The Concerning Creep In Consumer Debt

U.S. consumer debt has been on the rise for the last year and hit $13.29 trillion during the quarter ending in June, according to the New York Federal Reserve.

All in all, consumer debt during the second quarter was up $454 billion from a year ago, marking the 16th quarter in a row in which it increased.

And there is reason to believe about a quarter of consumers are having a difficult time managing that debt, according to the latest edition of the PYMNTS/Unifund Financial Invisibles report. And while the natural assumption is that those difficulties would be located mainly among lower-income, lower-educational attainment consumers, the data tells a very different story.

Those with some of the highest incomes and educational levels that we surveyed were also among those with the most precarious financial circumstances. The most worrying category of borrowers are roughly 42 years old and earn $63,000 a year. Sixty percent of them own their own home and are employed full-time. Forty-one percent have college degrees. Sixty-six percent have credit cards. Seventy-seven percent report they are better off or the same, financially, as they were last year. And 79 percent of this demographic group — who PYMNTS/Unifund labeled “Second Chances” because they are rebuilding from previous financial troubles — report living paycheck to paycheck.

It gets more worrying from there. Half say their monthly bills are larger than their monthly income, with the other half reporting that most of the time bills outweigh their monthly income. Around 50 percent also say they will either fall into delinquency (22 percent) or struggle to pay their bills (28 percent) three months or less from now.

And while the trouble is most notable among this group, about a third of consumers report falling behind on bills — up 6 percent from this time last year — in an economy that is booming with inflation rates below 2 percent for more than eight years.

The economic bulls may be running, but a large segment of consumers seem to nonetheless be riding right on the line of being trampled if their luck turns in one or two big ways.

The good news? It’s not all bad news — there is a reason to think that some of the debt creep is a bit better controlled than the most dire numbers make it seem.

The less good news? There are a lot more dire numbers.

Want to read them all?

We’ve got them - and they are eye-opening.



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