Credit card delinquencies at highest point since 2005

Consolidated Credit offers financial warning signs for consumers

The average debt of consumers seeking help from Consolidated Credit has gone from approximately $7,000 in 2007 to an average of $18,000 in 2009. The higher debt comes with a higher minimum payment. With unemployment standing at over 9 percent, many Americans are getting behind on their bills and credit card delinquencies are rising.

People are cash-strapped and have been using credit cards to pay for household goods on a daily basis, according to counselors at Consolidated Credit. This trend will eventually lead to a very risky situation for many consumers. As people continue to struggle they may be unable to keep up with their debt loads. As a result, credit card charge-offs may start to catch up with mortgage charge-offs.

According to Consolidated Credit’s counselors, cardholders continue to pay the minimum payment to keep the credit card open, rather than trying to pay-off their debt. This mind-set can be dangerous because the minimum payment is sometimes less than the interest accrued and the total balance increases.

When a person finds themselves in a financial situation where they can’t pay even the minimum any longer, they stop paying their bills and the credit card accounts fall into delinquencies. A few missed payments can lead to an interest rate increases, and their financial situation only gets worse.

Consolidated Credit urges consumers to seek help if they fear they will fall behind on any debts that they owe. Seeking financial advice from a reputable credit counseling agency can be the difference between consumers crashing and surviving these difficult economic times.

The financial experts at Consolidated Credit suggest consumers ask themselves the following questions:

  • Have you reached or are you close to the limit of your lines of credit?
  • Are you only able to make the minimum payments on your credit cards?
  • Is the size of your new bills a surprise each month?
  • Are you frequently taking cash advances on your credit cards?
  • Are you chronically late paying your bills?
  • Are you borrowing to pay for items you used to pay for with cash?
  • Are you tapping into your savings to pay current bills?
  • Do you put off medical or dental visits because of lack of money?
  • Do you only have savings equal to less than three months of income?
  • Is an increasing percentage of your income going to pay debt?
  • Are you unsure of how much you owe?

If you answered “yes” to any one of these questions, it may be time to reassess your credit use. If you answered “yes” to two or more questions, it”s time to take steps to actively improve your current financial situation. Credit card delinquencies can be prevented if you start changing your habits now.

Consolidated Credit is dedicated to helping Americans understand how to survive the recession and teach the value of long term financial planning to avoid personal financial calamity in the coming years.

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April Lewis-Parks
Director of Education and Public Relations

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