The statistics from the Federal Reserve report that outstanding consumer debt in 2010 remained fairly steady. Granted, those statistics do not include debt secured by real estate, and they also don’t touch on the rise of bankruptcy numbers. So, what does the report include? Let’s take a look at the consumer credit breakdown, its components and statistics, and where you stand in the consumer debt equation.
- Total amount of consumer debt in the United States stands at nearly $2.4 trillion.
- $7,800 in debt for every man, woman and child that lives in the U.S.
- 33% of all consumer debt is termed revolving credit (periodic repayments are made to lenders, like credit cards).
- 67% of all consumer debt is derived from loans that are not revolving in nature (like automobile loans, student loans, vacations, etc).
- The financial obligations ratio of all debt payments to disposable income stands at 15.27% for homeowners and 23.99% for renters.
These averages paint a financial picture of the American household and where their money is being allocated. What they don’t tell you is how differently the picture is painted based on definitive spending, saving, and income numbers. With the typical homeowner spending nearly 16% of their disposable income just to own their home and car, it begs the question, where is the other income being allocated?
Credit Card Debt
- 181 million credit card holders in the U.S.
- These same Americans own approximately 1.5 billion cards, an average of nearly nine credit cards issued per credit card holder.
- Americans charged approximately $1,950 billion to their credit cards in 2006. That's just over $11,300 in charges per cardholder.
- Americans carried a projected $1,177 billion at the end of 2010.
- That’s $6,500 in credit card debt per card holder (not household).
It’s clear that credit card debt is rising. Many Americans rely on credit cards for large purchases, everyday necessities, and even simply credit card promotions and offers. Credit cards can be great tools for building your credit, the problems arise when the spending and card balances become too much for you to handle. Late fees and higher interest rates lead to an exponentially bigger problem. And what’s next? Many are turning to bankruptcy for help.
- Credit card delinquencies were at the third highest level on record in 2008.
- Cardholders 60 or more days late on payments stood at 4.50%.
- Cardholders that were 30 days late stood at 5.72%.
- There were 115,000 bankruptcy filings in November 2010.
- There were 9% more bankruptcy filings by November 2010 compared a year earlier.
- Nationally, there were 6,000 bankruptcy filings per million individuals, or 1 in every 160 people.
With the current statistics showing a rise in bankruptcy filings, it’s obvious that more and more individuals are experiencing financial distress. Mortgage payments, automobile payments, student loans and credit card balances are just a few of the main factors that lead to financial distress. Bankruptcy isn’t the only answer. Financial planners can be huge assets in debt and risk management. If you think your financial future is in danger, don’t hesitate to take action. The sooner you ask for help the better! Drop us a line and we can answer any of the financial questions you may have.