Most people don’t like being told what to do. However, a recent study financed by the Consumer Financial Protection Bureau (CFPB) reveals that many consumers are okay with suggestions. In fact, if findings from this study are accurate, some strategic suggestions might help Michigan consumers pay off high credit card balances. This, in turn, might allow these same Michigan credit card users to improve their credit scores.
How the CFPB Study Shows that Strategic Suggestions Might Help Michigan Credit Card Users Manage their Balances
This CFPB-funded study sought to determine whether or not reminding consumers about financial “rules of thumb” would help them lower their credit card debt. To find out, researchers selected 14,000 consumers who routinely carry credit card balances over from month to month. These types of consumers are often referred to as “revolvers.” It is important for intrigued Michigan consumers to note that these participants were unaware of their participation.
In the study, these 14,000 consumers were sent two simple messages (“rules of thumb”) in one of three ways.
The messages were:
1 – You should always use cash for purchases under $20.
2 – Paying with a credit card adds 20% to the purchase cost of items.
These were the methods of message delivery:
1 – Some consumers received emails twice a month with the message in the subject line.
2 – Others saw banner ads when they logged into their bank’s website.
3 – Other consumers were mailed magnetized calendars imprinted with a message.
To serve as a control for the study, a third group received no messages.
On average, study participants who received reminders to use cash for purchase under $20 reduced their credit card balances by $104. The message about credit cards adding 20% to the cost of items didn’t have much of an effect on receivers, except for those under 40. These consumers, on average, dropped their debts by $160 by the study’s conclusion.
These results were significant enough to make the CFPB take notice. Apparently, the cost of the study was approximately 50 cents per consumer. So, it seems that if banks sent similar messages to “revolvers” in Michigan, it might yield cost-effective benefits.
How Michigan Consumers Can Pay Down High Credit Card Balances on their Own
In Michigan and other U.S. states, credit card debt is on the rise. Even though delinquencies are relatively low, increasing credit card balances still create cause for concern. This growing debt is, in fact, the number one reason why the CFPB funded the abovementioned study.
Unfortunately, Michigan consumers who carry high credit card balances can bring their credit scores down even if they pay all of their bills on time. This is because, in the calculation of your credit score, your credit utilization rate matters. Ideally, no Michigan credit card holder should use more than 30% of their available credit at any given time. In the eyes of potential lenders, consistently running up high credit card balances makes you seem too reliant on credit cards and possibly a lending risk.
Little reminders about the possible dangers and extra cost of heavy credit card use are nice, but Michiganders can manage their credit cards on their own. When balances get out of hand, the best plan is to rework your budget so that more money can go toward credit card bills every month. You should also limit credit card use until your balances are within your target range – 30% of your spending limits or lower.
Another important part of credit score improvement is regularly checking your credit reports. This gives consumers in Michigan a chance to catch suspicious items that often result from identity theft. In addition, monitoring your credit reports allows you to find and report errors that can harm your credit score.
The Free and Legal way to Get Better Credit
If, while going through your credit reports, you spot fraudulent accounts or inaccuracies caused by creditors or the credit reporting agencies, call Credit Repair Lawyers of America in Michigan. When you contact our firm for help with credit report issues, we provide you with an experienced credit attorney who will get you clean credit reports – for FREE.
Don’t let identity theft damage or errors on your credit reports bring your credit score down. At Credit Repair Lawyers of America in Michigan, we’ve been cleaning up credit reports for consumers since 2008 for free. How do we do it? All of our fees come from the defendants in settled cases. This is why our clients pay nothing for the work we do.
Let’s start the conversation about what we can do for your credit. Set up your free consultation today by calling Attorney Gary Nitzkin at (248) 353-2882 or contact us on our contact page.
For more information about Free Credit Repair, please visit https://creditrepairlawyersam.com/michigan/credit-repair/. Or, to learn more about Free Credit Repair After Identity Theft, check out https://creditrepairlawyersam.com/michigan/id-theft-repairs/.