Increased Credit Card Debt Boosts Overall Household Debt in America

August 16, 2016, Written By Lynn Oldshue
Increased Credit Card Debt Boosts Overall Household Debt in America

Household debt in the United States increased to $12.29 trillion in the second quarter of 2016, up 0.3% from the previous quarter, according to a report from the Federal Reserve Bank of New York. The organization attributes the growth to a rise in credit card and auto loan debt.

Total household debt increased by $35 billion. Auto loan debt rose $32 billion on its own, and credit card debt jumped $17 billion. These increases were offset by a drop in the mortgage sector, down by $7 billion. Student loan debt remained fairly even during those two quarters.

With regards to annual changes, credit card debt rose $26 billion compared to a year ago. Mortgage debt increased $246 billion, even though it dropped during the last quarter. Auto loan debt jumped $97 billion, and student loan debt rose $69 billion.

One of the causes of the increased credit card debt could be an expansion of options for subprime borrowers. Currently, almost half of people with a credit score below 620 have a credit card, very close to the 60% of subprime borrowers who had a credit card in 2007. The number of cardholders with low credit scores is beginning to reach pre-recession levels, and that’s not necessarily a good thing.

The good news is that delinquency rates are continuing to improve. The delinquency rate for outstanding debts in the second quarter was 4.8%, down from 5% in the first quarter of 2016 and 5.6% in the second quarter of 2015. This continues a multi-year decline that has taken place since 2010.

The information contained within this article was accurate as of August 16, 2016. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.

About Lynn Oldshue

Lynn Oldshue has written personal finance stories for for twelve years. She majored in public relations at Mississippi State University.
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