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While defaults fall, debt consolidation may help pay off credit cards
By Oscar Monfort on Jul 28th, 2010
A recent report shows that credit card debt defaults have declined for the third month in a row.
According to Moody's Investors Services, June posted a charge off rate of 10.28 percent of all accounts. That's down 0.43 percentage points from what was seen in April.
Defaults are also lower than what was seen in June of last year, when 10.76 percent of accounts were charged off.
The unemployment rate will have an impact on default and delinquency rates, as people without work may find it difficult to pay off debt. Moody's said it expects the unemployment rate to flatten out at 10 percent during the second half of 2010.
"This forecast, combined with the steady improvement in the delinquency rate throughout the spring, leads us to believe that charge-offs have peaked and will gradually decline in the final two quarters of the year," said Jeffrey Hibbs, an analyst with Moody's.
Consumers who are having trouble paying off their credit cards may consider an option like debt consolidation. Doing so may lead to lower interest rates.
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