2024-08-26 03:36:32
Americans are getting more and more indebted. US household debt rose by $109 billion in the second quarter of the year to $17.8 trillion. That’s according to a report by the Federal Reserve Bank of New York released earlier this month.
Home mortgage debt rose by $77 billion to $12.5 trillion.
American households are in debt by another 10 billion dollars due to the acquisition of cars. The amount of these debts reaches 1.63 trillion dollars.
Overall levels of non-performing loans remained largely unchanged in the April-June period, when they stood at 3.2 percent of all U.S. household debt.
However, in the second quarter of 2024, record credit card debt accumulated, reaching $1.14 trillion. This is their highest value since the Federal Reserve Bank of New York began keeping such statistics in 1999.
U.S. household credit card debt rose substantially from the first quarter of the year, when it stood at $1.11 trillion.
US consumers owed an average of $6,864 on their credit cards in the fourth quarter of 2023. This is according to an analysis of the American financial company “LendingTree” (LendingTree), which is based on 350,000 credit reports.
However, the delinquency rate on credit cards is higher. The most serious problems in repaying them were reported among Americans between the ages of 18 and 29, as well as between 30 and 39 years.
“These debtors may have taken on too much debt during the pandemic,” experts at the Federal Reserve Bank of New York said.
Why Americans are getting more and more indebted
Among the reasons for the increase in the debts of American households is the increase in interest rates by the Federal Reserve Board of the United States. Their increase was aimed at controlling high inflation, but it leads to an increase in the cost of lending, which is a prerequisite for an increase in personal debts, analysts note.
“High inflation and interest rates have eroded Americans’ savings and put more people in debt for longer periods of time.” This is stated by Ted Rossman, senior analyst at the American financial services company Bankrate, quoted by CNBC.
Against this background, the optimism of a number of analysts in the US is hardly justified, that the increase in credit card debt of consumers in the country should not cause alarm.
Experts advise
An increase in financial obligations and delinquencies in credit payments are registered in all sectors of the US economy that create products and services intended for end customers.
This situation is much more difficult for younger workers than for their older colleagues, according to analysts from the American company TransUnion (TransUnion), which prepares analyzes of the state of the credit market.
Young people must develop habits of responsible shopping for credit, which will protect them from the danger of not being able to cover their obligations on time, experts say.
“You have to make sure that your loans and your expenses are within what you can afford.” Charlie Wise, Head of International Market Research and Consulting at TransUnion, gave this advice in an interview with CNN.