Household Debt in America Reaching Dangerous Levels

American households are carrying a good bit of debt these days according to a recent NBC News article. From what I’m seeing, no matter how you categorize the debt or spin the numbers, it’s not welcoming news to begin the new year. Still, there is no better way to illustrate a point than by staring at the cold, hard numbers, so I will break down a few.

The Numbers Don't Lie

$13 Trillion. The New York Federal Reserve found that total household debt (mortgages, student and car loans, etc.) reached slightly under that number in the third quarter—breaking the pre-2008 recession level.

$1.02 Trillion. The Federal Reserve reported that the “revolving credit” category, i.e., revolving credit card debt, hit that record high in November of last year. That number also broke the pre-recession record set in April 2008.

$8,600. The average outstanding credit card debt per household. WalletHub.com’s Jill Gonzalez noted that in the fourth quarter of 2007, $8,400 was considered “unstainable”.

$24.7 Billion. The number of bad credit card debt charged off in just three quarters of 2017, which is set to surpass $25.3 billion for all quarters in 2015 and 28.3 billion for all quarters in 2016.

9% and 26%. Per the Consumer Financial Protection Bureau (CFPB), for the past two years, the average credit card debt increased 9%. But that same debt has grown 26% for subprime borrowers (credit scores below 580).

What Do These Numbers Mean?

Matt Schulz, senior industry analyst at CreditCards.com, breaks it down this way: If the economy is in a stable or good condition, increased debt levels in good times make it more difficult to save and have security in economic downturns. The sad reality is that many Americans are using credit cards to compensate for lack of wage growth over the past 30 years. If this pattern continues, industry experts predict a rise in bankruptcy filings.

According to the article, delinquency rates are still below historic averages. While that is good news, there is still cause for concern. After looking at the numbers, you may find yourself falling into these categories. In fact, a survey conducted by CreditCards.com found that 38 percent of those who participated stated they did have a time frame to be debt free. Also, 30 percent said they don’t think they will ever by debt free.

 

But all hope is not lost, and you don’t have to go through it by yourself. The attorneys at Bond & Botes are here to help. If you would like to discuss options for dealing with your debt, contact our office nearest you and schedule and appointment for a free consultation.