Credit Card Debt Use Leveling Off
In July, consumers increased their credit card debt 4.8%, lower than the 7% growth rate of last year. Consumers owe $970 billion, which is $3,180 of credit card debt per person, or $8,255 per household. (Source: Federal Reserve, G.19 Release, August 7, 2008)
The Federal Reserve’s G-19 Consumer Credit report also stated that non-revolving debt, like mortgages and auto loans, only grew .5%, an indication that credit restrictions are tightening again. Non-revolving debt is still $1.618 trillion, or $5,304 per person or $13,793 per household. Note: This estimate is based on 305 million people in the U.S., an average of 2.6 persons per household, and 117 million households. (Source: U.S. Census, Population Clock; Average Household Size)
The declining housing market has caused many families to switch from home equity loans to credit cards to finance purchases. In addition, the Bankruptcy Abuse Prevention Act of October 2005 has prevented many indebted families from filing for bankruptcy, further inflating the debt figures. The availability of credit for personal consumption drives 70% of the U.S. economy. Now that it seems credit is returning to normal, this will support GDP growth.
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