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As charge offs increase, consumers may consider debt consolidation to help pay off what they owe
By Edith Barlow on Feb 23rd, 2010
Credit card debt is one reason why consumers may try to get some help, and a recent report shows that defaults on accounts increased in January.
According to Moody's Investors Service, the number of charge offs "rose sharply," increasing to 11.15 percent in January. However, it what may be seen as a positive result, early-stage delinquencies did decline during the month, dropping to 5.96 percent.
William Black, a senior vice president with Moody's, said that the decline in early-stage delinquencies goes against seasonal trends that would normally be seen around that time of year. Furthermore, he said a decline in the number of delinquencies could mean that charge offs numbers could improve by the middle of this year.
Though delinquencies did fall, the rate of payment on credit card principals also declined in January, dropping from 18 to 17.53 percent.
Given that drop, and the fact that defaults increased, a number of consumers may be trying to find a way to pay off outstanding debts. One option they may consider is debt consolidation, which could lower the interest rates people face on their credit card debt obligations.
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