Credit Card Debt Delinquencies Increase In First Quarter 2009

[Jun 12, 2009.]

 

Cardholders Continue to Struggle With Credit Card Debt
Earlier this month, a recent article of ours pointed out that consumer credit debts had dropped by a record $11.1 billion in March 2009. But the latest report from TransUnion, a credit reporting agency, showed that credit card debt delinquencies increased almost 11% in the first quarter of 2009. Compared to last year's delinquency rate of 1.19%, 2009's first quarter increase now put delinquency rates at 1.32% for consumers. And when compared to the last three months of 2008, delinquency rates jumped 9.1% from the previous quarter.

Why Are Consumers Falling Behind On Their Credit Card Debt?
Although unemployment and foreclosure rates are definite contributors, the recent increase occurs at an interesting point in the year; the months where most consumers receive their tax refund checks. Typically, it is expected that many often use this tax refund to pay down credit card balances and other personal loans. But with consumer spending still at a low, it seems that cardholders are still struggling to get out of debt, even after some receive their tax refunds. Unfortunately, analysts comment that this delinquency rate could be an indication that many borrowers may have used their recent tax refunds to cover their daily living expenses instead.   In addition, the credit card debt delinquencies were highest in Nevada, Florida, and Arizona--states where homeowners have also been struggling with increased foreclosures.

Debt Consolidation Programs Reduce Debt Before It's Too Late
In the case of credit card debts, time is often the worst enemy for individuals burdened with debt. Especially when credit card rates hit double digits, the amount of added interest can make it difficult to chip away at existing balances and avoid delinquency. In response, debt consolidation loans have since been a great alternative for borrowers seeking credit card debt relief. These consolidation loans can simplify multiple accounts into more manageable monthly payments, and also allow access to lower interest rates.

Since individuals struggling to get out of debt will likely be dealing with bad credit as well, it's important to seek help before it's too late. As an example, homeowners often have the greatest advantage because their home serves as significant collateral for these discounted interest rates. However, if borrowers wait until problems become more serious, the tightened credit market has certainly made it more difficult to obtain mortgages and home equity loans with bad credit.

To find a debt consolidation loan specialist in your area, our directory page can be located here. Additionally, these professionals can assist you with free debt consolidation options and other financial aspects such as budgeting and counseling.

 

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.