Credit Card Companies – Why They Are Settling Credit Card Debts

Credit Card Companies Why They Are Settling Credit Card Debts

As the U.S. economy deteriorates and more and more consumers either lose their jobs or their hours are cut, they will no longer have the means to keep up with all of their credit card payments. A consumer at this stage will have to make a decision as to whether or not to put food on the table, pay their mortgage to keep the roof over their head or make their credit card payments.

This has caused credit card companies to rethink their approach to collecting payments or settling thedebt in full for a reduced amount. Credit card companies know that the next meltdown coming is in the credit carddebt arena. So they are now quietly negotiating settlements for a reduced amount of what is owed with consumers, rather than have thedebt charge off and they get nothing.

Some of these same credit card companies are also mortgage lenders and have now learned the concept, that it is better to get something now, than to risk getting nothing in the future. Most credit card companies don't disclose this practice as they fear that they will be flooded with requests from consumers who are experiencing financial difficulties.

According to Moody's, the charge off rate for credit cards for July was 10.52% and is expected to increase to 12% by mid 2010. You will see this rate continue to increase until unemployment rates begin to stabilize or decrease, currently we are around 10% for unemployment, a number that high hasn't been seen in decades and its still climbing.

As the need for settlements increase, banks are trying to keep up with the demand by now training theircustomer service reps to negotiate settlements, rather than escalating the call to a supervisor. Some credit card companies are even getting more proactive and are reaching out to the consumer early, once they realize the consumer is having financial difficulties. The credit card companies know that once someone is unemployed their chances of repayment is next to none, so they want to step up to the plate early in hopes of recovering some of their money.

Now everyone's situation is different, credit card companies are not revealing what the eligibility guidelines are to qualify for a settlement. But one thing for sure is, to qualify for a settlement the consumer needs to be late, but other factors to consider are income, other expenses and payment histories.

POST COMMENT

Eliminate Credit Card Debt - Make Lower Credit Card Payments Each Month Credit Card Debt Elimination - Reduce Monthly Credit Card Debts and Loan Payments Credit Card Debt Settlement - Transparency of Credit Companies Keeps Consumers Aware of Solutions Personal Loans with Bad Credit - Avail Money with No Hassle Debt Relief - What Impacts To Your Credit Score? Debt Consolidations - Negotiate Lower Monthly Credit Card Debts Unsecured Bad Credit Loans - Viable Options For You No Credit Check Payday Loans - Small Financial Support for Bad Creditors Bad Credit Loans - Grants Money In Spite of Your Bad Financial Rating 5 Suggestions For Discovering Poor Credit Secured Personal Loan Resources Improve Credit - Think Different Save More Money Where Can I Get a Free Credit Score Report? Know Your Options Payday Loans No Verifications - Premeditated Exclusively For Your Credit Record