Bills.com Warns of Looming Credit Card Crisis
SAN MATEO, CA -- As the fallout from the credit crunch and subprime mortgage meltdown continues, many analysts are keeping a close eye on potential spillover into other segments of the economy, including the credit card industry. This sector has personal finance experts from Bills.com concerned about a new credit crisis, due to record levels of debt by cardholders.
According to the latest Federal Reserve Consumer Credit report, total revolving debt by consumers, which consists primarily of credit cards, is at an all-time high of $947.4 billion.
“Americans are in more debt than ever before,” says Brad Stroh, co-CEO and co-founder of Bills.com, an online personal finance Web site.
“The credit card industry could be the next domino to fall if consumers don’t get a handle on their personal finances soon,” he adds.
At the same time, property values are plummeting nationwide, meaning homeowners no longer have the luxury of tapping into home equity lines of credit. Instead, many now are turning to credit cards and other revolving credit for short-term cash.
This trend concerns Stroh, who warns that individuals facing economic hardship should be managing and eliminating debt, not adding to it.
“Now is the time for consumers to eliminate unnecessary expenses and then use those funds to pay off their credit card balances,” he says. “This will require some sacrifice, but will be worth it in the end.”
A credit card industry meltdown would have serious effects on the broader economy and create hardship for banks and consumers alike, according to Stroh. He points out, however, that the worst-case scenarios can be avoided.
“Prudent steps should be taken by consumers to avoid a credit crunch,” he explains. “Simple things like budgeting and spending plans can make a big difference in averting major economic problems.”
For more information, including tips for credit consumers, visit www.bills.com.
Based in San Mateo, Calif., Bills.com is a free one-stop online portal where consumers can educate themselves about complex personal finance issues and comparison shop for products and services including credit cards, debt relief assistance, insurance, mortgages and other loans. Since 2002, Bills.com has served more than 40,000 customers nationwide while managing more than $1 billion in consumer debt. Bills.com is a division of Freedom Financial Network, LLC, whose co-founders and CEOs, Andrew Housser and Brad Stroh, have been named Northern California finalists in Ernst & Young’s Entrepreneur of the Year Awards.
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