Roy Sperr’s Post

I look forward to reading the State of Consumer Credit Report published by NerdWallet and given the very uncertain economy in the United States today, I read the 2024 edition published online yesterday with extra interest. I have researched, written and posted a plethora of articles on consumer credit due to the fact that it (consumer spending) drive nearly 70% of GDP in the United States. As the saying goes, so goes the American shopper, so goes the economy. My analysis of the 2024 Report confirms my concerns about the significant debt levels owed by many Americans today and the new  credit and debt data reveals many Americans are paying late fees on bills and using credit to cover the costs of necessities. Both of these can’t by any measure be considered positive news. A recent post by Elizabeth Renter online (May 28, 2024) did a great job of summarizing the 2024 data and selected parts are presented below. 1. In the past 12 months, credit cards were among the most commonly used type of credit that we asked about in the survey (66%), but 25% of Americans used buy now, pay later (BNPL), and 10% used a cash advance app. 2. Many Americans use credit cards for necessities such as groceries or bills. Though one-third (33%) of Americans used a credit card to pay for necessities in the past 12 months to accumulate rewards or cash back, 16% used cards for necessities during this period because they didn’t have the money to pay for these expenses outright. Further, 12% anticipate using their credit card for such expenses in the coming 12 months because they won’t have the money to cover them outright. 3. Some Americans carry a credit card balance from month to month, potentially due to a common misconception. More than one-quarter (27%) of Americans generally carry a balance on at least one credit card from month to month, according to the survey. But just 40% of Americans recognize leaving a balance on your card is not better for your credit score than paying it off. 4. Americans will continue to use BNPL for “needs” in coming year. During the past 12 months, 8% of Americans had to use BNPL to pay for necessities, and 8% anticipate having to use the service for those things in the coming 12 months. 5. Many Americans pay late fees as delinquent accounts are on the rise. Well over one-third (37%) of Americans have been charged a late fee in the past 12 months, according to the survey. And in the first quarter of 2024, 3.6% of total debt balances moved into delinquency. The long and short of it is that while most Americans use consumer credit responsibly, a rapidly growing number are in a position to use it to simply survive month the month. Add to that a booming number of BNPL additions and that nearly 40% of Americans paid a late fee in the last 12 months, this is at best a less than desirable snapshot of the overall financial health and acumen of the American consumer today.

U.S. credit cardholders collectively spent $15 billion on late fees in 2022 - officially surpassing pre-pandemic levels again. This will likely change significantly from 2024, however, as the Biden Administration has capped most types of these payments at $8 in a larger effort to reduce so-called junk fees. The Consumer Financial Protection Bureau estimates that the average late fee stood at $32 in the U.S. previously, four times the new limit. According to the watchdog, savings for consumers will amount to $10 billion annually. The new rule says that credit card issuers with more than 1 million accounts have to stick to the $8 limit. Data shows that especially the top 20 issuers had so far charged maximum late fees almost exclusively exceeding $36. Smaller banks had lower fees on average, according to the data, with 80 percent percent of them charging between $21 and $40. Credit unions charged even lower rates, with maximums not exceeding $25 for three quarters of these cooperatives. Late fees constitute the biggest part of credit card fees in the country, with annual and other fees only making up $10 billion opposite a total of $15 billion in late fees paid by U.S. households and businesses in 2022. During the Covid-19 pandemic, U.S. debt making went down while savings went up, causing fewer late fees and less interest incurred through credit cards as Americans were staying home more and spending less. Some issuers also offered waivers for late fees during the pandemic which further reduced their incidence. Late fees have so far made up around one tenth of all credit card interest and fees, which stood at $130 billion in 2022, and they were predominantly paid by those with lower credit scores, poorer Americans and those of color. Another CFPB report shows that despite only making up 12 percent of credit card accounts in 2019, those rated subprime incurred 42 percent of late fee volumes. While interest drove up subprime accounts' balances by 21 percent, late fees added 6 percent for regular subprime and 11 percent for deep subprime accounts. In places with local annual incomes of around $20,000 per adult, annual late fees stood around $30 per account. In areas with $80,000 or more in annual incomes, the average late fee per year was only half that. Likewise, in areas where more than 50 percent of residents identified as Black, average annual late fees exceeded $25 and topped $30 in areas that were 90 percent Black.

