Consumers remain committed to credit cards

According to the December poll hosted on the National Foundation for Credit Counseling (NFCC) website, consumers remain very connected to their credit cards. When asked to rank their 2012 financial resolutions, only six percent of more than 2,300 respondents indicated that decreasing dependence on credit cards was their number one goal.

While that statistic could appear to be a warning sign of future trouble, it’s important to keep in mind that the use of credit is not the problem. It is the misuse of credit that leads to financial distress for many Americans.

Balancing the continuing reliance upon credit, an encouraging statistic from the poll is that the overwhelming majority, 62 percent, selected decreasing debt as their focus for 2012. If consumers are able to decrease their debt load, continuing to use credit responsibly will help them meet the goal of increasing their credit score, which was the top resolution chosen by 24 percent of respondents.

While decreasing debt is always a positive, consumers should not neglect savings, yet that is exactly what respondents appear to be doing. In fact, only eight percent of respondents ranked saving as their most important resolution. Without the security of a well-funded emergency savings account, consumers are living without a financial safety net, as unplanned expenses will occur, usually at the worst possible time.

The NFCC’s poll also revealed some interesting trending from 2010 when the identical question was posed. Showing the largest percentage difference between the years, the 2010 poll noted 69 percent of respondents were most interested in decreasing debt, compared with 62 percent in 2011.

The second largest year-over-year difference involved improving their credit score, with that category posting a six percent increase. In 2010, 18 percent of consumers chose increasing their credit score as their main goal, while in 2011, 24 percent selected that category as most important in the New Year. This increase indicates that consumers understand the relationship between the credit score and obtaining credit, confirming their interest in continuing to have access to credit.

While the survey reflects that consumers recognize the importance of achieving financial wellness, and acknowledge that paying down debt is necessary, the low priority placed on saving for the future is troublesome.

So as you begin the New Year, remember that a savings plan is essential to any good money management system. Savings can be your parachute when periodic living expenses or unexpected emergency expenses push you over the edge of your budget. Additionally, savings can help you reach your future financial goals.

The December poll question and answers are as follows:

My No. 1 financial New Year’s resolution for 2012 is to:

  • Decrease debt: 62 percent (December 2010 poll: 69 percent)
  • Increase savings: 8 percent (December 2010 poll: 7 percent)
  • Improve my credit score: 24 percent (December 2010 poll: 18 percent)
  • Decrease my dependence on credit cards: 6 percent (December 2010 poll: 7 percent)

The NFCC’s December Financial Literacy Opinion Index was conducted via the homepage of the NFCC website (DebtAdvice.org) from Dec. 1 to Dec. 31, 2011, and was answered by 2,319 individuals. Money Management International is a member of the NFCC.

The NFCC is the nation’s largest and longest serving national nonprofit credit counseling organization. NFCC Members annually help over three million consumers through close to 800 community-based offices nationwide.

Jessica Horton is a former copywriter and community manager at MMI.

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  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.