The Federal Reserve's G-19 Consumer Credit Report showed that shoppers relied more on cash, debit cards and layaway than credit cards over the Black Friday weekend. In November, credit card debt only rose 1.1%. However, consumers were probably taking a breather, after credit card debt had risen a whopping 2.8% in October. Instead, families continued to take advantage of low interest rates, increasing loans and other forms of non-revolving credit by 9.6% in November.
The slight increase in credit card debt means that Americans still owe roughly $858 billion in credit card debt, only marginally higher than in October. As a result, families owe around $7,210 per household on average, in credit card debt alone. (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)
School, auto and furniture loans continue to set records month after month. In November, Americans owed $1.9 trillion in these non-revolving loans, a total $16,050 per household.
When you add it all up, the average household now owes $23,260 in consumer debt, (and this doesn't even count mortgages). Talk about a debt crisis! Combined, total consumer debt is now $2.768 trillion, more than any other time in history. Fortunately, much less of it is expensive credit card debt. Furthermore, a lot of it is investment in the future, in terms of education loans. (Source: Federal Reserve, G.19 Release, January 2013)
What It Means to You
As the economy continues to improve, interest rates will rise. Therefore, if you have any loans you want to take out this year, do so now. True, it's more difficult to qualify, as the banks have raised their credit limits. Nevertheless, it probably won't be cheaper to take out a loan in our lifetimes.
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