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CNN
04-07-2025
- Automotive
- CNN
America's tariff-driven buying spree leaves households saddled with debt and financially vulnerable
Washington CNN — Linda Wilburn, a 62-year-old retiree in Susanville, California, did not plan to buy a car this year. She originally wanted to save up, build her credit and buy a used car next year — a necessary purchase, she said. But President Donald Trump's tumultuous trade war drove her to buy a car this past April, fearing higher prices if she waited any longer. Now Wilburn has a $607 monthly car payment coming out of her $1,600 Social Security check, which she said is her only source of income. 'Things are so tight right now,' Wilburn told CNN. 'But the car was a necessity because of my oldest son's medical appointments.' As Trump waged a global trade war this past spring, many Americans raced to make major purchases — cars, electronics and furniture — trying to beat any potential price hikes caused by tariffs. That spending spree has left many with new debt and could weigh on consumer spending, which powers the US economy, in the months ahead. Retail sales surged in March as consumers drove up car sales, spurred on by tariffs targeting imported cars and auto parts, which went into effect in April and May, respectively. But those numbers have weakened since then, according to Commerce Department data, declining 0.9% in May in the steepest monthly decline in two years. Meanwhile, US household debt reached $18.2 trillion in the first three months of the year, a record high on data going back to 2004, as delinquencies marched higher, according to data from the Federal Reserve Bank of New York. For families like Wilburn's, the spring's spending spree was a gamble against uncertainty —a bet that may now require years of careful budgeting to manage. 'Once I get everything level again, hopefully it will get easier, but I don't know,' Wilburn said. 'Now we can't really do anything for our enjoyment, like buy bird food for all the birds in the backyard.' Cutting back on spending Americans who are now saddled with new debt may pull back on their purchases. Economists say 'discretionary spending' — purchases that are not necessary for one's survival — is usually first on the chopping block. That includes eating out and traveling for leisure. A Bankrate survey of consumers' plans for discretionary spending showed that 54% of US adults said they expect to spend less on travel, dining out or entertainment this year, up from 49% who said the same last year. In May, retail spending at restaurants and bars fell 0.9%, the Commerce Department said, the first monthly decline since February and the steepest one since February 2023. Annika Wheelock, 28, and her family used a loan and a home equity line of credit to accelerate spending on more than $137,000 in purchases — including a new car, computers, a refrigerator and home repairs – to avoid any sticker shock from Trump's tariffs. With her husband returning to school this fall and their retirement contributions slashed, Wheelock, who works as a nurse, says her family is now living paycheck to paycheck. 'After making all these purchases, we're hunkering down and not planning on spending that much money, like we're not planning on going out and putting money back into the economy anytime soon,' she said. In March, a CreditKarma survey of more than 2,000 US adults showed that 51% of them said they changed their spending behavior in anticipation of Trump's tariffs, with 18% specifically saying the pulled forward major purchases. Feeling financially vulnerable as tariff-induced inflation looms Trump's tariffs are widely expected to eventually weigh on Americans through higher inflation, even those who front-loaded their big-ticket purchases. That means consumers who took part in the spring spending spree are left even more financially vulnerable. Henry Tuason, a 52-year-old school photographer from Los Angeles, said he spent nearly $50,000 earlier this year on a new laptop, television and a $45,000 Hyundai Tucson Hybrid to get ahead of the tariffs' impact. He said he's been on edge these days, worried his family could suddenly deal with an unexpected hardship. 'One day, when I went to go pick (my wife) up from work, people were driving very badly and I told her how picking her up is stressing me out because of this brand new car,' he said. 'She's gone back to taking the bus because to crash it prematurely would be very bad.' And it's not just being prepared for emergencies. If more Americans find themselves without a job or dealing with any financial hardship, that would further trigger a pullback in spending. 'Anytime you lose a job is bad, but it'd be much worse if me or my wife did nowadays, after everything we bought,' Tuason said. The unemployment rate remains at a low 4.2% for the third consecutive month in a row and employers are still demonstrating an appetite to hire. On Tuesday, the Labor Department reported that job openings unexpectedly rose in May to 7.7 million. However, entry-level hiring is down and Trump's chaotic trade war paralyzed some business decision-making. For now, Wall Street and economic policymakers are watching closely whether spending plummets after households stretched themselves to beat Trump's tariffs. 'As the tariffs kick in with price increases finally taking effect, that will be a hit to people's real income, their purchasing power, and because of that, you will see a slowing in consumer spending,' Jay Bryson, Wells Fargo's chief economist, told CNN. 'And that will also be because of that pull-forward in spending.'
