Mounting credit card debt makes it difficult for consumers to make bill payments
Thursday, 10 February 2011 13:00While many consumers are getting a better handle on their credit card debt, some are still having so much financial trouble that they're missing payment on at least one of their major monthly bills, according to the latest statistics from the Consumer Reports Trouble Tracker Index. Overall, 9.7 percent of consumers reported that financial constraints caused them to let at least one important payment fall delinquent in the previous month.
This group of consumers often cited changes to their credit card agreements as one of the primary reasons they could not meet their obligations, the report said. In particular, alterations to interest rates paid on existing credit card debt, penalty rates and fees applied to accounts that had already become delinquent, as well as reduced credit limits contributed to their economic troubles.
However, consumers with lower household incomes - those earning less than $50,000 a year - were affected by these problems at a disproportionate rate, the report said. Of these consumers, 14.1 percent reported they had missed at least one major bill payment in the previous month. Exacerbating their problems is a considerably higher rate of unemployment, where 11.7 percent of this group lost their job during the month, compared to just 6.7 percent of all consumers.
In addition, many consumers faced financial problems related to medical problems, the report said. About 17 percent said that much of their money was siphoned off by medical bills and medication they could not afford, and 9.3 percent lost or saw shortfalls in the healthcare coverage.
These troubles came even as more consumers seemingly have a better handle on dealing with their credit card debt. All of the nation's major credit lenders have reported considerable improvements in both delinquency and charge off rates in recent months. However, some financial experts say this is also a function of many consumers who had previously defaulted can no longer qualify for new lines of credit of any kind, even as lenders once again loosen restrictions.