Ohio Department of Aging

• Older Ohioans & Families
• Providers & Professionals
• Advocacy & Legislation

• Home
• Info Center
• About Us

January 2008

One in Five Ohioans Expect to Borrow to Heat Homes This Winter

For as many as 27 million American adults, keeping warm this winter will mean borrowing money. Another 20 million will use credit cards to pay their heating bills, according to a CreditCards.com poll.

According to the Energy Information Administration (EIA), heating costs between October 2007 and March 2008 are expected to spike by nearly 10 percent for the average U.S. household. As heating bills rise, utility companies are offering different payment options for customers, including allowing credit card payments for utility bills.

Personal finance experts say paying for basic living expenses with credit cards makes sense only if you pay off the entire balance each month. They also warn that carrying a revolving balance racks up interest charges that can plunge families deeper into debt. Consumer credit counselors advise homeowners to consider all utility payment options before borrowing to pay the bills, including:

• Federal, state and local government assistance programs, such as the Home Energy Assistance Program (HEAP), that offer grants to low- and moderate-income families to defray heating bill costs.
• Delayed or reduced payment plans, such as Percentage of Income Payment Plan (PIPP), offered by utility companies to help customers budget energy expenses, including averaging payments over the course of the entire year to avoid getting hit with a jaw-dropping winter bill.
• Charitable programs sponsored by many utilities that solicit donations from paying customers to help consumers who are struggling to pay their bills.

Consumers should beware of easy credit options, such as convenience checks and cash advances offered by credit card companies, which carry higher interest rates. "Payday loans," offered by retail lending franchises across the country, are also a source of quick cash for people who borrow against their next paychecks. Researchers have found payday loans can end up costing as much as 300 percent in interest and fees, making them among the most expensive forms of credit.

Table of Contents...