An increasing number of Americans are struggling to keep up with their student loan and credit card debt, Reuters reported on Tuesday (Aug. 13).
The number of student loans unpaid for several months has increased, even though total student loan debt went down a bit, from $1.49 trillion to $1.48 trillion in the quarter.
Credit card debt has reached $868 billion and balances seriously past due are on the rise, according to Federal Reserve Bank of New York data released on Tuesday, the report said.
Total U.S. consumer debt is higher than its peak in 2008, at $13.86 trillion in the second quarter. The figure is higher than the previous peak of $12.68 trillion before the 2008 global financial crisis, according to the New York Fed’s U.S. household debt and credit report.
The Federal Reserve recently cut interest rates for the first time since 2008, in part due to the U.S. trade war with China.
“We may see more consumers making a large purchase they had been putting off because it seems relatively more affordable,” Dieter Scherer, a financial planner at Adaptive Wealth Solutions LLC, told the news outlet.
“We’ll likely see credit card rates decline by a small amount in response to the cut in the target federal funds rate. However, charge-off rates have been increasing over the past few years, which has also contributed to increased credit card rates among less credit-worthy consumers. So, I’d expect the effect to be more muted among those with low credit scores,” he added.
The cost of a four-year degree at a public higher education institution has more than tripled, according to the College Board, while the cost of attending a private, nonprofit college or university has doubled. A new PYMNTS research report indicates 63.1 percent of students who are currently late on their payments work a full-time job. Although 57.4 percent are not currently late, they have been in the past.