Americans should fundamentally change their holiday practices. You know who you are shopping for the vast majority of time. You know their likes/dislikes, hobbies/interests, and needs/wants. Set a budget on new years day for each person. Then shop throughout the year for each person, finding that something they would not get themselves. The earlier the better. And try to avoid the holiday season all together as prices are typically higher, I find that they often start to increase in October so that come black Friday, the sale price is close to the previous pricing. Better still is to use skills and make/craft an individualized gift. Similarly, white elephant gifts, last minute office party gifts, etc... Go to dollar stores or like Five Below, seek out the gender/age neutral gifts, and buy in bulk. Then, wrap and store in a sealed tote. Pick as needed. The few you don't know you are buying for (new romantic partners, new baby, new addition to a family, new friend), keep the same budget and buy as early as possible. No big debt. No massive spending. And gifts that are more appreciated. I have completed my Christmas shopping, including white elephant gifts, in September (later than usual for me as I typically have it done by July). My last minute gift stash I haven't had to fill for 4 years running, and the gifts are just as much of a surprise for me as the person receiving it.

Do you use Cash or Credit?⁠ ⁠ According to a recent NerdWallet post, the average US household has ~ $7k in credit card debt and only ~55% pay their balance off in full!⁠ ⁠ I actually prefer to use credit and very rarely use cash... however, I pay off my balance in full each month so that I am never charged interest.⁠ ⁠ Do you know how your credit card interest is actually calculated?⁠ ⁠ Each credit card has an Annual Percentage Rate or APR, however, credit card interest is charged daily! AND... the interest is charged on your AVERAGE DAILY BALANCE during each billing cycle. ⁠ ⁠ This means that if you carry a balance, each day that you don't pay on your credit cards the credit card companies ⁠ ⁠ 1️⃣ Charge you more interest each day because of compounding interest on a daily basis⁠ 2️⃣ Charge you the interest if you don't pay your balances off in full on your payday⁠ 3️⃣ Reports a higher credit usage to the credit bureaus ⁠ 4️⃣ DRAIN YOUR COINS⁠ ⁠ ⁠Want to learn more about how to get the most out of your credit cards to save money and build credit? ⁠ ⁠ PS. I have a new video about my home purchase process and you don't want to miss some major credit card tips I shared! Link in the comments 👇🏾⁠

Looking for ways to boost your credit? You’re reading the right post! Here are 4 simple hacks to help you do exactly that... Hack 1: Create a budget and stick to it. This will help you control your spending. Hack 2: Track your expenses. Your bank likely has a spending app on it and if not, DM me and I’ll offer recommendations. Hack 3: Pay your bills on time and in full. Being punctual avoids late fees and increases your credit score. Hack 4: Keep your credit card balances as low as possible. Remember, the less you owe, the better your score. Keep in mind, building your credit takes time but it's worth it! 💪 For more info on how to build your credit so you can become mortgage-ready sooner, message me today! 💬 #debtfreejourney #credittips

Whose Money Is It Anyway? — Fishing for Deals — Be careful what you pull in Many shoppers are heading into Black Friday with holiday debt left over from last year As you peruse the aisles on Black Friday, look at the shoppers to your left and to your right: One of you, in all likelihood, still hasn’t paid for the gifts you bought in 2023. American consumers are heading into the holiday shopping season with an alarming amount of debt left over from last year’s holidays, balances lingering on card statements like stale turkey.  In one holiday shopping survey, the personal finance site WalletHub found that 47% of consumers still carry debt from last holiday season.  In another poll, NerdWallet found that 28% of consumers who used cards to buy gifts in 2023 haven’t paid off their balances.  A third survey, from Intuit Credit Karma, found that one-third of consumers are heading into the holidays with at least $5,000 in debt. “Americans are entering the holiday season in the red,” said Emily Childers, consumer financial expert at Credit Karma.  The credit card landscape looks bleak The nation’s credit-card landscape looks bleak. Half of all cardholders are carrying debt from month to month, as of mid-2024, the highest quotient since early 2020.  The nation’s collective card balance is a record $1.17 trillion, LendingTree reports. The average cardholder with debt owes $7,236. Delinquency rates are rising. To make matters worse, credit-card interest rates are higher than ever. The average card rate is 20.42%, Bankrate reports. That’s a hair below the all-time record, 20.79%, set in August. Retail credit cards, popular in the holiday season, carry even higher rates. The average rate on store cards reached 30.45% this year, an all-time high, Bankrate reports. “This is definitely not the holiday season that you want to take on debt,” said Melissa Lambarena, personal finance expert at NerdWallet. — USA Today

