Latest Financial NewsStay tuned for the financial news from all over the World!

Reports of falling credit card debt can inspire debt burdened consumers to take control of their finances, but these reports do not entirely represent the American consumer’s drive to eliminate debt. Here’s why:

The Motley Fool notes that falling credit card debt levels are influenced by factors other than consumers cutting up credit cards and using cash instead of plastic:

• Credit card companies are slashing credit lines: You can’t charge more than your credit limit.
• Credit card issuers removing bad debt from their active portfolios: When credit card companies identify debt as noncollectable, they charge it off and remove it from their active debt portfolios. This can occur when consumers file bankruptcy or otherwise fail to repay their credit card debt.
• Strategic mortgage default: Some consumers are defaulting on their mortgage payments while keeping their credit card accounts current. The Federal Reserve reports that during the last quarter of 2009, 6.6% of homeowners were delinquent on their mortgage loans, but current on their credit card payments. It can be tempting to walk away from a mortgage that is more than your home is worth, but the end result is foreclosure, which can negatively impact credit scores for several years.

Debt Consolidation, Credit Counseling Services Offer Debt Help

Eliminating credit card debt can be a challenging process that takes months or years. There are no legitimate quick fixes for getting out of debt unless you’re blessed with a sudden financial windfall. Determining who and how much you owe and what it’s costing are the first steps toward finding debt solutions.

Credit Card Debt: Do You Know What it Costs?

Credit card statements are legally required to state the annual percentage rate (APR) of all costs associated with carrying credit card balances. The APR is easy to understand; it expresses finance charges as a percentage of your debt amount. If you owe $5000 on a credit card with an APR of 20%, you’re paying $1000 a year in finance charges. (This is a simplified example because the APR changes as your balance changes.) Learning how much credit card debt costs provides a strong incentive to eliminate your debt.

Finding Debt Help

Making a plan to eliminate debt, track your progress, and maintain your resolve can be difficult; you may find that you need debt help. Contacting debt consolidation and credit counseling programs can help you establish a cash budget and arrange affordable and consistent repayment to creditors. Debt consolidation arrangements with your creditors may include reducing or eliminating interest and other finance charges to achieve an affordable debt repayment solution.

Similar Posts:

• Credit Counseling and Debt Consolidation: Finding Help on Your Credit Card Bills
• Credit card debt consolidation: Is debt consolidation good?
• Debt consolidation and credit counseling services: How they can (and can’t) help
• Lawmaker introduces bill to reduce credit card interest rates
• DIY debt management: Tips for negotiating credit card debt