MONEY WATCH.

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Author: Lim, Paul J.

Are higher prices at the pump crimping Americans' lifestyles? It's hard to say, partly because so many households use plastic to make basic purchases. But a new report indicates that the one-two punch of higher gas prices and rising interest rates is starting to have an impact on credit card payments. In the second quarter, a record 4.81 percent of credit card accounts were 30 days or more past due. "Gas prices are taking huge chunks out of wallets, leaving some individuals with little left to meet their financial obligations," says James Chessen, chief economist for the American Bankers Association. What worries Mark Zandi, chief economist of Economy.com, is that these card delinquencies shot higher well before gas prices set new records in September. "That indicates that there was a good amount of financial stress developing even before the surge in prices in the wake of the hurricanes," he says. "That would suggest that there could be even greater credit problems in the coming quarters."

At least someone in the family is getting a raise. Although American workers have enjoyed less than a 2 percent increase in their weekly paychecks over the past year, teenagers enjoyed a hefty 6 percent raise. Teens ages 13 to 17 are now earning $29.20 per week through allowances, gifts, and other forms of income, according to a new study by the market research firm GfK NOP. That's up from $27.60 last year and $25.20 in 2003. Keep in mind that on top of this sizable pay hike, notes Cary Silvers, GfK NOP's vice president for consumer trends, parents are supplementing their children's income in the form of iPods, cellphones, and other gifts. The question you should perhaps be asking yourself: Is Junior justifying his higher salary?

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By Paul J. Lim