Negative U.S. Savings Rate, Credit Card Abuse Concern Financial Professionals
February 06, 2007
Americn Debt Control - TASC Release
As Americans across the board spend more than they earn and pile up debt, financial professionals say those who misuse credit cards will pay stiff penalties and perhaps face financial ruin. The Association of Settlement Companies offers sound advice to consumers in financial distress.
Fort Worth, Tex., Feb. 8, 2007 – The US Commerce Department last week said the rate of savings in the United States now stands at negative one percent. Translation: Americans, on the whole, are spending more than they are making, in spite of a robust economy and near-record-low unemployment.
Profit-taking from investment gains accounts for some of the red ink, as people have harvested earnings instead of reinvesting them. But a significant factor in the mix is rising credit card debt. That worries some financial professionals, who say a day of reckoning will come for many living on the edge.
“Without a doubt, the biggest cause of consumer debt problems is credit cards,” Zack Anderson, president of American Debt Control, said. “Many credit cards that arrive at our homes uninvited are as welcome as Trojan horses. They may seem like a gift, but many have extremely high interest rates and stiff penalties that can make it nearly impossible for unwary consumers to pay them off.”
For those who become mired in serious financial difficulties, bankruptcy historically has provided an effective, if problematic, way out. But a more strict federal bankruptcy law that went into effect last year has eliminated this option for many.
Now, debt settlement is rapidly gaining popularity with consumers. With this approach, third-party companies negotiate lower settlements with creditors, consolidate loans and reduce monthly payments. But the emerging debt settlement industry has experienced growing pains, including broken promises to consumers and poor customer service by some companies.
Anderson says the situation is improving rapidly and the disreputable companies are being driven out, thanks to strict standards set in place by The Association of Settlement Companies, TASC. TASC is raising the bar for settlement companies while helping consumers learn how to select a good company to represent them.
Some of TASC’s basic guidelines for selecting a company include:
- Company credentials – does the company hold itself accountable to industry standards maintained through an industry accreditation process?
- Bonding and insurance – before giving sensitive financial information, be certain the company is bonded and insured against identity and financial theft.
- Holding accounts – consumers should always maintain control of their own money through a federally insured bank. Responsible debt settlement companies will not offer to hold money for clients.
- Contracts – you will be asked to sign a contract. Make certain the contract spells out all terms and costs in specific, easy-to-read language.
- Cost – the total cost should never be more than the client’s total outstanding debt, including the fee to be paid to the settlement company. A typical result might be a 50 percent reduction in debt, plus a 15 percent fee to the settlement company, for a net reduction of 35 percent.
- Customer service – the process normally takes two-to-four years to complete, and it will include some trying times, such as calls from aggressive creditors. Find out how the company will represent you in such situations.
- Professional affiliations – many companies work nationwide, but check to see that they are affiliated with professional organizations, such as the Better Business Bureau or the chamber of commerce, in the communities where they are based.
- Consumer education – debt settlement is an ongoing process that involves learning how to become debt-free and stay that way. Better settlement companies offer financial education as part of their services so clients can get out of debt and stay debt-free.
About American Debt Control
American Debt Control, LLC, is a full-service debt settlement company with more than 10 years of experience helping financially distressed people become debt-free and regain control of their lives. Our knowledge and solid relationships with banking and collection institutions nationwide help our clients reach favorable settlements, become debt-free and stay that way, without the lasting stigma of bankruptcy. For more information, call American Debt Control toll-free at 1-866-861-8894, or visit our Website, http://www.americandebtcontrol.com.
Contact
David Thompson, Vice President of Operations
American Debt Control, LLC
davidt@americandebtcontrol.com
866-861-8894
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