Financial counselors 'overwhelmed'

Val Sherwood has seen it all when it comes to people in financial crisis because of overwhelming credit card debt.

From the college student with $50,000 in credit card bills to the retired senior whose minimum credit card payments exceed his Social Security income, people of all types have come seeking help from Sherwood and the financial counselors at Consumer Credit Counseling Service of the Central Southern Tier, where Sherwood is branch manager. The office is at the Metrocenter, Binghamton.

"I have two full-time counselors," Sherwood said. "Each does seven to eight appointments a day, and we are booked out for 10 days. It's overwhelming."

But starting Feb. 22, new marketing restrictions and other rules will take effect that aim to result in fewer plastic-driven shopping sprees for consumers below the age of 21.

Under the new rules, credit card companies will no longer be able to give out free gifts in exchange for filled-out credit card applications. Card issuers will be required to disclose any marketing contracts they have with colleges. And Americans under the age of 21 will be required to prove they have a source of income to pay off any charges, or will need to get a co-signer before they can get a card.

Consumer advocates say the rules should help bring down credit card debt among students, who by the time they are seniors in college, on average had balances of $4,100 last year, according to a Sallie Mae survey. That's up from $2,900 in 2004.

Most have four or more cards, and only 17 percent said they always pay off their full balances every month, according to Sallie Mae.

"These new rules are long overdue," Sherwood said. "It's going to protect them in the long run from getting in over their head because it happens really quickly."

And it's not just people who are simply spending too much on "wants" versus "needs," she said.

"We are hearing more and more from people of all ages that it's simply the cost of living is increasing so fast," Sherwood said. "They are not getting raises substantial enough to take up that slack. I have elderly folks who are trying to choose between buying food and buying medicine."