Consumer credit declines in May.

Consumers across America are slowly paying off their debt, continuing a trend has been exhibited in 18 of the last 20 months.

According to the latest report from the Federal Reserve [Board], the amount of money consumers owe to creditors declined at an annualized rate of 4.5 percent in May. That number equates to a drop of about $9.15 billion in consumer debt. The new national number for total consumer debt is $2.42 trillion. This was the fourth month in a row that consumer credit declined. Read full article…

Report shows that both consumer spending and personal income increased in May

Americans may be slowly improving their financial situation, new data from the U.S. Department of Commerce suggests. According to a report released Monday, consumer spending – a key indicator of economic health – increased by 0.2 percent in May after giving a flat reading in April.

Consumer spending accounts for nearly 70 percent of the economy and is often used to determine the strength of economic recovery. After disappointing results in April, May’s rate suggests that Americans are showing slightly more confidence in both their personal finances and the economy. Read full article…

The New South Wales government is launching a research project into excessive credit card surcharges, which may result in the abolition of some fees.

Consumer advocate group Choice has said taxis and airlines are charging customers up to 10 per cent on transactions, the Daily Telegraph reported.

According to Choice, the cost of processing credit card transactions is closer to one per cent for airlines.

The Reserve Bank (RBA) abolished the “no-surcharge rule” in 2003 to allow merchants to recover the costs of card use.

Read full article…

Concerns about the mounting personal debt problems of ordinary Australians may have been exaggerated, it has been suggested.

Shaun Cornelius, chief executive of Infochoice, told the Australian that the percentage lenders apply to a borrower’s net disposable income to work out how much they will allow in loans can range from 30 per cent for those on lower incomes to 50 per cent for those on higher incomes.

The newspaper argued that if that is the rule of thumb, then “the shock horror element” in reports on the current lending climate could have been overdone.

In addition, Mr Cornelius said that he expected financial institutions to become increasingly prudent and respect the practice of responsible lending.

The news may interest Aussies who wish to compare credit cards and other borrowing facilities.

Meanwhile, Elise Davidson, spokeswoman for the consumer advocate group Choice, recently told News Limited that Australian credit card holders should protect themselves from fraud by using separate products with lower balances when shopping online.