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Bold Predictions for the Debt Consolidation Industry In 2018

Published on November 30th, 2017

Photo: Image of the word Debt Where is the debt consolidation industry headed in the next year?

While there are no sure answers, there are some trends that could help you understand what to expect in 2018.

Let’s take a look at some hot topics in debt consolidation and debt collection that will have an impact on where the industry is going in the next year or so.

Student Loan Problem Will Get Worse

There are now more than 44 million Americans carrying student loan debt to the tune of a staggering $1.3 trillion.

And the Trump administration has signaled that it intends to get rid of many student loan forgiveness programs, and also eliminate debt consolidation programs so that people only have a single repayment option in the future.

If these two things happen, the student loan debt consolidation industry will be in trouble, because there will be millions more defaults to deal with.

Increasing Household Debt May Force More Americans Into Debt Consolidation

The latest figures on household debt in the U.S. are startling.

For just the first quarter of 2017, consumer debt increased to $12.73 trillion, which is the highest in history.

And while excess debt is not good, there is a silver lining, because debt is often a trigger to consumer spending, and results in more investments in housing and education, which can create more wealth.

However, the staggering amount of debt in the U.S. could lead to a significant number of loan defaults, which could negatively affect the economy.

Student loans, car loans, and credit cards are the biggest sources of debt, and if the trend continues, millions of more Americans will have to find ways to handle this debt load, which could mean more debt consolidation in 2018.

Interest Rate Hike Could Make Debt Even More Expensive

Some economists are predicting that the Federal Reserve could raise interests rates in 2018.

In fact, the latest projections are that the Federal Reserve will raise interest rates three times next year, which could take rates to three percent, nearly double the current rate of 1.16 percent.

That would affect the debt consolidation industry, because it would make it more expensive for people to pay off their credit card loans.

The reason is that many credit card companies establish their variable interest rates based on the prime rate, which is typically three percent higher than the Federal Reserve interest rate.

As a result, when the government raises interest rates, it increases the prime rate, and also affects the variable interest rates on a credit card.

And when that happens, consumers with credit card debt will end up paying even more per month, and that could lead to a greater number of people seeking debt consolidation as a solution to their financial issues.

Be Prepared For What the Future Could Bring

The debt consolidation industry is poised to undergo significant changes in 2018, and businesses involved in helping clients resolve debt will need the most up-to-date debt collection software and debt consolidation software to provide outstanding service. Call us today to see how DebtPayPro can help you stay competitive.

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