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Some may consider debt consolidation as credit card defaults increase
By Sam Craine on May 20th, 2010
Throughout the recession, some consumers have had difficulty paying off their credit card debt. That trend continued through April, according to a recent report.
The S&P/Experian Consumer Credit Default Indices showed that defaults on credit cards increased from 8.9 percent in March to 9.1 percent in April. Furthermore, defaults were higher than in last April, which saw a rate of 7.7 percent.
"With attention focused on consumer spending and little hope for a fast rebound in housing, the bank card series may raise concerns for many consumer related businesses as well as for consumer-oriented lending institutions," said David Blitzer, managing director of the S&P Index Committee.
While defaults on credit cards increased, the report showed they declined for mortgages and auto loans. For example, the failure rate on first mortgages dropped to 3.7 percent in April.
Still, the index shows some consumers are still having problems dealing with their bills. One option they may consider when facing this situation is debt consolidation, which might help by providing a loan that has a lower interest rate than existing credit card balances.
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