Latest news with #Americanhouseholds
CBS News
03-07-2025
- Business
- CBS News
5 mistakes that could make your credit card debt even more expensive now
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. If you want to keep your credit card debt in check, make sure you avoid these costly (but common) missteps. Getty Images Credit card debt is becoming an increasingly heavy burden for American households, with the average cardholder now owing nearly $8,000 across their cards. What makes this situation even more challenging is that the rising cost of living has pushed many people to rely heavily on credit cards for everyday expenses, from groceries to gas to unexpected medical bills. And, they're doing so at a time when credit card interest rates are sitting at an average of nearly 22% — though rates are much higher for many borrowers. As a result, any credit card debt that might have been manageable a few years ago may now cost significantly more. And, what's particularly frustrating is that many people are unknowingly making their credit card debt worse with a few financial habits that seem harmless on the surface. These seemingly innocent missteps can add years to your debt repayment timeline and cost you thousands of extra dollars in interest, so it's important to avoid them if you can. Understanding these common mistakes isn't just about saving money on your credit card debt, though. It's about preventing your debt from spiraling out of control. So what are the common but costly credit card debt mistakes people are making right now? Below, we'll examine five to avoid. Get help with your overwhelming credit card debt now. 5 mistakes that could increase the cost of your credit card debt now Let's explore the most costly mistakes people make with their credit card debt and what you can do to avoid them. Making only minimum payments Falling into the minimum payment trap is one of the most expensive mistakes you can make in terms of your credit card debt. While paying the minimum keeps you in good standing with your card issuer, it barely makes a dent in your actual balance, especially in today's high-rate landscape. After all, credit card companies design minimum payments to keep you in debt as long as possible, maximizing their profit from interest charges. For example, a $5,000 credit card balance with a 22% APR, paying only the minimum of $141.67 per month (which is 1% of the balance plus interest) would take over 23 years to pay off and cost you more than $8,500 in interest alone. But if you were to increase your monthly payment to $200, it would expedite the repayment process, allowing you to pay off your credit card debt in less than three years while saving thousands of dollars in interest charges. Explore the credit card debt relief options available to you today. Ignoring promotional rates and their expiration dates Many people take advantage of 0% APR promotional credit card offers without fully understanding the terms. When these promotional purchase periods end, though — often after 12 to 21 months — the interest rate can jump dramatically, in many cases to 25% or higher. Even worse, some cards apply the new rate retroactively to any charges that you made during the promotional period if you haven't paid off the balance in full. So, always mark your calendar with the promotional rate expiration date and have a payoff plan in place before that deadline arrives. Using credit cards for cash advances Cash advances typically come with immediate fees of 3% to 5% of the amount withdrawn, and they generally carry higher interest rates than regular purchases. Unlike purchases, cash advances start accruing interest immediately, too. There's no grace period. That means a $1,000 cash advance could cost you $50 in fees upfront, plus interest charges that begin accumulating the moment you withdraw the money. This makes cash advances one of the most expensive ways to access credit, but many people rely on this type of borrowing anyway, driving up the cost of their credit card debt. Closing old credit cards without considering the impact When you close a credit card, you lose that available credit limit, which can increase your credit utilization ratio, which is the percentage of available credit you're using. High utilization can hurt your credit score, potentially leading to elevated interest rates on your remaining cards and future credit cards or loans. Closing old cards can also shorten your average account age, another factor that affects your credit score. Before closing any card, then, you may want to consider keeping it open with a small recurring charge to maintain your credit history. Falling behind, even slightly, on payments There has been an increase in late and delinquent payments recently as more cardholders find themselves, and their budgets, stretched thin. Late payments trigger immediate late fees, raising the cost of borrowing, but the real damage comes from penalty APRs that can reach 29.99% (or higher), which kick in when your payment is late by 60 days or more. These elevated rates often apply to your entire balance, not just new charges, and can remain in effect for at least six months of on-time payments. A single late payment can also damage your credit score, making it harder and more expensive to borrow money in the future. The bottom line Even simple credit card debt mistakes can be incredibly costly, especially in today's high-interest environment. But by avoiding these common pitfalls and taking proactive steps to manage your debt, you can save thousands of dollars and get back on solid financial ground. So, make sure to take the time to assess your credit habits and resolve any issues that may be looming. And, you should do so quickly, before small problems become overwhelming financial crises.
