Posted by Lending Club :: March 16, 2009 @ 5:26 am

So often we seem to do the opposite of what is necessary for our financial health. We buy high and sell low. We forgo building an emergency fund when times are good. Now, at a time when excellent financial health is more important than ever, many Americans are paying down less of their credit card debt.

A recent article in USA Today reported that the credit card payment rate — the percentage of outstanding card debt paid — fell by 2.5 percentage points to 16.1%. That was one of the largest monthly drops in the percentage ever. Not only are consumers paying less, but they are doing so on less debt. While it’s a positive sign that consumers have less debt, that also means they should be able to pay it down more quickly.

The recently unemployed may have no choice but to reduce their payments and that is certainly understandable. Those who feel their jobs may be at risk are probably reducing payments as well, to keep as much cash on hand as possible. These two groups of people are probably a major component of the decline. Again, such circumstances may make reduced payments the best course of action. For the rest of us, though, it’s the wrong approach.

Similar to how those without debt should be building their emergency funds now (since an emergency is more likely), consumers with credit card debt should be working to eliminate that debt as quickly as possible while they’re still able to do so. Paying down debt not only reduces interest and fees, but it also makes the remainder more affordable in the future. If you were to lose your job a few months from now, wouldn’t it be a lot easier to survive without the burden of credit card debt? You’re probably cutting back on new purchases already, so why not tackle your outstanding debt while you are able to. To accelerate the process, you can consolidate your high interest credit card debt with a more affordable P2P loan from Lending Club.

Finding yourself in a financial crisis is hard enough on its own, but is exponentially worse as more credit card debt is added to the equation. Buck the trend and start paying off more of your credit card debt now, before it’s too late.

Have you adjusted your payments as a result of the economy?