Credit Card Debt Up 8% from Last Year
This is besides the $1.554 trillion in non-revolving credit, like auto loans. That brings total debt to $8,144 per person ($21,000 per household) and a 6% increase over August 2006 debt.
The declining housing market has caused many families to switch from home equity loans to credit cards to finance purchases. In addition, the Bankruptcy Abuse Prevention Act of October 2005 has prevented many indebted families from filing for bankruptcy, further inflating the credit debt figures.
Personal consumption drives 70% of the U.S. economy. If this were to falter, so would the bulk of our entire economy. A combination of softer retail sales, higher debt levels and lower home equity levels is a shaky foundation for continued economic growth.What It Means to You
A softening economy coupled with rising credit card debt is a good time to reduce your financial vulnerability. Consult with your financial planner and develop ways to reduce your own credit card debt....and avoid becoming a statistic in the Federal Reserve’s G-19 report next month.
Related Articles
- Chicago Federal Reserve web site How to Budget
- Making a Plan to Reduce Credit Card Debt
- More Resources for Reducing Credit Card Debt
Comments
Despite asssertions to the contrary, most consumers aren’t ’suicidal’, anyone who has been around the block a few times is well aware of the ‘damage’ credit cards can do.
Yet, as the data shows, credit card ‘use’ is on the rise.
(consumer defaults on ‘personal debt’ is on the rise as well) While the dollar continues to lose purchasing power, making a bad situation worse.
Oddly (although not surprisingly) the common denominator here is paychecks folks can’t live on.
Worse, the further down you go on the income distribution chart, the raises get smaller.
With the ‘average’ consumer spending up to 135% of their disposable income, what passes for our economy is likely to come to a screeching halt once consumer credit ‘dries up’.
We are in ‘uncharted waters’ with no ‘land’ in sight.
The only thing holding us up right now is if we sink, the global economy goes with us.
I so agree with you. I’ve had a number of students ask me similar questions and I love the way you put it. May I quote you or forward this blog to them?
Hi Jonathan,
By all means, please quote me as long as you attribute it to me as the About.com Guide to the U.S. Economy.
Kimberly