Consumer debt amounts to $16.5 trillion and only a small portion is comprised of consumer debt. Credit cards, car loans and educational loans are included in consumer debt. Unemployment, low saving, recession and luxurious lifestyle have increased the strain on banks and financial institutions in consumer debt category. Banks are increasing rates to cover risks and defaults. Most of the borrowers are defaulting loans, increasing the amount of private debt.
Our government has taken efforts to avoid bankruptcies and thereby helped banks to make money again. However, most of this money does not reach the people who really want loans to pay their personal debts, buy automobiles or to continue their studies. Many of these consumers are considered less credit worthy, due to joblessness and recession. The problems caused by private debt are discussed elaborately in Jobenomics book, written by Chuck Vollmer. You can log on to www.jobenomics.com to buy this excellent book.
At present, consumer debt is amounted to $2.5 trillion. Credit card debt, automobile and college loans occupy the major portions in it. In fact, consumer debt has changed the attitude of many people in our country. Prior to the recession, people used credit cards frequently to buy luxurious things, which they did not really need. They did not like to allocate a portion of their income to savings. Consumer debt has put an end to unrestrained lifestyles. It may even help our country in its recovery efforts. Nowadays, saving rates are going up and consumer spending is coming down. On an average, each American has six credit cards, but they are used less frequently.
There are still many citizens feel financially stressed, as they get to know that credit cards offer only short term solutions and they often lead to personal bankruptcy. The number of bankruptcy filings is increasing, as many consumers look it as the last resort. They use it as a way to escape from the effects of increasing unemployment rates and housing debt. The executive director of American Bankruptcy Institute reported that consumer bankruptcy filings increased 41% in September 2009 over the previous year.
Federal Reserve specifies that the total amount of consumer credit is $2.4 trillion on February 2010. Outstanding consumer debt drops at a 5.5% rate per year. Revolving credit decrease at 13% annual rate and non revolving credit reduced at 1.5% rate in a year. Revolving credits, such as credit cards do not have any fixed number of payments, but non revolving credit has fixed installments. Out of the $2.4 trillion consumer debt, revolving credit amounts to 0.86 trillion and non revolving credit amounts to $1.59 trillion.
As the consumer debt habits have been changed, retail businesses are under great pressure. Decreased retail means a fragile economy and increased unemployment rate. It is becoming very difficult to get student loans, but education especially the technical and vocational field are doing well. Increased unemployed and underemployed rate has changed the4 motivation of people and they are now willing to get retraining.
Chuck Vollmer’s Jobenomics book is all about economic recovery and jobs creation. You can get to know the ways in which you can contribute to the development of our country by reading this book. Visit www.jobenomics.com to get your copy of this exceptional piece of writing.