Complain about a product or service

Higher Gas Prices Lead To More Late Credit Payments

By Martin H. Bosworth
ConsumerAffairs.com

September 28, 2005
The skyrocketing gas prices resulting from Hurricanes Katrina and Rita have already begun taking a toll on consumer finances. The American Bankers Association (ABA) reported today that delinquency rates on monthly credit card payments have reached record highs for the second quarter of the year.

According to the ABA's poll, credit card payment delinquencies rose to 4.81 percent of total accounts, up from 4.76 percent in the previous quarter. That was also an increase, from the original figure of 4.03 percent.

James Chessen, the ABA's chief economist, blamed higher gas prices for the increases in delinquency.

"Gas prices are taking huge chunks out of wallets, leaving some individuals with little left to meet their financial obligations," he said.

In addition to tracking credit card loans, the ABA surveyed seven other types of loan categories, including home, auto, and personal. All categories showed increases in delinquency, with the exception of mobile home loan delinquencies, which fell from 4.46 percent to 3.74 percent.

Home equity lines of credit (HELOCs), normally posting the lowest rates of delinquency, also rose from 0.40 percent to 0.43 percent.

Gas prices have stayed high even though the damage from Hurricane Rita was less than predicted, leading many consumer groups, state attorney generals, and the FTC to warn against price gouging.

Consumers have even more pain to look forward to this fall, as the mandatory minimum payments on credit card balances are doubling. Though the long-term effect of the higher payments means consumers will get out of debt faster, it also means that consumers will have even less money to set aside for other expenses or savings.

Many victims of Hurricane Katrina and Rita have already run up huge debts on their credit cards as they try to reestablish their lives, and Congress has so far not seen fit to waive or suspend provisions of the new law to offer them relief.

Report Your Experience
If you've had a bad experience -- or a good one -- with a consumer product or service, we'd like to hear about it. All complaints are reviewed by class action attorneys and are considered for publication on our site. Knowledge is power! Help spread the word. File your consumer report now.

Share		Follow us on Twitter.

Back to the top |