The bureau will examine effectiveness of credit card counseling for consumers …

The Consumer Financial Protection Bureau has announced a Project Catalyst research pilot to examine the effectiveness of early intervention credit counseling for consumers who are at risk of default on their credit card debt.

The research can help improve understanding of strategies that may help consumers struggling with credit card debt avoid defaulting and harming their credit reports, according to the CFPB.

“Managing credit card debt can be stressful for consumers and will affect their ability to access credit in the future,” said CFPB Director Richard Cordray. “This project can help us better understand what works and does not work to improve life for consumers in the marketplace.”

Many consumers who are struggling with credit card debt often do not seek help until their options are limited for avoiding default. Providing consumers struggling with debt with early access to resources such as credit counseling may be an effective strategy for financial educators, credit counselors, and others who aim to help consumers, according to the CFPB. However, currently there is limited research on the effectiveness of early-intervention credit counseling strategies.

A recent survey on consumer finances from the Federal Reserve Board shows that the percentage of families with credit card debt declined from 2010 to 2013, ACA International reported. Median and mean balances for families with credit card debt declined 18 percent and 25 percent, respectively, and the amount of families that pay their complete credit card balances every month has increased.

According to the SP Experian Consumer Credit Default Indices, national credit default rates increased in August. Auto and home sales are on the rise, which indicates more borrowing and may be the cause of the default rate increases.

The bureau’s research pilot will explore whether certain early intervention strategies can improve consumers’ financial outcomes. This research, according to the CFPB, may also help inform whether similar strategies could be effective for consumers facing default on other products such as home, auto or other loans.

According to the CFPB, this initiative is an important means of fulfilling its mandate under the Dodd-Frank Wall Street Reform and Consumer Protection Act to provide all consumers access to fair, transparent, competitive, and innovative markets.