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Consumer efforts lead to drop in defaults, although debt management may aid those still struggling
By Marvin Milner on Jun 16th, 2010
After the recession, trying to get out of debt became a priority for many people, as consumers concentrated on stabilizing their finances.
Recently, the Standard & Poor's/Experian Consumer Credit Default Indices showed that these efforts may be paying off for some, as defaults on credit cards declined in May. Charge offs on balances fell to 8.9 percent during the month, compared to 9.1 percent in April, the first drop seen since December of last year.
Defaults on home loans also declined, with first mortgages seeing the rate drop to 3.4 percent. Debts tied to vehicles also improved on payment, the firms reported.
"The declines reflect continuing efforts by consumers to bring their debt levels down following the financial crisis and recession," said managing director and chairman of the Index Committee David Blitzer.
While some consumers are having an easier time dealing with their loans and credit cards, others might need additional help. One avenue they may consider taking is a debt management plan, which can lead to bills being paid in a shorter period of time.
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