Debt

American Consumer Debt To Hit $4 Trillion By EOY

New data shows that Americans are on pace to accumulate a collective $4 trillion in consumer debt by the end of 2018.

LendingTree, the nation’s leading online loan marketplace, released its first Consumer Debt Outlook for May 2018 — it found that collectively, Americans owe more than 26 percent of their income on consumer debt, up from 22 percent in 2010.

Consumer debt includes non-mortgage debts such as credit cards, personal loans, auto loans, and student loans.

Over the past five years, Americans have been accumulating more debt. Total non-housing debt is at 26 percent of Disposable Personal Income — higher than during the credit boom in the mid-2000s. And for nearly two years, consumer credit has grown at a steady rate of 5 to 6 percent annually.

Yet overall, the amount Americans owe on revolving credit (primarily credit cards) and non-revolving credit (like auto loans and student loans) fell by $2.9 billion in March – a less than 0.1 percent drop to $3.824 trillion. Revolving credit, primarily credit card spending, also fell by $8.1 billion to $976.6 billion, which is the second consecutive month of declining balances.

Still, LendingTree analysts expect the total amount owed will exceed $4 trillion by the end of the year.

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 10.72 percent chance they would miss a loan payment in the next three months — the lowest reading since the survey began 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 problem debt is up as well, 5.2 percent to $56.7 billion.

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