Credit counseling may help reduce consumer debt

July 03, 2019

By the end of fourth quarter 2018, total household debt in the United States reached a new high of $13.54 trillion. A new Economic Inquiry study found that nonprofit credit counseling--which reaches millions of consumers a year and provides financial education, individualized financial counseling, and debt restructuring services--can be an effective strategy for addressing consumer debt issues.

For the study, researchers analyzed the credit of counseled individuals versus a matched comparison group of noncounseled individuals. Individuals who underwent credit counseling experienced a substantial decline in debt relative to the comparison group, and credit counseling was also associated with an increase in credit scores for consumers with the lowest credit scores prior to counseling.

"This research shows some of the most rigorous evidence to date on the benefits of nonprofit credit counseling in helping distressed households manage their debt levels," said co-author Stephen Roll, PhD, of Washington University in St. Louis. "Though these results are encouraging, more work is needed to understand the longer-term effects of credit counseling services on consumer credit profiles. Our findings also speak to the need for policymakers, researchers, and practitioners to find ways of helping households better address their debt issues before they fall into crisis and experience large credit score declines, which can have lasting implications for consumers' financial security."
-end-


Wiley

Related Consumers Articles from Brightsurf:

When consumers trust AI recommendations--or resist them
The key factor in deciding how to incorporate AI recommenders is whether consumers are focused on the functional and practical aspects of a product (its utilitarian value) or on the experiential and sensory aspects of a product (its hedonic value).

Do consumers enjoy events more when commenting on them?
Generating content increases people's enjoyment of positive experiences.

Why consumers think pretty food is healthier
People tend to think that pretty-looking food is healthier (e.g., more nutrients, less fat) and more natural (e.g., purer, less processed) than ugly-looking versions of the same food.

How consumers responded to COVID-19
The coronavirus pandemic has been a catalyst for laying out the different threats that consumers face, and that consumers must prepare themselves for a constantly shifting landscape moving forward.

Is less more? How consumers view sustainability claims
Communicating a product's reduced negative attribute might have unintended consequences if consumers approach it with the wrong mindset.

In the sharing economy, consumers see themselves as helpers
Whether you use a taxi or a rideshare app like Uber, you're still going to get a driver who will take you to your destination.

Helping consumers in a crisis
A new study shows that the central bank tool known as quantitative easing helped consumers substantially during the last big economic downturn -- a finding with clear relevance for today's pandemic-hit economy.

'Locally grown' broccoli looks, tastes better to consumers
In tests, consumers in upstate New York were willing to pay more for broccoli grown in New York when they knew where it came from, Cornell University researchers found.

Should patients be considered consumers?
No, and doing so can undermine efforts to promote patient-centered health care, write three Hastings Center scholars in the March issue of Health Affairs.

Consumers choose smartphones mostly because of their appearance
The more attractive the image and design of the telephone, the stronger the emotional relationship that consumers are going to have with the product, which is a clear influence on their purchasing decision.

Read More: Consumers News and Consumers Current Events
Brightsurf.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.