MasterCard launches personal debt management initiative

Source: MasterCard International

MasterCard International today announced that it will launch its "Debt Know How" program, a multi-year, consumer education program, designed to give consumers access to free, easy-to-understand tools to help manage their personal debt.

MasterCard's announcement comes in conjunction with the company's participation in Financial Literacy Day on Capitol Hill.

MasterCard's Debt Know How program will consist of the following elements in 2005:
  • An interactive website containing free, easy-to-use tips and resources for consumers.
  • A national web-based Debt Know How seminar and local seminars around the U.S.
  • Partnerships with financial institutions, so that they may introduce the Debt Know How curriculum to their customers.
  • Partnerships with policymakers to ensure their constituents receive the Debt Know How information.

"MasterCard's Debt Know How program will provide valuable tools for individuals struggling with debt to get themselves back to financial health," said Patrick Dwyer, vice president for consumer affairs at MasterCard International. "MasterCard has a long-term ee to consumers. Credit is an empowering tool for consumers when used correctly."

As part of the Debt Know How program and Financial Literacy Day, MasterCard today also emphasized the following "Smart Steps to Get Out of Debt":

  • ASSESS DEBT: Determine your total amount of debt. Consumers should compare their debt with their income and projected necessary spending.
  • SET A GOAL: Set a goal and prioritize your debt - for example, pay off debt in three years - and then break it into a series of smaller goals to help reach the ultimate finish line.
  • PAY MORE THAN THE MINIMUM: For credit card debt, understand how paying more than the minimum can be a critical first step in reaching your goals.
  • TRACK SPENDING: Keep diligent track of spending and consistently look for ways to reduce it.
  • UNDERSTAND INTEREST AND LATE FEES: Know what the late fees are on all of your debt. Try to avoid unnecessary fees, which only add to existing debt.

"It's important for consumers to understand that while this program provides resources to help reduce debt, it's up to each individual to put theory into practice," Dwyer said. "Getting out of debt takes commitment and consistency. Accomplishing your goal is worth the effort."

According to the May 2004 Nilson Report, U.S. credit card debt was $784.9 billion at the end of 2003, which accounts for 8 percent of the $9.8 trillion in total consumer debt. Mortgage debt has been estimated to have risen by $1 trillion last year alone.

MasterCard today also commended the U.S. House for the recent passage of H.Res. 148, which expresses Congressional support for the goals and ideals of financial literacy, designates April as financial literacy month and asks that President Bush issue a proclamation calling on federal, state and local governments to work with businesses and non-profit organizations to observe and promote Financial Literacy Month.

"We commend the House for making financial literacy a priority," Dwyer said. "It is in the spirit of Congress' call to businesses, governments and non-profits to promote financial education, that we are announcing our Debt Know How program today."

While this program focuses on debt management, MasterCard will continue to offer financial literacy information designed to help young individuals develop good spending and saving habits. For example, the unique peer-to-peer MasterCard "Are Your Credit Wise?" program has just concluded its sixth year in operation and has now reached 50 college campuses across the U.S. and Canada.

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