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Consumer Credit Debts Drop by $11.1 Billion--What Gives?

[May 8, 2009.]


The latest report from the Federal Reserve is out, and consumer credit card debt dropped by a record 11.1 billion dollars in March 2009. There's definitely been a lot going on in today's market, so what gives? Well, combine the unwillingness from consumers to spend with the reluctance of today's lender to lend, and you'll quickly find yourself with the largest annual percentage drop in consumer credit since 1990.

Similarly, the most recent reports in February showed an 8.1 billion dollar decline with many consumers seeking credit card debt relief by ditching their credit cards for debit cards. According to most analyst and economist, the resulting decline in credit and consumer spending is really no surprise as job losses continue to persist. On the flip side, credit companies are still struggling with non-performing assets and defaulted debts, so most have been trying to limit their additional risks in the mean time. Not surprisingly, the end result is the sixth decline in consumer credit in the last eight months. So far, revolving consumer debt has now shrunk for two consecutive quarters.

How Are Consumers Getting Out of Debt? And How Can You Join Them?
There are three main routes consumers are taking to reduce their overall debt. The most favorable option is if a consumer begins paying off their existing debt at an increased rate. Unfortunately, with the previously mentioned job losses, many are pressured into the second route and given no choice but to simply cut back on spending. The third contribution to debt reduction is out of many consumers' hands and attributed to the credit companies reluctance to lend out money.

For individuals looking seriously into debt relief, a combination of the first two routes would be the ideal debt elimination strategy. Although easier said than done, there's not many ways around the old fashioned method of spending less and paying back more. If an individual is serious about cutting back on their spending, credit card debt consolidation loans are a great way to get started. Not only are monthly payments simplified, individuals can often reduce their overall rate of interest by consolidating into a single loan.

For existing homeowners with outstanding credit card debt, mortgage rates have become quite attractive lately and have always been substantially less than the average credit card interest rate. Homeowners should look into debt consolidation programs if they believe there is enough home equity in their property.  Home equity loans and mortgages are the most typical debt consolidation loans since the property secured as collateral allows for the most competitive interest rates. For more credit card debt consolidation information, be sure to visit our site's resource for debt consolidation programs.


About Author:

Renee Morgan has been a loan officer for over eighteen years. She is also a freelance writer and guest expert for radio and TV.

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