Credit Card Debt Consolidation Effects – Credit Card Debt Consolidation Options – Plus Fed Report.
By: Sheldon Levene
According to the Federal Reserve Statistical Release on consumer credit dated September 8th, 2009 “consumer credit debt decreased at an annual rate of 10-1/2 percent in July 2009. Revolving credit consisting mostly of credit cards decreased at an annual rate of 8 percent, and non revolving credit decreased at an annual rate of 11-3/4 percent. Americans are decreasing their debt at a record pace”.
Credit Card Debt on the Decline – Credit Card Debt Consolidation Companies Advertising Everywhere.
Credit card debt has continually declined since the 4th quarter of 2008. A contributing factor is the big push being made by debt management firms to get consumers in credit card debt consolidation programs. Credit card debt consolidation companies have been advertising aggressively on the radio, television, and online since before the credit crunch struck in August 2007.
Credit Card Debt Consolidation Options in Today’s Economy.
As unemployment increases and the average American’s credit score decreases home equity loans, cash out refinance home loans, and balance transfer credit cards have become nearly impossible to obtain. As a result Many Americans have turned to credit card debt consolidation programs to reduce their unsecured debts.
Do Credit Card Debt Consolidation Programs Work?
The most popular credit card debt consolidation option over the past 2 years has been Debt Settlement. Consolidation by debt settlement involves a negotiation by a debt management firm with the consumers creditors
to pay back a percentage of the money owed. Monthly payments go into a trust account at a monthly payment
affordable for consumer who’s consolidating their debt. Though temporary, this credt card debt consolidation
option has a negative impact on the credit scores of most people. These programs are advertised to get consumers
debt free in 12-36 months.
Judging by the programs unbelievable popularity and statistics from the Fed showing American’s revolving debt
on a steady decline it could be argued debt settlement is very effective. The debt consolidation industry has
boomed since the mortgage industry crash. Coincidentally the reverse in consumer debt began at the same time.
We’ll follow up on this report with a few examples of actual settlement programs.