July Credit Card Debt Holding Steady at $8,200 per Household

After a rebounding in May, credit card debt backed off slightly to 6.8%, around the same monthly growth rate it has been holding for the last year. Consumers owe $968.4 billion, which is $3,175 of credit card debt per person, or $8,255 per household. Evidently consumers did not use the $86 billion in Stimulus Rebate checks to pay off their debt. (Source: Federal Reserve, G.19 Release, August 7, 2008; Robert Longley, About.com Guide to the U.S. Government, Nearly 105 million Tax Rebate Checks Sent so Far, July 9, 2008)

The Federal Reserve's G-19 Consumer Credit report also stated that non-revolving debt, like mortgages and auto loans, have returned to their normal growth rate of 6.6%, an indication that credit restrictions are loosening. Non-revolving debt now totals $1.618 trillion, or $5,304 per person or $13,793 per household. Note: This estimate is based on 305 million people in the U.S., an average of 2.6 persons per household, and 117 million households. (Source: U.S. Census, Population Clock; Average Household Size)

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 debt figures. The availability of credit for personal consumption drives 70% of the U.S. economy. Now that it seems credit is returning to normal, this will support GDP growth.

What It Means to You

A soft 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
• About.com Guide to Credit, LaToya Irby Making a Plan to Reduce Credit Card Debt
• About.com Guide to Beginners Investing, Joshua Kennon More Resources for Reducing Credit Card Debt