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Debt consolidation may be considered as card defaults increase
By Sam Craine on Apr 26th, 2010
U.S. credit cards saw their highest quarterly rate of default during the first three months of 2010, according to a recent report from Moody's Investors Service.
March of this year saw charge offs at 11.21 percent, while the quarterly rate hit 11.12 percent, the highest the company has seen in more than 20 years of monitoring defaults. However, delinquencies, which could predict future defaults, were dropped to 5.79 percent during the month.
"Moody's expects this first quarter 2010 rate to mark the peak of the quarterly charge-off rate for the current credit cycle, with the monthly charge-off rate peaking either in this month or the next," the company said.
Charge offs are debts companies no longer expect will be repaid, and an increase in them shows some consumers are having a hard time paying off credit card debt.
Rather than run into default, which can lower a credit score, consumers may consider other options to try and pay down what they owe. One route to consider is debt consolidation, which can lower the amount of interest a consumer pays on their credit card.
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