After the financial crisis, many Americans began to struggle with mortgage and credit card debt, which led to a hike in the national credit default rate.
According to the Standards & Poor’s/Experian Consumer Credit Default Indices, the national default rate declined in February to 1.55 percent, down from 1.63 percent in January.
The first mortgage rate dropped from 1.58 percent to 1.48 percent, while the bank card default rate fell slightly to 3.37 percent.
However, not all areas saw declines, as the second mortgage and auto loan default rates increased to 0.71 percent and 1.11 percent, respectively.
“Consumer credit quality remains healthy,” said David Blitzer, managing director and chairman of the index committee for S & P Dow Jones Indices. “The first mortgage and bank card default rates moved down, the second mortgage and auto loans were marginally up in February. All loan types remain below their respective levels a year ago.
Despite the drop in the national credit default rate, many people still struggle with debt on a daily basis. People who find themselves in these situations can take numerous steps to get out debt.
1. Consolidate – Consumers who find themselves with a significant amount of debt could benefit from consolidating. This step could potentially help them get a better interest rate, which might allow them to save money on interest. Additionally, consolidating makes it much easier to pay down debt, as there is only one payment each month.
2. Cut your credit cards – People who are struggling with credit card debt could benefit greatly from cutting their credit cards so they don’t use them. With that said, it is important that these accounts aren’t closed, as this could have a negative impact on their credit score.
3. Seek help – Another step people could take when bogged down with debt is to seek help. Credit counseling services can be a great benefit, as these professionals deal with consumers who are in debt on a daily basis. Credit counselors can provide people with a plan to help them get out of debt before it gets out of control.
4. Reduce your interest rates – When someone has a lot of debt, generally, the interest accrued is what is costing them greatly. This problem can be tamed by calling providers and asking for an interest rate reduction. While this isn’t always successful, it doesn’t hurt to ask, as people could save themselves a significant amount of money.