Two Thirds of Americans Plan to Cut Back On Credit Card Use This Holiday Season, According to Cambridge Consumer Credit Index

ISLANDIA, NY--(BUSINESS WIRE)--December 7, 2001--66% of Americans plan to use either less credit than a year ago or no credit as they buy holiday gifts, according to the initial release of the Cambridge Consumer Credit Index.

The Index is sponsored by the Debt Relief Clearinghouse, America's premier-debt-management referral service. In a nationwide poll of 1000 adults done by ICR/International Communications Research in the past week, 30% of Americans plan to use less credit than they did a year ago and 36% will not use any credit card debt at all when buying gifts. In contrast, 31% plan to use about the same amount of credit card debt as last year and only 4% expect to use more credit card debt. Jordan Goodman, spokesperson for the Index, says: "Clearly consumers are approaching this holiday season in an extremely cautious mood, with most unwilling to take on additional debt for gifts."

The Index also asked consumers who are going to use credit cards for gifts whether or not they expect to pay these bills off when they arrive in January. Fully 55% expect to pay their credit card bills off in full next month, while 39% expect to carry a balance and pay interest for at least a month after January. Only 6% thought they would pay off some, but not all of what they spend when the bills come in January.

The initial reading for the Cambridge Consumer Credit Index is 60. This means that on average 40% more Americans are paying off debt than are adding debt. That number is a composite of the three questions asked of respondents:

-- In the past month, have you taken on more debt or paid off debt?

In December, 31% of consumers say they have taken on more debt, with 23% taking on a little and 8% taking on a lot more debt. Conversely, 69% of Americans have paid off debt, with 49% paying off a little and 20% paying off a lot. The index reads 62 on this question.

-- In the next month, do you anticipate taking on more debt or paying off debt?

In December, 26% plan to take on more debt, with 6% planning to take on a lot and 20% planning to add a little debt. Conversely, 74% expect to pay off debt, with 58% paying off a little and 17% paying off a lot. The index reads 52 on this question.

-- In the next six months, do you expect to take on debt because you are thinking of making a major purchase such as a car, education, appliance, medical procedure furniture or carpeting?

33% of Americans plan to take on more debt to make such purchases, with 10% taking on a lot of debt and 23% taking a on a little debt. In contrast 67%of Americans plan to pay off debt in the next six months, with 46% expecting to pay off a little and 21% expecting to pay off a lot. The index reads 66 on this question.

-- "While two-thirds of Americans are or are planning to pay off more consumer debt, it is surprising that about one-third of Americans are or are expecting to go further into debt," says Index spokesperson Jordan Goodman. "At a time of rising layoffs and uncertain job security, it is dangerous for so many Americans to be adding to their already formidable debt burden."

The Index survey is conducted by ICR (International Communications Research) of Media, Pa., over five days in the week before the index is released. 1000+ households throughout the country are polled with a margin error of plus or minus three percentage points. The Index is released on the fifth business day of every month to coincide with the Federal Reserve Board's G19 release of consumer credit outstanding data.

The Debt Relief Clearinghouse, which sponsors the index, refers consumers to the debt-management agency best able to handle their problem. To date thousands of clients with excessive credit-card debt have been referred to Cambridge Credit Counseling Corporation, based in Agawam, Massachusetts and the Brighton Credit Management Corporation, headquartered in Palm Beach Gardens, Florida. Cambridge and Brighton help thousands of Americans in financial distress by educating them on how to use credit wisely while in turn negotiating lower interest rates, waiving late and/or over limit fees with creditors to help consumers repay their unsecured debt obligations. Unlike other debt management firms, Cambridge and Brighton offer programs that pay a rebate to qualified clients of half the "Fair Share" contribution received from creditors for every six months that the client pays their bill on time. These programs, known as the Good Payer Program at Cambridge and the Bonus Payment Program at Brighton, have helped thousands of Americans repay their debt load while rewarding them for their commitment to reduce their debt.

For more information about the Cambridge Consumer Credit Index, contact Paramjit Mahli at pmahli@cambridge-credit.org or 800-804-0575, or economist Allen Grommet, who provides an economic analysis of Index results, at agrommet@cambridge-credit.org or 800-804-0575, or the Cambridge website at www.cambridgecredit.org. Consumers wishing to find out more about Debt Relief Clearinghouse's referral services should call 1-888-4DEBTHELP or visit www.debtreliefonline.com.

CONTACT:

Cambridge Consumer Credit Index, Islandia
Paramjit Mahli 800-804-0575
pmahli@cambridge-credit.org

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