Forty-two percent -42%- of Americans are making minimum or no payments on their credit card balances, according to the Cambridge Consumer Credit Index.

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ISLANDIA, N.Y.--(BUSINESS WIRE)--March 5, 2004

Over four out of ten Americans (42%) are making just minimum payments or no payments on their credit card balances, according to the Cambridge Consumer Credit Index. Of those respondents surveyed with revolving balances on their credit cards, 39% made only the minimum payment due and 3% made no payments at all last month. Another 39% paid less than half the balance owed but more than the minimum, while 19% paid more than half their balances. In 2003, 46% of Americans surveyed paid just the minimum (40%) or made no payment at all (6%).

The Cambridge survey also asked Americans who are taking on more debt why they are doing so. 49% of the respondents (up from 44% in 2003) said they are adding debt because they don't have the funds to pay for the purchases in full when the credit card bills arrive, while 51% of Americans (down from 56% in 2003) are taking on debt because they are confident of their ability to pay the balance off in full.

Overall, 39% of Americans paid off their credit card balances in full last month (down from 43% in 2003), 32% extended their payments (up from 31% last year), while 29% did not use credit cards at all in the last month (up from 26% a year ago).

"The results of the Cambridge Consumer Credit Index wildcard question show Americans are dramatically split between the haves and have-nots. The haves either don't use their credit cards at all or feel secure about paying off their credit card bills when they arrive. The growing number of have-nots, however, are being forced to borrow to pay for their daily necessities, and are getting deeper into debt since they are just able to make minimum payments or sometimes not even able to make any payments at all," says Jordan Goodman, spokesperson/financial analyst for the Cambridge Consumer Credit Index.

According to Chris Viale, Chief Operating Officer of Cambridge Credit Counseling Corp., "It is discouraging to see that a greater percentage of consumers are taking on debt even though they can't pay their credit card bills in full. This can only lead to higher accumulation levels of debt since these people wind up paying more towards interest than the outstanding purchases on their bill. We recommend that people take a hard look at their spending habits and prioritize wants vs. needs. It is possible to create a realistic budget and trim spending so that you can live within or even beneath your means - but it takes commitment."

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

The overall Cambridge Consumer Credit Index rose in March to 59, six points higher than in February. The Index rose in two of its 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 versus the amount of debt they actually paid off a month later, increased to 12 percentage points from 7 points in February. A month ago, 85% of Americans planned to pay off debt, while a month later 73% actually did so.

Wild Card Question:

When you received your credit card bill this month did you:

                       March 2004      March 2003        March 2002

Pay off bills in full      39%             43%               37%
Extend payments            32%             31%               32%
Did not use credit cards   29%             26%               30%

Of those extending payments:

Paid minimum payment       39%             40%               47%
Paid less than half
 the balance               39%             37%               37%
Paid more than half
 the balance               19%             17%               13%
Made no payment             3%              6%                3%

Source: Cambridge Consumer Credit Index

The Cambridge Consumer Credit Index is a forward looking economic indicator gauging consumer spending and 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 783 people who answered, this was the order of their responses:

1. I am frustrated with high bank rates and fees (33.1%)

2. My income has been reduced from a lower salary, less overtime or layoff (25.7%)

3. I want to improve my ability to achieve future financial goals like buying a house or saving for retirement (12.6%)

4. I got into too much debt by overspending (10.7%)

5. Other (5.6%)

6. My lack of financial education caused me to take on too much debt (5.1%)

7. Large medical expenses forced me to take on huge debts (5%)

8. My recent divorce or widowhood forced me to take on large debts (2.2%)

For more information on the survey see http://www.cambridgeconsumerindex.com/index.asp?content=client_survey

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 54 on this question, a drop of two points from February.

In March, 27% of Americans say they have taken on more debt, with 18% taking on a little and 9% taking on a lot more debt. Conversely, 73% of Americans have paid off debt, with 50% paying off a little and 23% paying off a lot.

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

The Index reads 42 on this question, a jump of twelve points from February.

In March, 21% plan to take on more debt, with 5% planning to take on a lot and 16% planning to take on a little debt. Conversely, 79% plan to pay off debt, with 56% paying off a little and 22% paying off a lot. In February 15% planned to take on debt and 85% 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 80 on this question, a rise of six points from February.

In March, 40% of Americans plan to take on more debt to make such purchases, with 14% taking on a lot of debt and 27% taking on a little more debt. In contrast, 60% of Americans plan to pay off debt in the next six months, with 44% expecting to pay off a little and 16% expecting to pay off a lot. In February 37% of Americans planned to take on more debt, while 63% planned to pay off debt.

"The results of the Cambridge Consumer Credit Index survey indicate a rebound of optimism about the future direction of the economy from last month. While consumers took on a bit less debt in the last month, they expect to spend a lot more and take on significant amounts of debt in the next month and the next six months. In fact, the six month level of 80 is approaching the all-time high of 82 hit in July 2003," 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 mailto:[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 http://www.cambridgeconsumerindex.com/. Consumers wishing to find out more about Debt Relief Clearinghouse placement services should call 1-888-4DEBTHELP or visit http://www.debtreliefonline.com/.

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