Late Credit Card Payments, High Gas Prices Lead to Payday Advance Use
By J.J. CameronPayday Loan Writer
Why would you consider a faxless payday loan? Because you've fallen behind on credit card payments, perhaps.
The American Bankers Association, in its quarterly survey of consumer loans, reported Wednesday that the percentage of credit card payments 30 or more days past due increased to 4.41 percent in the April-to-June quarter, up slightly from 4.40 percent during the January-March period.
"High gas prices and Federal Reserve interest-rate hikes have left consumers with less money in their pockets," said James Chessen, the association's chief economist, in explaining the increase in late payments in the second quarter.
This, of course, is what makes a payday advance so appealing: you can receive cash in your pocket quickly.
Since earlier in the year, gasoline and other energy prices have dropped and the Fed has halted its rate-raising campaign. The central bank last week decided for the second straight meeting to hold rates steady - a move that gives borrowers some more breathing room.
"The financial squeeze may ease a bit in the third quarter as the Fed has stopped raising rates and prices at the pump are down more than 17 percent since the end of June," Chessen said.
The survey is based on a poll of banks and did not specifically mention the use of no faxing payday loans.
The survey also showed that the delinquency rate on a composite of other types of consumer loans, including auto and certain home equity loans, climbed to 1.96 percent in the second quarter, from 1.94 percent in the first quarter.
The cooling of the once-hot housing market, meanwhile, has important implications on consumers and the overall economy, Chessen said.
Consumers who watched their homes rise rapidly in value over the last several years were inclined to spend and borrow against their homes - treating them like ATMs - to support their spending ways. But home prices have since lost altitude.
This, again, leaves the door open for people to consider cash advance payday loan use.
The National Association of Realtors reported Monday that the annual price of existing homes declined in August for the first time in more than a decade.
"Up until now, rising home values have increased wealth, been a source of liquidity for borrowers and allowed consumers to spend out of savings," Chessen said. "It's a different world now, and consumers will need to be more careful in managing their finances."
