84% of Americans say war with Iraq had no impact on their use of debt, according to the Cambridge Consumer Credit Index.

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ISLANDIA, N.Y.--(BUSINESS WIRE)--May 7, 2003

Eight four percent (84%) of Americans say that the recently-concluded war with Iraq had no impact on their willingness to use credit cards or take on other types of debt, according to the Cambridge Consumer Credit Index.

Of those surveyed, 13% said they decreased their use of credit during the war, while 3% increased their use of debt.

"The results of Cambridge Consumer Credit Index's May wildcard question will surprise many economists who expected the war to slow consumer spending and the use of credit cards dramatically. To the contrary, the vast majority of Americans did not change their borrowing habits because of the war and related fears of terrorism. The consumer has been remarkably resilient in their borrowing patterns over the past three years despite massive layoffs, enormous loss of stock market wealth, incidents of terrorism around the world, and now the war with Iraq," says Jordan Goodman, spokesperson for the Index.

These findings are the result of monthly nationwide telephone poll of 1000+ adults conducted by ICR/International Communications Research in the past week.

The overall Cambridge Consumer Credit Index dropped by thee points from April to 56. The Index fell in all three component questions. The "Reality Gap," which is the difference between the amount of debt consumers say they will pay off in the next month compared to the amount of debt they actually pay off a month later, narrowed to the three points, the lowest level in the history of the Index. A month ago, 78% of Americans planned to pay off debt, while a month later 75% actually did so.

Sponsored by The Debt Relief Clearinghouse, the Cambridge Consumer Credit Index is a forward looking economic indicator which tracks consumer attitudes towards consumer debt. It 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.

In conjunction with the Index, the Cambridge Credit Counseling Corp. is releasing its monthly survey of people who have called in for credit counseling services over the past month. Cambridge representatives ask callers for the primary reason that they found it necessary to get help with their debts now. Of the 1161 people who answered, this was the order of their responses:

1. I am frustrated with high bank rates and fees (27.6%)

2. My income has been reduced from a lower salary, less overtime

or layoff (27.1%)

3. I want to improve my ability to achieve future financial goals

like buying a house or saving for retirement (13.5%)

4. I got into too much debt by overspending (11.3%)

5. My lack of financial education caused me to take on too much

debt (7.2%)

6. Large medical expenses forced me to take on huge debts (5.6%)

7. Other reasons (5.4%)

8. My recent divorce or widowhood forced me to take on large debts

(2.3%)

For more information on the survey see http://www.cambridgeconsumerindex.com/camsurvey.htm

"It is alarming that in times of war and economic instability a majority of consumers continue to spend and incur debt," said Chris Viale, general manager of Cambridge Credit Counseling Corp. "Although consumers may not have begun to experience the harmful effects of overextending their credit during uncertain economic times, they must not assume that in the future they will have the money to pay off the debts they are taking on today. Therefore, it is imperative that consumers continually exercise their money management skills to prepare for any situation that may negatively impact their financial stability."

The Cambridge Consumer Credit Index number is a composite of these three questions:

1. In the past month, have you taken on more debt or paid off debt? The Index reads 50 on this question, a drop of four points from April.

In May 25% of Americans say they have taken on more debt, with 17% taking on a little and 7% taking on a lot more debt. Conversely, 75% of Americans have paid off debt, with 54% paying off a little and 21% paying off a lot. The reading is lower than April, when 27% of consumers had taken on more debt while 73% had paid off debt.

2. In the next month, do you anticipate taking on more debt or paying off debt? The Index reads 42 on this question, a drop of 2 points from April.

In May, 21% plan to take on more debt, with 4% planning to take on a lot and 17% planning to take on a little debt. Conversely, 79% plan to pay off debt, with 63% paying off a little and 16% paying off a lot. In April, 22% planned to take on debt and 78% planned to pay off debt.

3. 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? The Index reads 76 on this question, a drop of two points from April.

In May, 38% of Americans plan to take on more debt to make such purchases, with 9% taking on a lot of debt and 29% taking on a little more debt. In contrast, 62% of Americans plan to pay off debt in the next six months, with 45% expecting to pay off a little and 17% expecting to pay off a lot. In April, 39% of Americans planned to take on more debt, while 61% planned to pay off debt.

"The May Index reading shows that consumers were more cautious about taking on debt in the recent past and anticipate continuing to curb their debt use in coming months. The dramatic narrowing of the Reality Gap from 20 points in February to just 3 points is a positive sign that consumers are now much more able to keep their promises to pay off debt than they were just three months ago," says Jordan Goodman, spokesperson for the Index.

The Index survey is conducted by ICR (International Communications Research) of Media, Pennsylvania over five days in the week before the Index is released. Over 1000 households are polled based on random-digit dialing, with all demographic and regional groups in America fairly represented. The Index has a margin of error of plus or minus three percentage points.

For more information about the Cambridge Consumer Credit Index, contact media relations representative Paramjit Mahli at [e-mail] or 631-786-6450, or economist Allen Grommet, who provides an economic analysis of Index results, at [e-mail] or 800-804-0575, or the Index website at www.cambridgeconsumerindex.com. Consumers wishing to find out more about Debt Relief Clearinghouse referral services should call 1-888-4DEBTHELP or visit www.debtreliefonline.com.

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