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service ratio in Q3 2016 was only 10 percent, well below
the 13.2 percent in 2007 leading up to the recession."

If last year was any indicator of an increased appetite
for spending, U.S. consumers racked up $21.9 billion
in credit card debt in the third quarter of 2016, the
seventh largest third-quarter debt accumulation in 30
years, and were expected to finish the year with an $80
billion net increase in credit card debt, according to
WalletHub's 2016 Credit Card Debt Study.

Michael Rittler, Head of Retail Card Services at TD
Bank, whose department manages promotional
financing programs for customers through retail
clients, said retailers are optimistic that purchase
volumes will increase this year. A TD Bank survey of
furniture retailers found that 80 percent expect same-
store purchasing volume to rise in 2017.

For large ticket purchases, such as jewelry and
furniture, he said the journey and first impression of a
store often begins online and ends in the store. "From
a credit perspective, as an extension of their brand this
represents a key opportunity to pre-qualify customers
online, so that when they're in the store it can be a
seamless transaction in the store," Rittler noted.

This financing model has also become popular for
smaller ticket purchases, where consumers elect
to spread out payments. "Areas where people are
accustomed to a monthly payment type scenario, like
cell phones, where technology quickly changes and
upgrades are needed," he said. "In that case, it's really
not something that becomes an enabler of the purchase,
but a convenience, because it syncs up with how they
think of the product."

In either case, financing simplifies the transaction for
the consumer and produces the desired end result in
that more products can be sold and existing customers
retained as product upgrades become available.

To sustain consumer spending, monitoring
creditworthiness and confidence are key. Recent
developments in the auto industry point to an
alarming trend. With auto dealers posting three years
of record breaking sales, the Federal Reserve estimated
that 6 million sub-prime borrowers were at least 90
day delinquent on their auto loans. Over-extended
consumers could be problematic in certain sectors of
the economy.

The housing market bubble burst of 2006 serves as a
reminder that too much optimism is never advisable.
But sound decisions based on solid research can go
a long way toward ensuring a steady income in 2017
whether the economy is steady or rocky.

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