Consumer debt levels fell for the eighth consecutive month in September, according to a report issued by the Federal Reserve. Falling by an estimated annualized rate of 7.2 percent, U.S. consumer debt fell by approximately $14.8 billion. Consumers have reduced debt by about $86.2 billion since September 2008, but this isn’t as commendable as it seems. Included in this figure are debts eliminated through charge-offs by credit card issuers and lending institutions. The Fed estimates the rate of declining consumer debt to be about 10 percent for the third quarter of 2009.
What’s “Up” with Credit Card Rates and Fees?
Credit card companies are responding to recent legislation regulating some of their consumer-unfriendly practices by reducing credit lines, hiking interest rates, and imposing more fees. If you’re tired of traveling on the hamster wheel of credit card debt (you pay and pay and pay, and get nowhere fast), credit card debt consolidation may be an option.
Debt Consolidation and Consumer Credit Counseling
Consumer credit counseling services work as intermediaries between consumers and their creditors to provide affordable debt repayment solutions. If you agree to a repayment plan through credit counseling, you sign an agreement and make one payment to your credit counseling company, which then deducts its service fee and distributes what’s left to your creditors. Paying one bill instead of several helps avoid missed or late payments, and making steady payments helps reduce debt faster than if you continue racing along on the hamster wheel of juggling minimum payments and barely breaking even.
Charge administrative fees according to income and ability to pay
If credit card debt is ruining your credit and your life, get debt help immediately. Credit counseling and debt consolidation solutions may take a few years, but reclaiming your life makes it all worthwhile.
Debt settlement has helped some people wipe out or reduce credit card debt and other bills. A California man told MSN Money that he settled $281,000 of debt for $75,000. But debt settlement isn’t a magic solution and can cause even more financial woes in some situations.
Debt Settlement and Fraud
For every debt settlement program out there than can legitimately help you, there are others looking to rip you off. That’s partly because the debt settlement industry is mostly unregulated. Avoid debt settlement programs that require you to pay fees upfront. Often these firms take the money and are never seen or heard from again. Read the rest of this entry »
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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.