Second Annual Consumer Credit Counseling Service of Delaware Valley Survey Shows Local Households Taking on More Debt and Saving Less.

PHILADELPHIA -- In its second annual survey gauging local consumer savings and debt trends, Consumer Credit Counseling Service of Delaware Valley (CCCSDV) found that lower income households have a higher level of debt compared to the year before, and that respondents at all income levels reported making less of an effort to reduce their debt this year. The online study, conducted by Zoomerang from September 21 to September 28, 2006, asked 30 questions on savings and debt habits of 813 residents of Philadelphia County, four suburban Pennsylvania counties (Chester, Delaware, Bucks and Montgomery), and three counties in New Jersey (Camden, Gloucester and Burlington).

Respondents earning between $15,000 and $20,000 saw their level of debt increase by 54 percent in 2006, up from a 41 percent increase the previous year. The top reasons across all incomes accounting for the increase in debt were gasoline prices (54 percent); utility bills (39 percent); and healthcare costs (34 percent). These reasons were similar to last year's top two responses: energy costs (51 percent) and healthcare (34 percent).

"It is no surprise that consumers have continued to feel a crunch in their bank accounts due to increasing fuel prices and the growing expense of healthcare costs," said Patricia Hasson, President, CCCSDV. "With gasoline prices finally coming down from record highs, we are hopeful that consumers can get back to spending in line with their budgets and return to saving the money that has been going into their gas tanks or towards heating and cooling their homes."

While debt has increased by 38 percent for households at all income levels in the last year, the survey found that 59 percent of respondents were taking proactive measures to try and reduce their debt. The number one tactic was using money from their savings accounts to pay off debt (34 percent). In the 2005 survey, credit card consolidation was the number one method for decreasing debt (23 percent).

"It's encouraging to see that consumers are actually paying down debt instead of simply moving it around on different cards, which is what happens with debt consolidation," said Ms. Hasson. "The interest paid on a credit card is much higher than the interest earned on a savings account. It makes better financial sense to put your money to work for you by paying off any high interest loans and then working to build up savings again."

Tapping savings accounts to decrease debt meant that respondents were able to save even less in the last year as compared to the previous year. Fifty-two percent reported saving less money in the last year compared to 46 percent who saved less the year before. On a positive note, 83 percent do have savings, although savings is more prevalent among higher income households. Only 33 percent of respondents earning less than $15,000 have savings as compared to 93 percent of those earning more than $75,000 per year.

Editor's Note: More detailed data tables can be obtained from Consumer Credit Counseling Service of Delaware Valley (see page one for contact information).

About CCCSDV:

Consumer Credit Counseling Service of Delaware Valley is the region's non-profit leader in credit and savings education. Their mission is to positively impact human lives and communities through comprehensive consumer credit education, counseling, asset building and debt reduction programs without regard to economic status. Established 40 years ago, CCCSDV provides knowledgeable, expert and caring advice to consumers looking for help in improving their credit situation and in increasing their savings.