The holiday shopping season started early, if the Federal Reserve's G-19 Consumer Credit report is any indication. In October, credit card debt rose 4.7%, after falling 4.1% in September. The report shows that credit cards were used to bring in record-setting Halloween retail sales. Rising availability and usage of credit is a sign that the rest of the holiday shopping season will be strong. November credit card usage should also be positive, as a record number of shoppers hit the malls over the Black Friday weekend.
Americans now owe $858 billion in credit card debt, which translates to $7,210 per household. (Note: This estimate is based on 119 million households or 308.7 million / 2.59 persons per household. Source: U.S. Census, 2010 Data; Average Household Size)
Low interest rates are attracting borrowers for school, auto and furniture loans. This "non-revolving debt" rose 6.9% in October, setting another new record at $1.896 trillion. That converts to $15,932 per household.
All told, the average household holds $27, 530 in debt making the total consumer debt total $2.753 trillion. Although that's more than at the height of the 2007 bubble, less of it is high-interest credit card debt. (Source: Federal Reserve, G.19 Release, October 2012)
What It Means to You
Higher credit card debt for everyone else is good for economy, as it spurs consumer spending. However, it's not good for you personally, so take advantage of retailers' discounts for lay-a-way and use of cash and debit cards. In fact, ask for a discount if it isn't offered.
How to Reduce Credit Card Debt
- A Life Preserver in a Sea of Debt
- Making a Plan to Reduce Credit Card Debt from the About.com Guide to Credit, LaToya Irby
- More Resources for Reducing Credit Card Debt from the About.com Guide to Beginners Investing, Joshua Kennon