CBS News
23-06-2025
- Business
- CBS News
Can you inherit credit card debt? Experts weigh in
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. There are some instances to be aware of in which you could inherit credit card debt. Getty Images/iStockphoto Credit card debt continues to strain household budgets, with the average credit card balance ticking up to $6,618 in the first quarter of 2025, according to Experian. At the same time, the Federal Reserve reports average interest rates on credit cards remain elevated at 21.37% with many card issuers charging rates around 30% or higher. With a high balance and interest rate, even the minimum payment can be hard to make, let alone paying your other bills. Perhaps that's why over 40% of American households are relying on their credit cards just to cover everyday expenses, a recent Civic Science study shows. If you're dealing with a similar debt burden, you may wonder what happens to it after you die or in the event of the death of a spouse or loved one. Specifically, can you inherit someone else's credit card debt? We put these questions to the experts. Below, we'll break down what they had to say. Stuck with high-rate credit card debt? Explore your top debt relief options here. Can you inherit credit card debt when someone dies? "Typically, you won't inherit debt from a loved one unless you're a co-signer on the debt or it's a joint debt, like a joint credit card," says Leslie Tayne, a finance and debt expert and founder of Tayne Law Group in New York City. "Debt is usually paid out by the estate if possible, but if not, then it may not be repaid." According to a recent survey, 55% of Americans expect to leave behind debt when they die, and in most of those cases, they believe it'll be at least $5,000. The deceased person's estate typically settles these debts. If the estate lacks the funds to pay them off, the remaining balance may go unpaid without passing the burden to surviving family members. Don't risk leaving credit card debt to family. Check your credit card debt forgiveness qualifications here. What usually happens to credit card debt after death When someone dies, you don't automatically inherit their debt. But you may not be off the hook either. So, when are you responsible for a spouse or loved one's debt, and when are you not? "The decedent's estate is responsible for paying any credit card debt, typically before any remaining estate assets are passed on to heirs," says Kyle DePaolo, co-founder and principal at DePaolo & May Strategic Wealth in Irvine, California. "If the estate is insolvent (debts exceed assets), the credit card company may write the debt off. Family isn't liable unless legally connected to the debt." That said, there are generally two important exceptions: Joint account holders or co-signers may be fully liable. Spouses in community property states (and domestic partners in some cases) could be responsible if the debt was taken out during the marriage. If you don't fall into one of those categories, you likely aren't responsible for the debt. If you're unsure, speak with an estate attorney to clarify your legal responsibility. Common myths about inheriting credit card debt There are many misconceptions about credit card debt and who's liable for it when someone dies. Misleading information online and from debt collectors only adds to the confusion. "If my parent dies with debt, I'm on the hook," is one of the most common assumptions people make, says DePaolo. "False—unless you co-signed or were a joint account holder." "Another myth I hear is that a creditor can go after retirement savings," says Chris Diodato, founder of WELLth Financial Planning in Palm Beach Gardens, Florida. "Even during life, most IRAs, 401(k)s and 403(b)s are afforded some protection from creditors. I've never seen a case in my career when an IRA or 401(k) account needed to be invaded to pay creditors." While state laws vary, retirement accounts are generally safe from creditors. What if a spouse dies with credit card debt? The first step you should take after the death of someone with credit card debt is to notify the credit card companies and provide them with a copy of the death certificate. Typically, the card issuer will close the account and pause collection efforts once they're notified of the death. While you're at it, contact the credit bureaus to freeze their credit and update the credit report to show the person has died. This helps prevent identity theft or fraudulent activity under their name. If debt collectors call, don't assume you're personally liable. "Talk to an estate attorney before responding to any debt collectors," says DePaolo. "Don't rush into settling anything personally." It's a good idea to head off potential issues by preparing in advance. "Pay close attention to any debt that you co-sign on or are a joint owner on," says Tayne. She also notes that "spouses in community property states, like California, should have a good understanding of what kind of debt their partner has incurred during their marriage to avoid any unpleasant surprises in the event that someone passes away." The bottom line It's hard to make financial decisions while you're grieving, but getting legal counsel can help you avoid future financial headaches. You may even be entitled to benefits you may not know about. For example, you might want to check whether the deceased had any unused credit card rewards. Some issuers allow trustees or spouses to claim them within a limited time. If you're not sure who's legally responsible for a debt, or whether it should be paid from the estate, consult an estate or probate attorney for professional assistance. And if debt collectors are harassing you, remember that the Fair Debt Collection Practices Act protects you from threats, false claims and repeated calls.
