Originally published May 2 2005
Credit card delinquencies on the rise; unemployment blamed
by Mike Adams, the Health Ranger, NaturalNews Editor
Credit card delinquencies jumped to 4.43 percent of all credit accounts in the last quarter of 2003, according to the American Bankers Association. Delinquent accounts are accounts where the account holder has failed to make the minimum monthly payment. Credit analysts suggest that unemployment among cardholders is a major contributing factor to the rise. Credit repair specialists suggest that periods of unemployment are the worst possible time to start charging more. They recommend setting up a "survival" budget that uses realistic income figures and takes into account periodic expenditures. Contacting creditors to arrange temporary repayment plans and applying for hardship programs can also help people in a credit bind.
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.
Consumer Credit Counseling Services (CCCS), a division of 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.
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.
Don't forget to consider periodic expenses such as auto registration, insurance, or school tuition.
Write to your creditors explaining your situation and request a temporary repayment plan or suspension of payments until you find new employment.
"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."
Consumer Credit Counseling Services (CCCS), a division of Money Management International (MMI), is a non-profit, full-service credit-counseling agency, providing confidential financial guidance, counseling and debt management assistance to consumers for more than 46 years.
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