CD Investments Used To Pay Down Credit Card Debt
Consumers eager to reduce their credit card debt are finding alternative ways to come up with funds, such as cashing in investments. A new study shows 15 percent of maturing certificates of deposit were used to pay down credit card bills during the first half of 2010.
A report conducted by San Francisco research firm Market Rates Insight shows nearly $29 billion of cashed out CDs went toward credit card payments. The remaining $171 billion cashed out went toward checking, savings and money market fund accounts.
"One of the significant findings of this analysis is the positive relationship between CD and credit card balances," said Dr. Dan Geller of Market Rates Insight. "The research indicates a strong and significant linear relationship between these two variables, which means that as CD balances drop, so do credit card balances, and vice versa."
Many consumers seeking debt relief from mounting credit card, mortgage and student loan bills have turned toward their investments, savings and retirement accounts for funding. A recent Fidelity study revealed 62,000 Americans took out a hardship withdrawal from their 401(k) during the second quarter of 2010.