Originally published October 15 2005
Credit card overdue balances on the rise
by Mike Adams, the Health Ranger, NaturalNews Editor
Following both major recent hurricanes, the record price spikes on oil and other raw materials have created record highs in overdue credit card balances as well.
Surging energy prices, low personal savings and the higher cost of borrowing have combined to produce a record level of overdue credit card bills.
The American Bankers Association reported Wednesday that the percentage of credit card accounts 30 or more days past due climbed to an all-time high of 4.81 percent in the April-to-June period.
The previous high of 4.76 percent came during the first three months of the year, in keeping with a generally steady rise over the past several years.
"The last two quarters have not been pretty," said Jim Chessen, the association's chief economist.
Chessen and other analysts mostly blamed high prices for gasoline and other energy products, but said that low savings and higher borrowing costs also played a role.
When people have less money available money to pay for energy costs or emergencies such as a big car repair, many resort to credit.
That has caused commercial banks' prime lending rate to rise to 6.75 percent, the highest in four years.
Late payments may be bad news for consumers, but credit card companies do not necessarily mind them because late fees are a source of revenue.
"Credit card companies are increasingly addicted to their fees," said Daniel Ray, editor-in-chief at Bankrate.com, an online financial service.
Credit problems due to the loss of a job, sickness or divorce play less of a role, said personal finance expert Susan Tiffany, director of consumer publishing at the Credit Union National Association.
From an economic perspective, the current rise in delinquent credit card payments is not overly worrisome.
But if the trend were to continue for a sustained period, it could spell trouble for the overall economy, said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group.
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