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May 22, 2010

Credit card default rates still rising to record levels

Standard & Poor’s/Experian Consumer Credit Default Index

The Standard & Poor’s/Experian Consumer Credit Default Index indicates that credit card default rates are still rising to record levels.  The default rate is now at 9.41 percent, the highest percentage recorded since the index began in 2004.

On a more positive note, as the unemployment numbers continue to improve, indices will begin to reflect an abatement of defaults.  In fact, some indices are already beginning to show the rate slowing down.  Naturally, there will be a lag in indicators as consumers get back to work and begin paying their bills.

Overall, the fact that default rates are so high does not bode well for a speedy economic recovery, which will be fueled, in large part, by a healthy and confident consumer. 

Read more about the newest statistics as reported by The New York Times.

Comments

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Thanks, Kevin. You know I was thinking the other night that we learned so many subjects when I was in school that I have absolutely no use for in my every day life. Never were we offered courses in how to manage money, credit, etc. I hope you run again for office and that one of your first proposals will be to get financial education in the schools. I wish that when I was in my 20's I knew what I know now...

Carole

Definitely leave it open, and use it about once a quarter so the issuer doesn't close it. Pay it off within the grace period. Finally, keeping it open will ensure that your debt-to-available-credit ratio is low. This is a major factor in your credit score, and you want to maintain a good ratio.

Not a comment, but a question that perhaps someone can answer for me.

I'm in the process of paying off my credit cards and will have everything paid off by early 2011. Once a card is paid off, is it better for me to close it, or leave it open? I'm trying to get my FICO score up higher, and I've heard a lot about income to debt ratio.

Thanks,
Carole

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About Me

Greetings! I’m Kevin D. Johnson, a business owner who has recently assumed the role of consumer advocate and internet activist. Atlanta, Georgia is my home.

My Story

Upon returning from my wonderful honeymoon in Jamaica in October 2008, I received what I thought was an ordinary American Express bill, but to my surprise it was a disappointing letter informing me that my credit line was reduced by about 65% for a highly suspicious and discriminatory reason. Considering my excellent credit score and pristine payment history, it just didn’t make sense. However, what does make sense are the unfair and insidious policies that I have uncovered when asking why. It is time to change them.

Good Morning America tells my story.

The Goal

I created this web site to document and share my challenging journey to change what is wrong, unfair, and unjust in the credit card industry. The ultimate goal of this web site is to inform consumers of ways to stand up for themselves against treacherous business practices and to educate consumers about how to improve their credit. Finally, I hope to encourage a more open dialogue with credit card companies about their policies–good and bad.

Success

I am proud to say that this blog's unyielding demand for change led to an important amendment in the final Credit CARD Act signed by President Obama on May 22, 2009. Despite this major accomplishment, there is still more work to be done.

View video of bill hearing in Maryland

Testifying at a bill hearing in Annapolis, Maryland

Speaking Engagements

In an effort to educate as many people as possible about financial management, especially about how to manage the current credit crisis, I have begun to speak around the country at colleges, universities, corporations, chamber of commerce meetings, congressional hearings, trade organization meetings, etc. Having acquired a wealth of information that will help to empower people and to improve their financial future, I feel that sharing this information is the least I can do to make a positive impact. For information on my availability for speaking opportunities, please send an e-mail to Jennifer Silverman at jennifer@silvermanworldwide.com.


Speaking at a university

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