Wall Street Journal
21-06-2025
- Automotive
- Wall Street Journal
High Costs Have Ended America's Love Affair With Cars
I think of myself not so much as a car reviewer as an intimacy coordinator. Four out of five American households depend on an automobile to get to work, to get the kids to school, to go wherever. The typical driver spends about an hour a day in the car, says the AAA—more face time than many of us spend with our families. A good relationship starts with a good match. Lately, though, Americans have been losing that car-loving feeling. Actually, they're at the dish-throwing stage. Light-vehicle sales have fallen by about 1.7 million a year since 2016, reflecting the number of younger consumers declining the pleasures of ownership. Millions more remained trapped in toxic relationships with abusive elders. The average age of passenger cars on the road is currently 14.5 years, according to S&P Global's data.
Fast Company
02-06-2025
- Automotive
- Fast Company
The household auto fleet is a money pit
There's a financial crisis hiding in plain sight: the American household vehicle fleet. Families are hemorrhaging money through car payments, insurance, fuel, maintenance, depreciation, parking, and registration. In many cases, this adds up to more than a family's annual savings—or the cost of sending a child to college every four years. Car ownership is nearly universal in the U.S., with 92% of households owning at least one vehicle. About 37% own two cars, and 22% own three or more. In 2023, the average annual cost to own and operate a new vehicle climbed to $12,182. For households with two cars, that's nearly $25,000 per year—a recurring expense that too often escapes scrutiny. Now consider how those vehicles are used. In 2021, more than half of all daily trips in the U.S. were under three miles. Nearly 30% were less than one mile. We're paying a fortune to go nowhere. The rise of remote and hybrid work has amplified the mismatch between cost and use. As of 2023, more than a third of U.S. employees worked remotely full time, with another 41% following hybrid work models. Pew Research Center reported that almost half of remote workers would look for a new job if their employer took this option off the table. Cars are parked roughly 95% of the time, depreciating as they collect pollen and bird droppings. And yet they demand monthly payments, insurance, fuel, and maintenance. The long-distance commute has been the primary reason for every working member of the family needing their own vehicle, but our travel habits have changed. What if owning fewer cars was a sign of more success? A growing number of families are experimenting with a car-lite lifestyle—ditching the second or third car and rediscovering local travel through bikes, transit, or walking. They're not doing it to make a statement. They're doing it to make ends meet—and to take back their time. At the center of this quiet shift: the e-bike. Part appliance and part liberation machine, e-bikes are redefining what a 'vehicle' can be. School drop-offs, grocery runs, commutes, and social visits—trips once assumed to require a car—are increasingly accomplished with battery-assisted pedaling. Terrain and distance fade as barriers. In 2022, more than 1.1 million e-bikes were sold in the U.S., nearly quadruple the number from 2019. E-bikes now account for over 20% of total bicycle sales in the U.S., and they represented 63% of revenue growth in the bike industry between 2019 and 2023. Bikes have become robust enough to handle everything from kid pickups to bulk grocery runs, and more cities are creating rebate programs to accelerate adoption. Replacing a car with an e-bike can save a household $120,000 over a decade—enough to wipe out debt, fund a college account, or boost retirement savings. And as infrastructure improves with more protected lanes, slower streets, and secure parking, the e-bike can graduate from practical to preferable. What if you spent less on movement and more on meaning? What if streets worked as well for bikes as they do for cars? What if getting around town felt like a lifestyle upgrade? For too long, success was measured by how many vehicles fit in your driveway. But those cars aren't status symbols—they're financial sinkholes. Remember, more than half of America's car trips are under a few miles. If you're going broke to go nowhere, the journey needs a new map.
