows for debt reorganization, could have contributed to the decline. Housing sales continue to improve, and prices have remained low as the slow but steady market shows evidence of recovery. Some in the region are optimistic that 2013 will continue on an upward trend and that foreclosures will continue to drop as the economy strengthens.

Responsible credit card use for students

College students are increasing their credit card debt as the average student has about $2,500 in debt. Once students graduate, they struggle to pay back that money. They believe they can easily find a job when they finish school, but that may not be the case. A combination of factors, such as low salaries, costly living expenses and student loans, mean that the repayment of credit card debt can be put on the back burner. Someone who only makes the minimum payments on a $1,000 loan with an 18 percent rate will take more than a decade to pay off the bill. While parents may be tempted to sign for their child to receive a credit card, this can add mounting debt to their own finances.

Authorizing credit card users can avoid debt issues

For savvy credit card users, authorizing a child or spouse to use the card instead of opening their own account can help family members avoid credit card debt in the case of a death or bankruptcy. However, there are also pitfalls to this practice that both the authorized users and the original cardholder should take into consideration.Many credit card companies allow cardholders to open accounts and then authorize users by having the individual issued his or her own card. However, unless the user's credit information is considered in granting the application, the authorized user is generally not liable for the debt incurred on the card. Only the original credit card holder is liable for the balance.

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