A recent news story from the Associated Press offers more evidence that consumers are getting better at debt reduction. According to the story, five of the nations top six issuers of credit cards report that delinquent payments are falling. At the same time, five of the top six credit card companies report that charge-offs have become less frequent. A charge-off occurs when credit card companies give up on ever collecting a specific consumer debt. The fact that both charge-offs and payments that are delinquent 30 days or more are on the decline would seem to suggest that U.S. consumers are doing a better job of consolidating debt. But, as is often the case in todays troubled economy, you wont get the whole picture by simply looking at the numbers.
How Much Debt have Consumers Eliminated?
The numbers from the last year suggest that consumers have taken great steps in eliminating their credit card debt. In fact, total consumer credit card debt has fallen every month in 2010.
Consumers who owe a significant amount of money on their credit cards may think about taking steps to consolidate debt rather than face the calls of a collection agency. At least that seems to be the consensus of officials with the Federal Trade Commission. The Wall Street Journal recently reported that the commission is requesting that states change their laws and arbitration rules regarding consumer debt-collection disputes. According to the FTC, the systems in place for handling collection disputes is broken, and weighs far too heavily in favor of creditors, putting too much pressure on debtors. Consumers who work with debt consolidation programs, though, might be fortunate enough to avoid debt-collection disputes entirely.
The Credit Card Accountability Responsibility and Disclosure (CARD) Act simply known as Credit CARD Act of 2009 has opened portals to fair treatment to credit card holders and merchants. The problem is not all people are satisfied with the passed federal law which was passed earlier this year. Though the Act prevented excessive payment of fees on the credit cards, the act did not limit price controls, rate caps, and fee setting. The act does not limit how high interest rates can go. The act does not apply to business or corporate credit cards.