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Credit card Delinquencies Cost Consumers
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For more information contact:
Kelly Rote (713) 394-3201 |
Release Date: April 14, 2004 |
The number of consumers who are having trouble making the minimum monthly payments on their credit cards is on the rise. In the last quarter of 2003, credit card delinquencies rose considerably to 4.43 percent of accounts, according to a recent American Bankers Association bulletin. Bank card delinquencies also increased.
Money Management International (MMI) suggests that one possible reason cited for the increase is unemployment. With the average length of unemployment nearing 20 weeks, many consumers are forced to rely on credit cards to bridge the income gap. Furthermore, financial obligations remained above 18 percent of personal income.
“Unfortunately, once late payments are made, a vicious cycle begins,” said Kelly Rote, communications manager for MMI. “A poor credit history, late fees and higher interest rates are just some of the penalties that can significantly compound any debt problem.” CCCS offers these tips for minimizing the damage to your credit.
· Stop charging and overextending yourself. Now is the worst time to accumulate more debt because the interest adds up quickly and your payments will eventually become unaffordable. If you know that the income interruption is only temporary, then a small loan to tide you over may be appropriate.
· Set-up a survival budget. Determine (1) the amount of take-home income you can realistically count on, (2) your set monthly payments such as housing, vehicles, and insurance, and (3) your current variable expenses such as costs for food, utilities, and gasoline. Don’t forget to consider periodic expenses such as auto registration, insurance, or school tuition.
· Contact your creditors. As a general rule, it is better to contact them before they have to contact you. Write to your creditors explaining your situation and request a temporary repayment plan or suspension of payments until you find new employment. Many creditors offer “hardship” programs for people facing temporary set-backs.
· Avoid costly short-term “solutions.” Quick-cash loans may solve an immediate problem, but carry long-term consequences. Bankruptcy is a drastic action and should be considered only as a last resort.
“Finally, if your payments are truly too much to handle, get help,” said Rote. “Enlist the services of a quality credit counseling organization to negotiate a repayment schedule with your creditors. Also research any and all assistance offered by your city of residence, including help from the Veterans Association or the United Way.”
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Money Management International, is a non-profit community service organization that provides confidential financial guidance, counseling and debt management assistance to consumers. MMI helps consumers trim their expenses, develop a workable budget, lower their debt payments and repay debts. Services are available by phone. To visit with an MMI counselor, call toll-free 1-800-762-2271- 24 hours a day, 7 days a week. Spanish speaking counselors are available. Consumers can also learn more by visiting the MMI home page at www.moneymanagement.org.
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