CBS News
30-06-2025
- Business
- CBS News
Best debt relief companies, plus advice borrowers need to know now
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. It can take work to find the best debt relief company for your needs, but doing so could also pay off. Getty Images/iStockphoto As of mid-2025, Americans are carrying record levels of consumer debt — and if the rising debt levels weren't concerning enough, they're carrying this debt at a time when interest rates remain high overall. Credit card debt can be particularly problematic now, though, as rates on these short-term borrowing tools are currently hovering near historic highs. With credit card interest charges compounding at today's high rates, many cardholders are finding it difficult to make even the minimum monthly payments. In turn, more borrowers have been looking to debt relief as a way to regain control. Debt relief companies typically offer a range of solutions for your high-rate, unsecured debt, including debt forgiveness, also known as debt settlement. With this type of debt relief, the company's experts try to negotiate with your creditors to settle your debt for less than what you owe. While that has its risks, including potential credit score damage and tax implications, debt settlement can offer a lifeline for people struggling to stay afloat financially. But not all companies are created equal. Some offer unique types of support and strong customer service, while others may come with hidden fees or questionable practices. So, knowing which companies are trustworthy and fully understanding how debt relief works is crucial before signing up. Find out how to start tackling your expensive debt problems now. Best debt relief companies, plus advice borrowers need to know now Here's a look at the top debt relief providers across several different categories to help you find one that aligns with your needs: Best for customer satisfaction: Accredited Debt Relief Accredited stands out for having the strongest customer satisfaction ratings among its peers. Their program includes account setup, budget review and personalized settlement negotiation, and the company boasts an A+ rating with the Better Business Bureau (BBB), as well as a low number of complaints. It also has a high rating on Trustpilot, indicating that customers are, in large part, highly satisfied with the help they've received from this company, and it has widespread availability as it operates in most states. Learn more about Accredited Debt Relief here. Best for legal assistance: Freedom Debt Relief One of the biggest fears people have when entering into a debt settlement program is the prospect of being sued by their creditors. While many debt relief companies offer ancillary legal assistance to help customers deal with creditors, this protection and peace of mind generally comes at a cost on top of the other charges. Freedom Debt Relief is unique, though, in that it offers all customers legal assistance for no additional charge. The company also has a lower minimum threshold than some competitors, requiring only $7,500 of unsecured debt to enroll. Learn more about Freedom Debt Relief here. Best for pricing transparency: DebtBlue The debt relief industry doesn't exactly have a reputation for transparency, which can make it tough to navigate. However, DebtBlue is the exception to that rule, with an informative website that explains both the process and its costs in plain English. The company proactively discloses third-party account fees and provides detailed explanations of all costs involved. DebtBlue also maintains strong ratings on review sites and offers individualized responses to customer complaints. Best for quick debt resolution: New Era Debt Solutions New Era Debt Solutions has a higher debt minimum than many other debt relief companies, but it also has decades of experience helping people settle their unsecured debts for less. The company requires a minimum of $10,000 in debt to enroll, but New Era clients take an average of just under 28 months to complete the debt settlement program, which is significantly faster than the average timeline with many of its competitors. And its fees are about as good as it gets, with a high end of 23%. The company also operates in nearly every state except for Iowa, Maine and Oregon. Find out more about New Era Debt Solutions now. Best for overall value: Pacific Debt Relief Founded in 2002, Pacific Debt Relief is one of the oldest companies on our list, but what sets Pacific it apart is its unique fee structure. Unlike other companies, the fees with Pacific Debt Relief are performance-based and calculated on a percentage of settled debt rather than the original enrolled amount, potentially saving clients money. The company's fees range between 15% to 25% and it requires a minimum of $10,000 in debt, though it may accept clients with as little as $7,500 in some circumstances. Debt relief advice to know now Before you make any decisions on how to deal with your debt, it may help to consider the following: Today's high rates mean you should act quickly. Carrying a credit card balance can quickly become costly at today's rates. If you're falling behind Carrying a credit card balance can quickly become costly at today's rates. If you're It's important to do your homework. Some debt relief companies put you at risk with their predatory practices, so you'll need to vet your options carefully Some debt relief companies put you at risk with their predatory practices, so you'll need to Not all debts will qualify for debt relief. Debt relief programs only address unsecured debts like credit cards and personal loans. Auto loans, mortgages, student loans and tax debts may require specialized solutions or a bankruptcy route Debt relief programs only address unsecured debts like credit cards and personal loans. Auto loans, mortgages, student loans and tax debts may require specialized solutions or There could still be a credit impact. If you're going to pursue debt relief, you should brace for a potential hit to your credit score If you're going to pursue debt relief, you should brace for a potential hit to You could owe taxes on any settled debt. The IRS considers forgiven debt as taxable income The IRS considers forgiven debt It makes sense to consider the alternatives. You may have more options than you think for resolving your debt. For example, if your credit is intact, a debt consolidation loan credit counseling program The bottom line Debt relief can provide significant financial relief to borrowers who are overwhelmed by their unsecured debt, but it's important to do your research and find the right companies to work with. The best debt relief companies offer transparent pricing, strong customer support and proven track records of successful negotiations. You should also consider the possible downsides of pursuing this type of relief. While it can provide significant savings, it won't be the right move for everyone, so make sure you're also weighing the less damaging alternatives, like debt consolidation or credit counseling, before committing to any solution.
