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August 25th, 2010

Falling consumer credit card debt: Are we learning a lesson?

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This week’s news brings interesting implications for consumer finances. First we learned that existing home prices have slumped to record lows, which has the media buzzing about the “new role” of owning a home. The new role is that our homes no longer function as limitless ATM machines. No more buying electronics, recreational vehicles, jewelry, and designer wardrobes with home equity loans and lines of credit. Under these circumstances, it appears that consumers would again turn to credit cards for the instant gratification of discretionary purchases. No way. Americans may finally be getting the message about the high cost and consequences of carrying high credit card debt.

Federal Reserve: Credit card debt decreases for 21st consecutive month

The Federal Reserve reports that credit card debt levels are continuing to fall, and that average credit card debt for individuals has fallen to $4951 as of June 30. This is the first time since 2002 that average consumer credit card debt has fallen below $5000. This is a trend worth continuing. Although recent legislation helps consumers in some ways by limiting credit card fees and requiring credit cards to notify customers in advance of arbitrary rate increases, many credit card companies are raising interest rates to recoup the income they’re losing due to caps on penalty fees. High cost debt is a particularly heavy burden during times of economic uncertainty.

Debt consolidation and credit counseling services provide help, support

Debt consolidation through a home equity loan or personal debt consolidation loan is often a first step to gaining control of credit card debt. What if you can’t borrow against your home or can’t qualify for debt consolidation loans? In situations where you can’t qualify for debt consolidation loans, a consumer credit counseling service may be able to help. These agencies act as a credit card debt consolidation service without loaning money. Instead, consumer credit counseling services offer debt consolidation and additional benefits:

  • Reviewing your finances and developing a cash based budget
  • Designing an affordable credit card debt repayment plan
  • Negotiating with creditors to lower or eliminate finance charges and fees (based on need)
  • Communicating with creditors on your behalf, which usually stops harassing calls to you, your home, and your work
  • Administering your debt repayment plan for a low monthly fee, often based on ability to pay
  • Avoiding bankruptcy through financial counseling and affordable debt repayment

Don’t put off taking “charge” of your credit card debt a moment longer. Contact a credit counseling service for debt help today.

Post written by Karen Lawson

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  • Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score. Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management. He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others. He can be contacted by visiting his personal site, GoodCreditLiving.com.

  • Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to rein in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.

  • Karen Lawson is a freelance writer with more than 15 years of experience working in mortgage banking and loan servicing. She holds BA and MA degrees in English from the University of Nevada, Reno. She enjoys writing informative articles about debt management and personal finance.

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