More about the consumer impact what it means for you and your money.
It's Ted Rossman, he's senior industry analyst at Bank Great Ted, great to see you down here on the floor of the New York Stock Exchange.
Hi, good to be here.
Look, there's a lot to talk about today, so let's start with where we finish on markets.
The S&P closing down 1.7%.
What does that mean?
Yeah, people are definitely nervous.
I mean, really, it's the war in Iran that's driving everything these days, relating also to inflation, oil and gas prices.
That's really one of the biggest drivers of not just the markets, but really how consumers are feeling.
And we're seeing really a psychological impact when it comes to higher prices for filling our cars, but potentially other things too.
I mean transporting goods.
This could really apply upward inflation pressure across our lives, which is obviously unwelcome.
OK, so let's.
About where we stand right now when it comes to credit card debt.
I know this is something that you follow very closely at Bankrate.
What is the state of that?
It's really the proverbial tale of two cities.
You know.
On one hand, we have half of cardholders paying in full every month, getting rewards, really generally doing well with things, and then you have the other half carrying very expensive debt, even though the average credit card rate has fallen a little bit, it's still close to 20%, and we do see some distress in terms of rising delinquencies and People really having difficult debt loads.
The average is $6700 according to TransUnion.
So it really is that classic have and have not kind of situation.
Overall, the credit card industry is doing well.
I mean these companies are making a lot of money on interest.
Delinquencies have gone up, but not in a terribly worrisome sense.
It's a little bit of a Goldilocks scenario for issuers, but for the borrower who's carrying interest at 20%, that's a tough spot to be in.
About something positive here, and that's that tax refunds are expected to be bigger this year.
I have nearly filed my taxes.
I'm hoping for a good refund as well.
What's the best way to deploy that strategically in these times?
Paying off credit card debt is actually one of the things that should go towards the top of the list because the average refund this year is about $3600 and that's up about 10% from last year.
This is the largest windfall many households will get all year.
Putting that towards your credit card debt.
Right there knocks out more than half of the average debt load or maybe using it for investing or boosting your emergency fund.
These are all smart uses of that money.
OK, so I see here that 29% of Americans have more debt than savings.
What's behind that statistic?
A lot of that has to do with emergency expenses.
So that's the number one cause of credit card debt medical bills, car repairs, home repairs, kind of the proverbial rainy day.
Second most common reason is to Day to day expenses, just things like gas and groceries outpacing your paycheck.
There's been a real cumulative effect of inflation and higher prices, especially on lower and middle income households.
Yes, you know, it's interesting that the services inflation is making some of those surprise medical bills super sticky, as well as some of the other costs that you just outlined there.
So we finally have mortgage rates that were lower.
Now they're higher.
It's hard to keep track.
What does that mean for the average homebuyer?
Well, that's another consequence of the war in Iran.
That's the biggest reason why rates have jumped lately.
We recently fell below 6% for the first time in 3.5 years, and now we're back to around 6.5%.
It's bad timing because spring is often the busiest home buying season of the year.
I mean, honestly, it's not the best time to buy overall, but for the right well qualified borrower, if you're planning to stick around, some people talk about marry the house, date the rate, you could always refinance later on if.
Have good credit.
If you shop around, you can beat the national average.
Maybe you can get 5.6%, 5.7.
Unfortunately though, 6% is a psychological tipping point.
And if we were to head noticeably below that, that could open up some activity.
But unfortunately we got that head fake where we got there and then we started to go the other way.
Yeah, I know it's been interesting to watch that indeed.
Finally, Ted, we have just about 45 seconds left for anyone who is facing a high credit card rate.
What's the best way to manage that?
Get a 0% balance transfer card.
Some of these deals last as long as 24 months.
That is a tremendous tailwind for your debt payoff efforts.
The US BankShield Visa is a good example.
There are some other cards like the Wells Fargo Reflect, Citi Simplicity.
They have 21 month terms.
Avoid interest for as long as possible.
2 years.
That's a really big tailwind.
Yes, that is a pretty good deal.
All right, Ted Rossman, he's a senior industry analyst at Bankrate.
Ted, thanks so much.
Good to see you.
Yeah, great to see.