Yahoo
26-06-2025
- Business
- Yahoo
An ETF for the Buy Now, Pay Later Market
If an ETF focused on the buy now, pay later market, could investors borrow via PayPal to acquire shares? The answer is probably not. But there is a forthcoming exchange-traded fund, seeking the Securities and Exchange Commission's approval, that would invest in short-term consumer debt issuers. While there are funds on the market with exposure to the likes of PayPal and Affirm, ones concentrated on the BNPL business are hard to find. The VegaShares Buy Now, Pay Later ETF would seek out financial-industry securities based on assessments of issuers' competitive positions, risk management, leverage, and price relative to peers, according to the initial prospectus filed earlier this month. The ETF may have to answer at least two questions, said Todd Sohn, ETF strategist at Strategas. One of which is whether the timing is right: is the launch coming at an advantageous time in the economic cycle? The other, he said, 'is anyone going to want to buy this in bulk, particularly in the competitive ETF space?' READ ALSO: The Rise of the Buffer ETF and RFG's Bluemonte Jumps Into ETFs The BNPL business comes with some baggage and a pretty big stigma. While it makes money, it's hard to argue that it operates in the best interest of consumers. The services have grown in popularity over a decade in the US, particularly among people who are the least financially equipped to borrow, according to a paper last month by economists at the Federal Reserve Bank of Kansas City. 'Although BNPL services may help some consumers manage financial constraints by breaking down purchases into smaller installments and providing access to interest-free credit, the smaller, interest-free installments may also lead some consumers to perceive purchases as more affordable than they really are, increasing the risk of overspending, debt accumulation, and even default,' authors Fumiko Hayashi and Aditi Routh wrote. High percentages of people who have used BNPL services have not fared well, data from a recent Motley Fool study show: Nearly a quarter, 24%, of such borrowers were late on payments last year, up from 18% in 2023. Fifty-eight percent borrowed for purchases they otherwise couldn't afford, and 40% said they regretted using buy now, pay later after understanding the full costs. Paying the Price: Still, it's a market that is drawing investors. Prudential's PGIM unit is buying up as much as $500 million in consumer debt from Affirm over three years, according to a report in The Wall Street Journal. The prospectus for the VegaShares Buy Now, Pay Later ETF did not yet identify the fund's advisor, and the law firm representing it did not comment, citing company policy. Ultimately, the market will determine whether there's room for such an ETF, and a challenge will be getting assets that are sticky, Sohn said. 'Those stocks … seem to come with a stigma. It's almost like preying on unaware consumers.' This post first appeared on The Daily Upside. To receive exclusive news and analysis of the rapidly evolving ETF landscape, built for advisors and capital allocators, subscribe to our free ETF Upside newsletter. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
26-06-2025
- Business
- Bloomberg
Jefferson Capital Rises 27% After Bottom-Priced $150 Million IPO
Jefferson Capital Inc. shares rose as much as 27% in its public debut after the company and some of its backers raised $150 million in an initial public offering. Shares in the buyer of charged-off consumer debt traded at around $18 each as of 11:02 a.m. on Thursday in New York, versus an IPO price of $15 apiece. The company and investors including private equity firm JC Flowers & Co. sold about 10 million shares at the bottom of the marketed range.
Reuters
26-06-2025
- Business
- Reuters
Debt collector Jefferson Capital valued at $1.2 billion in strong Nasdaq debut
June 26 (Reuters) - Shares of Jefferson Capital (JCAP.O), opens new tab rose 26.7% in their Nasdaq debut on Thursday, valuing the consumer debt collector at $1.2 billion. Jefferson's shares opened at $19 apiece, above its offer price of $15 per share. The Minneapolis, Minnesota-based company and some existing investors raised $150 million by selling 10 million shares in the IPO. The U.S. IPO market has recovered in recent weeks after President Donald Trump's shifting trade policies rattled investors and froze new listings earlier this year. Jefferson's debut mirrors the strong first-day performances last week of cancer diagnostic firm Caris Life (CAI.O), opens new tab and Slide Insurance (SLDE.O), opens new tab.
