(Newswire.net — November 21, 2017) — US household debt appears to be moving in tandem with the performance of stock markets. As the Dow Jones Industrial Average, the NASDAQ Composite Index, and the S&P 500 index continue reaching into the stratosphere, household debt has now topped $13 trillion. According to data released from the New York Federal Reserve Bank on Tuesday, 14 November 2017, household debt in the US is at its highest level ever. The $13 trillion figure is some $280 billion above the high posted at the time of the global financial crisis (Q3 2008), and over 16% higher than the nadir in Q2 2013. By far, the largest component of US household debt is mortgages, comprising 66.92%, or $8.7 trillion.
Delinquency rates are a source of concern
Fortunately, there have been improvements in mortgage delinquency rates, with just 1.4% of mortgages now reported as delinquent – 90+ days overdue. In terms of student loan debt, delinquencies are significantly higher at 11.2%. The overall level of student loan debt in the US is now $1.4 trillion, and growing fast. Another deeply distressing area is automobile loans. The current level of automobile loans is on par with student loan debt, at $1.2 trillion, up $24 billion and firmly trending higher over the past 6 years. Delinquency rates in automobile debt are just 4%. In terms of credit card balances, a $24 billion uptick was reported, and some 4% of US credit card holders are now delinquent in their repayments.
Dealing with credit card debt via debt consolidation options
One of the problems with rising credit card debt is that it is revolving debt. In other words, any repayments that are made will naturally be subject to additional interest charges, and given the high APR’s, credit card debt is considered bad debt. Presently, credit card debt APR (annual percentage rate) figures are in the region of 22% – 30% are common. Credit experts recommend that individuals work hard to pay down credit card debt as quickly as possible, since it eats into disposable income levels, and erodes savings.
One way to do so is a debt consolidation loan. These lines of credit can be offered through online lenders, or bank lenders. They are typically unsecured loans, but it is possible to apply for a secured loan (using collateral) for a debt consolidation loan. The interest rates and associated fees for debt consolidation loans are less than the APR on credit cards. The money savings generated can go towards repaying the principal, retirement accounts, and savings.
Now, financial analysts are cautioning that a large number of new car loans are in the subprime market. This means that people are financing car loans at higher rates, with some 20% of all loans originating in this market. Banks and credit unions offer the best rates for car loans, but car loan companies dominate this market with an estimated $200 billion in loans and 70% of market share.
It’s interesting to point out that new loan originations have increased for 26 quarters on the trot. This has contributed to the dramatic increase in household debt. On a plus note, delinquency rates with car loans have improved to just 4.4%, but automobile loans from bank lenders are now at a 9.7% delinquency rate. This is deeply concerning. People with poor credit (less than 660) now account for $435 billion worth of automobile loans. This is yet another reason why we are seeing a sharp rise in debt consolidation loans.