While consumer confidence in November increased to its highest levels – 107.1 from forecast of 101.5 – since July 2007. This has spurred an increased demand for credit cards, and the majority of new accounts are from subprime borrowers who have a credit score of 660 or less. At the same time, there has been an uptick in credit card delinquencies.
As the job market continues to improve and unemployment rates decline (4.6%), consumer confidence is rising – leading lenders to extend more credit and increasing the demand for credit cards. Although increased consumer spending indicates a strong economy, many consumers are struggling when it comes to paying off their debt.
American Consumer Credit Counseling (ACCC) cautions there are a large percentage of consumers with relatively poor credit scores. It is more important than ever that consumers create and stick to a budget to keep their debt at a manageable level.
The ACCC notes consumers should know about debt management counseling services and how these programs help individuals develop a management plan to eliminate debt:
1. Make the process more manageable – Consumers can combine all their creditor payments into one monthly amount to be disbursed directly to the creditors on the consumer’s behalf.
2. Increase access to counseling services – members of debt management counseling services have access to up-to-date information 24 hours a day, seven days a week.
3. Lower payments – The services help consumers work with their creditors to get lower monthly payments and reduced interest charges.
4. Get out of debt faster – Counselors work with consumers to design a program that will suit each consumer’s specific financial needs. The length of the program is determined by the total amount of debt and specific creditors.