Financial Counselors Urge Debt-Saddled Public to Exercise Caution in this Credit Crisis

Apr 01, 2008 by Elizabeth Ziegler

(KCPW News) In a financial crisis, the pitch from politicians is that we should keep spending to keep the economy afloat. But is that the wisest course of action for consumers? AAA Fair Credit Foundation President Preston Cochrane says not necessarily.

"Pay down debt, and do that as quickly as you can," Cochrane says. "Because what's happening with the credit crisis is interest rates are going up and so you are not really doing yourself a favor if you are using your credit cards and your interest rates are going up it is going to be very difficult to get out from under that and pay your balance in full."

Cochrane says this is the same advice his Salt Lake-based agency's financial counselors give to people every day. It will save consumers money in the long run, if they can avoid the high interest payments. He says this will also help them qualify for future car and home loans, which have become more difficult to get. Lenders are being more choosey about issuing loans, and those with a lot of consumer debt are less likely now to qualify for loans than they have been in the past.

"I just think as the lending guidelines change and the credit atmosphere changes, we as consumers just need to be taking note of how much we are using our credit and available credit," Cochrane says.

Cochrane says consumers should analyze their individual debt load before tapping into credit. He says only those who have good credit and the income to pay down their balance should be using credit cards. For a link to Cochrane's non-profit agency.

Email to a friendPosted in KCPW Newsroom. Copyright 2008 KCPW