💳28% of credit card users are still paying off last year's holiday debt. But that's an improvement Americans tend to overspend during the holiday season. In fact, some borrowers are still paying off debt from last year's purchases. To that point, 28% of shoppers who used credit cards have not paid off the presents they bought for their loved ones last year, according to a holiday spending report by NerdWallet. The site polled more than 1,700 adults in September. However, this is a slight improvement from 2023, when 31% of credit card users had still not paid off their balances from the year before. Growth in credit card balances has also slowed, according to a separate quarterly credit industry insights report from TransUnion released Tuesday. Although overall credit card balances were 6.9% higher at the end of the third quarter compared with a year earlier, that's a significant improvement from the 15% year-over-year jump from Q3 2022 to Q3 2023, TransUnion found. The average balance per consumer now stands at $6,329, rising only 4.8% year over year — compared with an 11.2% increase the year before and 12.4% the year before that. "People are getting comfortable with this post-pandemic life," said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. "As inflation has returned to more normal levels in recent months, it has also meant consumers may be less likely to rely on these credit products to make ends meet." Recent wage gains have also played a role, according to Paul Siegfried, TransUnion's senior vice president and credit card business leader. Lower inflation and higher pay "may be driving consumers toward a financial equilibrium," he said. Learn more via CNBC: https://lnkd.in/dkZvYJqu

Are Americans Managing Better This Year? 🎄💳 As the holiday season kicks off, a #NerdWallet report shows that 28% of credit card users are still paying off last year's holiday debt—a slight improvement from 31% in 2023. With slower credit card balance growth, wage gains, and lower inflation, consumers may be finding their financial footing. This year, 74% of shoppers plan to rely on credit cards for purchases. Experts recommend setting strict budgets, leveraging rewards, and avoiding overspending traps to stay financially healthy during the holidays. #HolidaySpending #PersonalFinance #ConsumerTrends #DebtManagement #CreditCardTips #FinancialPlanning

Money post! The month just changed, so this weekend, I will make our budget. I was just thinking about how tracking our spending in different categories throughout the month and logging it once monthly in a spreadsheet is data collection. Usually, we only talk about data collection at work, but it is useful in our personal lives as well. People generally collect data to inform decisions and ultimately change behavior. If you have no data, you are flying blind and guessing at your choices. Most of us have some data, even if it is disorganized. For example- uh oh! The bank account has $100 in it. I guess I should not eat out today, since my phone bill is usually due this week. We can make relatively educated decisions with this type of limited data, but with organized data, we can do so much better. For example, in 2022, I started tracking our monthly spending on different categories of groceries. The data immediately showed that we were significantly overspending on snacks. Just say we were spending $200 per month on snacks. If we put $200 extra per month toward our home loan, we could pay off our house in 20 years instead of 30, and we’d ultimately save nearly $37,000 in interest. We didn’t know we were going crazy with the snacks until I tracked the data. I took the time to create a spreadsheet and type and categorize every item we bought at the grocery store. The numbers don’t lie. If you’ve never tracked your spending like this before, I encourage you to try it. Start with 3 months. Log every single dollar you spend and categorize it (mortgage, electric, subscriptions, take-out, medical, etc). See what surprises you. See what you are spending a lot of money on that doesn’t align with your values, and move that money towards something that is a personal goal for you. Often, the act of logging your spending will trigger a behavior change before you even analyze it at the end of the month. Why? Because taking any action at all signals that you have decided you are worth the effort. If your life is fine, and you don’t track data, please ignore this post, but if you feel any inkling of nervousness about money, track your data! Decide right now that you deserve security and peace of mind because you are worth it!

Homeowners, check this out! I have a promotion from now until the end of July, when I will select one lucky entrant to win a $100 Amazon gift card. To enter, all you have to do is claim your FREE Homebot account via this link: https://hmbt.co/4YJhRb Homebot is an amazing service that sends homeowner's a monthly digest that is tailored to both your property and equity position. The digest shows your neighborhood activity, home values, and buying trends that give you high-level insight into managing the biggest investment of your life - your home.