If your credit card statement is this frightening, take advantage of the provisions of the Credit Card Act. (Photo Credit: CC BY/Jason Rogers/Flickr)

In 2009, President Obama signed the Credit Card Act into law. One of the provisions of the law is that credit card companies, in conjunction with the National Foundation for Credit Counseling, must provide resources for consumers who have difficulty with their finances. While they’ve held up their end of the bargain, recent NFCC studies have found that consumers simply aren’t taking advantage, reports Bankrate.

Free credit counseling, fallen by the wayside

Only 150,000 U.S. consumers struggling with credit card debt have accessed the nonprofit help to which banks and the NFCC have access, said NFCC spokeswoman Gail Cunningham. The contact number is toll-free and printed on credit card statements. As credit card debit still weighs heavily on the average, recession-weary American, the lack of initiative is troubling.

“I certainly think one of the reasons for the low response rate from consumers could be attributed to a lack of prominence,” said Cunningham. “Perhaps the number is buried somewhere.”

Within the recesses of public prejudice might be where that number is buried. Experts believe that many consumers who see the toll-free Credit Card Act number on their credit card statement may think it’s yet another “service” from the big, bad credit card company to take their money. However, Cunningham has observed that the number has been absent from some statements, which would be a violation of law.

Credit card debt shrunk in 2010

A study by Credit Karma indicates that from January to December, U.S. consumer credit card debt decreased by 8 percent nationally, to an average of $7,404 per person. Eight states, including California, Colorado, Connecticut, Indiana, Oklahoma, Tennessee and Nevada, showed as much as an 11 percent improvement.Wisconsin made the biggest dent in credit card debt, slashing and burning through the credit jungle for a 31-percent improvement over 2009.

On the other side of the scale, states like Delaware, Iowa, Louisiana, Missouri, Nebraska and New Mexico grew their credit card debt by as much as 6 percent. Mississippi was the biggest loser in the Credit Karma Survey, with 8 percent growth.

Looking for credit card help?

Visit the National Foundation for Credit Counseling website at nfcc.org for the information on non-profits near you that can help. The Federal Reserve’s website also has a free calculator with which you can calculate how much you’ll owe if you only make the minimum monthly payment on your credit card. For your mobile, there’s a useful Android Market app called Personal Financial Calculator. Or, if you are looking to compare overdraft APRs of installment loans and other consumer loan products, check out our “Loan Overdraft Calculator,” linked below.

Sources

Android Market: Personal Financial Calculator

Bankrate.com

Federal Reserve

Loan overdraft calculator

National Foundation for Credit Counseling

Obama signed the Credit Card Act. Are you using its programs?

Are you financially illiterate? (Photo from creativecommons.org)

If you’re like a lot of people today, you may be looking for credit repair services now that the economy seems to be bottoming-out. Statistics show that in 2006 approximately 1.5 million consumers sought assistance in the management of their finances from the National Foundation for Credit Counseling (NFCC). By 2008, the number of customers seeking aid from the nonprofit organization more than doubled to 3.2 million.

Spokeswoman for the NFCC Gail Cunningham said, “One of the most astounding statistics is that people who came to us had six credit cards with unsecured debt totaling 62% of their total household income…To put this into perspective, realize that this debt does not include their house or vehicle payment, but strictly represents credit card debt.”

A startling 244% increase

The NFCC has nearly 3,000 credit counselors who help consumers with household budgets, provide debt counseling, housing counseling, (from purchase planning to foreclosure prevention), and bankruptcy counseling, (both pre-filing counseling and pre-discharge instruction). Cunningham verified that the agency’s largest area of growth was the housing-counseling division, which increased by 244% from 2006 to 2008.

Financial literacy survey

An NFCC survey, entitled the Financial Literacy Survey, provided some startling results. First, nearly one-third of Americans have no savings other than their retirement accounts. Second, during the last recessionary year, another third put no money at all towards their retirement.

Willing to give themselves failing grades

About 28% of those surveyed were unaware of the terms or interest rates of their mortgage loans, car loans, or personal loans.  If that isn’t frightening enough, another 41% were willing to admit to their financial illteracy in general, and gave themselves grades of C, D, or F concerning their knowledge of personal finance.  Cunningham stated, “To me, this strongly suggests that there is considerable room for improvement.”

Bringing financial ignorance into the light

The survey was telling of our society as a whole. One thing the recession brought about was an awareness that we are uninformed and uneducated when it comes to finances. This lack of information leaves people in difficult situations when, for example, credit card companies raise their interest rates. Our financial ignorance was brought into a glaring light as the recession wreaked havoc on the average household.

Education and awareness may bring change

“Having survived the recession,” added Cunningham, “people are now looking for credit repair options. That’s our job—to educate them on what to do and not do in the future. Our goal is to empower our clients, not just to get them out of their current financial situations.”

Education is the key to managing finances and avoiding bigger problems in the future. As a society we need to make a concerted effort to understand our financial positions. We need to know what it costs to live the way we do, and how to live within our means.  We also need to keep stay aware of changes in the finance industry.

Is the end in sight?

People are hoping the end to the recession is at hand. The economy is showing small signs of recovery, and consumers are starting to regroup and assess their finances. With organizations like the NFCC offering credit repair services, people should take advantage of the learning opportunity. Cunningham summed up our need for increased financial awareness when she said:

One of the things we want to convey to our customers is that you don’t know what the future holds. There could be another recession coming or there could still be a heavy burden to carry until the economy returns to normal. Everyone needs to be able to look at their 401(k)s and understand the terms. They need to know how to read their credit card agreements. They need to understand the value of a low-interest rate on loans….this is where the NFCC comes in. Hopefully if we are doing our job right we’ll create a new customer base of financially responsible and educated citizens.

Get professional credit repair help

Speak to a professional today and take proactive steps to repair your credit. For a FREE credit consultation, call 1-877-563-2076.