Yahoo
31-05-2025
- Business
- Yahoo
I'm 29 with plenty of cash, a robust 401(k) and own a condo — but I feel left behind and lonely. What now?
Picture this: You own a home, along with $130,000 in cash savings and $40,000 in your 401(k), and you're not even 30 years old yet. On paper, this is a great financial situation. But after years of pinching pennies, turning down dinner invites and putting fun on layaway, was the sacrifice worth it? Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 5 of the easiest ways you can catch up (and fast) Nervous about the stock market in 2025? Find out how you can access this $1B private real estate fund (with as little as $10) Welcome to the emotional hangover of hyper-saving, a side effect of the FIRE (Financial Independence, Retire Early) movement. If this sounds like you, we've got some strategies for how to be fiscally responsible and still enjoy your life. The FIRE movement is a financial movement that is made up of intense saving and budgeting to support an early retirement. Saving 50% to 70% of your income sounds glamorous on paper, and for the ultra-disciplined, it's a path to fast-track financial goals. But when social life takes a back seat to spreadsheet life, the returns may not always be what they seem. According to the Federal Reserve data, as of 2022, the median net worth for American households under 35 years old is just $39,000. So, if you're in your late twenties with six figures saved and real estate in your name, you've already lapped this figure several times over. But while your bank account may be full, what can you do if your social calendar is blank? Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says — and that 'anyone' can do it Once you've nailed the basics, like establishing an emergency fund, bolstering your retirement savings and acquiring some equity, it could be time to rebalance. Financial stability should be your launch pad to life, not the finish line. Here are some ways to reclaim your social life: The 'Yes Month': Say yes (within reason) to social invites for a month. Go to that concert. Grab rooftop drinks. RSVP 'yes' to life. Giving yourself permission to live a little can revitalize your emotional well-being. Create a 'Fun Fund': Set aside a guilt-free allowance for everything you used to say 'no' to, such as weekend getaways, dinners out, shopping or even grabbing a coffee. Book a short trip: Whether it's a road trip or something more exotic, a short, reasonably priced escapade can reset your perspective and your priorities and give you time for self-reflection. Talk to a professional: A financial advisor can help you pivot from survival-mode saving to intentional living. Think of it this way, you take your car in for service regularly, right? So consider these meetings to be a tune-up for your money mindset. You may also want to ask yourself: 'What does 'enough' look like — for me?' This can be used as a baseline for your saving mindset. Defining what's 'enough' — whether it's a certain amount of savings or a paid-off mortgage — can help you figure out how much room you have to enjoy other things while you work toward achieving that goal. Saving aggressively in your 20s is a powerful move. But financial independence isn't just about escaping work; it's about designing a life you actually want to live. If you're sitting on a growing bank account and a shrinking social life, maybe it's time to rebalance the books, not just financially, but emotionally. Here are 5 'must have' items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you? Rich, young Americans are ditching the stormy stock market — here are the alternative assets they're banking on instead Robert Kiyosaki warns of a 'Greater Depression' coming to the US — with millions of Americans going poor. But he says these 2 'easy-money' assets will bring in 'great wealth'. How to get in now This is how American car dealers use the '4-square method' to make big profits off you — and how you can ensure you pay a fair price for all your vehicle costs Like what you read? Join 200,000+ readers and get the best of Moneywise straight to your inbox every week. This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
