Credit Card Debt Relief

The average amount of credit card debt that consumers carry has dropped again, according to the most recent quarterly report. This decrease marks the fifth quarter in a row that the average balance has dropped.

The credit card balance of the average American consumer has dropped from $5,165 to $4,951 in the most recent quarter. This equates to a 4% decrease in the average credit card balance.

The recent economic downturn has played a large role in the drop in credit card debt. A poor economy causes consumers to lose confidence in their market and the ability to pay off their debt in the future

Consumers are playing things safe financially, and taking less financial risk. And credit card debt is a major risk if for a consumer who is not sure if they will have a job a year from now.

This is causing consumers to put less debt on their credit cards, as well as try as hard as they can to pay the debt off.

Lower debt levels is good news for consumers. With less credit card debt, a consumers debt ratio drops, making it easier for them to qualify for the more important type of credit: a loan that could be used to purchase a house or car.

Photo credit: Brett L / Flickr

Gas Prices

Gasoline prices have fallen nationwide as the Labor Day weekend approaches. The average price for gasoline in the U.S. has fallen to roughly $2.68 per gallon, a six-cent decrease from last month’s prices.

According to the Energy Information Administration from the Energy Department, consumers from California will be paying the most, with an average price just under $3.10 per gallon. On the other hand, those in the Gulf Coast will be paying the least, with prices as low as $2.53 per gallon.

The administration says that prices in major cities will vary, with prices as high as $3.12 per gallon in San Francisco and as low as $2.62 per gallon in Denver.

Phil Flynn, an analyst with PFGBest, says that a significant fall in the prices of wholesale gasoline is the cause of the lower prices for consumers. The lowered prices are also a result of the end of summer, with less people hitting the roads and the water with their cars, RVs and boats.

Many experts think that prices will remain falling throughout the weekend and the month of September. Flynn says that once the Labor Day weekend has passed, the summer driving season will be “basically over”, and there will be less demand for gasoline.

Oil prices are also falling as spending on oil by consumers is increasing. Nevertheless, some have expressed concern that consumers will be buying less in the remainder of the year.

Photo credit: futureatlas.com

HP Stock Buyback

Two of the major computer giants: Dell and HP, are currently fighting to acquire 3 PAR Inc., who specializes in data storage. Their competition has led to an intense bidding war, and the most recent bid, placed by HP, exceeds $2 Billion.

HP’s stock buyback expansion is not directly related to their current bid war over the 3 PAR company. However, they are expanding stock buybacks as a way to increase the confidence of their investors.

A boost in investor confidence is sorely needed by HP after their CEO Mark Hurd resigned in early August due to a scandal in his personal life. HP is hoping that this stock buyback increase can provide that spike in confidence.

Additionally, HP’s future earnings are looking up as well. Their projected earnings for 2011 are $5.05 a share, while the numbers for 2012 are up to $5.57 a share. This is a slight increase over the past predictions.

The buyback program is intended to prevent the market from being flooded with excess amount of HP stocks. If there are too many HP stocks available, demand for the stock falls, and thus so would the value.

Photo credit: DeclanTM / Flickr

S&P

Standard & Poor’s (S&P) is now set to serve U.S.-based companies employed in consumer lending and financing with the S&P Consumer Leveraged Finance Index. Recognized as the world’s foremost index provider, S&P has now added this index to its group of indices that provide solutions to investors’ needs.

The recently-launched S&P Consumer Leveraged Finance Index targets a growing number of companies in the U.S. that are involved with direct consumer relations. This kind of finance index is specifically useful in supplying liquid exposure to the U.S.’s prevalent companies that operate with the U.S. stock exchanges.

As Aniket Ullal, Senior Director of S&P Indices puts it, “The S&P Consumer Leveraged Finance Index is designed to serve as both a relative benchmark for this important segment of the U.S. market, as well as the underlying for index linked investment instruments.”

To qualify as part of the S&P Consumer Leveraged Finance Index, a company must belong to the Mortgage REIT classification (according to the Global Industry Classification Standard) or be a member of any of the two S&P affiliates—the S&P Total Market Index or the S&P ADR Index.

By utilizing the modified market capitalization-weighted index, the S&P Consumer Leveraged Finance Index is designed to track the performance of consumer companies engaged in regional banking, mortgage financing, data processing and finance in the U.S.

Home Loan Refinance

Home loan refinance applications are coming in like never before.

Interest rates for fixed rate mortgages have been falling lately, and the trend has continued according to last week’s data. The Mortgage Bankers Association reports that in the past week the average interest rate for 30 year mortgages had decreased by 0.05%, from 4.60% to 4.55%.

The data is similar for the interest rates for 15 year mortgages, which have decreased by 0.08%, from 3.99% to 3.91%. These interest rates are some of the lowest interest rates in the past twenty years.

These low interest rates are spurring more activity in the mortgage industry, and more specifically in refinancing. The Mortgage Bankers Association has reported an unusually high volume of home loan refinance applications.

Refinancing is responsible for the bulk of the increases in mortgage loan applications. The current Refinance Index is at its highest peak since May 1, 2009.

The correlation between lower interest rates and an increase in loan and refinancing applications is not by chance. Consumers are reacting to the lower interest rates and are beginning to give refinancing their mortgage a serious consideration. For most consumers, the rates are now so low that there is a high incentive for them to refinance their mortgage.

Photo credit: The Truth About Mortgage