Consumer Finance

Consumer Debt Increases In May

consumer credit card debt on the rise

New data shows that U.S. consumer debt rose in May by the most in six months, showing that Americans were more comfortable with spending midway through the second quarter. The data from the Federal Reserve shows an increase in revolving debt, which includes credit cards, as well as a boost in non-revolving debt that includes educational and auto loans.  The Fed’s consumer credit report, though, does not track real estate debt like home equity lines of credit or home mortgages, according to Bloomberg.

The increase in consumer debt comes after a slow down in March as Americans recovered from a debt-filled fourth-quarter.

This latest news comes after LendingTree, the nation’s leading online loan marketplace, released its first Consumer Debt Outlook in May 2018, finding that Americans owe more than 26 percent of their income on consumer debt, up from 22 percent in 2010. That means Americans are on track to accumulate a collective $4 trillion in consumer debt by the end of this year. In fact, over the past five years, Americans have been accumulating more debt, and for nearly two years, consumer credit has grown at a steady rate of 5 to 6 percent annually.

As far as paying off that debt, the Federal Reserve’s Survey of Consumer Expectations shows that consumers, on average, expected there was only a 10.7 percent chance they would miss a loan payment in the next three months the lowest reading since the survey started in 2013.

However, data from the FCIC shows that overdue credit card debt has hit a seven-year high. Consumers more than three months behind on their bills, or considered otherwise in distress, were behind on nearly $12 billion in credit card debt as of the beginning of the year — an 11.5 percent increase during Q4 alone. And it’s not just the credit card debt: Mortgage debt is up as well, 5.2 percent to $56.7 billion.

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