Consumer Credit Insurance Association Notes Interest Rates Continue to Rise; Consumers Can Protect Debt Payments with Credit Insurance.CHICAGO -- Consumers can utilize consumer credit insurance in their financial strategies to protect their finances in this period of rising interest rates, the Consumer Credit Insurance Association (CCIA (Computer and Communications Industry Association, Washington, DC, www.ccianet.org) A membership organization composed of computer and communications firms. It represents their interests in domestic and foreign trade, and, working with the NIST, keeps members advised of regulatory policy. ) said today. Noting that the Federal Reserve last week raised the key benchmark interest rate Benchmark interest rate Also called base interest rate, it is the minimum interest rate investors will demand for investing in a non-Treasury security. It is also tied to the yield to maturity offered on the comparable-maturity treasury security that was most recently issued (on-the-run). , triggering rate increases throughout the economy, CCIA Executive Vice President William F. Burfeind said, "As interest rates continue to rise, consumers face higher payments on adjustable rate Adjustable rate Applies mainly to convertible securities. Refers to interest rate or dividend that is adjusted periodically, usually according to a standard market rate outside the control of the bank or savings institution, such as that prevailing on Treasury bonds or notes. debts including mortgages, second mortgages, home equity loans and some credit cards so they need to look at ways to protect themselves and assure they can make their credit payments." Burfeind said consumer debt protection strategies include consolidation of debts, including credit card debt Credit card debt is an example of unsecured consumer debt, accessed through ISO 7810 plastic credit cards. Debt results when a client of a credit card company purchases an item or service through the card system. ; making more than minimum credit card payments to reduce total outstanding debt; taking a break from new purchases on credit until outstanding debt has been reduced, and protecting long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. repayments through credit insurance. Various types of credit insurance assure repayment of a consumer's insured debt in the event of death, disability from accident or illness, involuntary involuntary adj. or adv. without intent, will, or choice. Participation in a crime is involuntary if forced by immediate threat to life or health of oneself or one's loved ones, and will result in dismissal or acquittal. INVOLUNTARY. unemployment or loss of property from events like storm damage or theft. Credit insurance is available to consumers through their lenders or credit card issuers. "The quarter point hike of the federal funds rate Federal Funds Rate The interest rate at which a depository institution lends immediately available funds (balances at the Federal Reserve) to another depository institution overnight. to 4 percent approved this week by the Federal Reserve is the 12th straight such rate increase," Burfeind observed, adding, "Most banking and financial experts expect at least two more quarter point rate increases as the Federal Reserve seeks to keep inflation in check during 2006." The CCIA official said, "This means we can expect more hikes in the prime rate and on outstanding adjustable credit. That means many consumers will be paying more for money they borrowed previously. In this environment of rising interest rates, when it costs more to borrow, credit insurance is an attractive low cost protection consumers can look at to assure repayment of higher cost credit." Based in Chicago and founded in 1951, the 140-member CCIA is a trade association of insurance companies and other financial service providers selling or servicing consumer credit insurance, credit related lines of insurance, and other consumer credit protection products. |
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