You Have $2.54 Trillion In Consumer Debt

The amount of new consumer debt is increasing more slowly than in previous months, growing only $5.2 billion in February, says Bloomberg. It sounds like a lot of money, but it’s a much slower rate of growth than the $10.3 billion increase in consumer credit seen in January.

How long will consumers keep reaching for their credit cards? Are they finally slowing down?

U.S. banks and other financing companies reduced lending after the collapse of the subprime mortgage market. At the same time, consumers are scaling back spending, and those who’ve exhausted home-equity loans have few alternatives other than credit cards.

“Consumers were still reaching for the plastic credit cards in February, but for how long is a big question mark,” said Chris Rupkey, chief financial economist at Bank of Tokyo- Mitsubishi in New York. “The credit-market turmoil is going to eventually take its toll as banks are already cutting back on their extensions of consumer credit.”

Are you cutting back on your credit card spending? Are you falling behind?

According to a survey by the American Bankers Association released April 3, consumers fell behind on credit-card, home- equity and auto loans at the fastest pace in 15 years during the fourth quarter of last year. Banks and other lenders, in turn, increased their reserves against losses.

U.S. Consumer Borrowing Rose $5.2 Billion in February (Update1) [Bloomberg]


Edit Your Comment

  1. APFPilot says:

    Even Ben does double posts.

  2. APFPilot says:

    correction Meg.

  3. Bladefist says:

    this one is better though.

  4. ptkdude says:

    I owe $2.54 trillion? I can send you $100 a month, but that’s the most I can do.

  5. PeteRR says:

    I’ve been carrying credit card debt since the summer of ’01 when I bought a race car. It peaked at about $42k, which at the time was about what I making per year. By the end of this month I’ll finally be debt free.

  6. uberbucket says:

    $2,540,000,000,000 doesn’t even look real.

    Did we win?

  7. ChuckECheese says:

    Yeah, but it’s at an introductory interest rate for the first 12 months, and then I’ll transfer the balance.

  8. ConsumptionJunkie says:

    Has anyone noticed that banks have quietly raised their fees?

    Aventium, for example, charges a $95 “program” fee once you are accepted, and $25 every time your credit limit is increased.

    The minimum credit line is $250, so after the yearly fee, the monthly fee, and the program fee, your available credit can be less than ten dollars a year.

  9. ClayS says:

    Someone check my math please…

    $2.54 trillion divided by about 300 million people in the US is almost $850,000 per person. Can that be right? Consumer debt?

  10. ClayS says:

    No, its $8467.

    Thats better.

  11. ConsumptionJunkie says:

    Has anyone noticed that banks have quietly raised their fees?

    Aventium charges a $95 “program fee” once you are accepted and a $25 fee every time your credit line is increased.

    Someone with a $250 credit line will have less than ten dollars for available credit after all the first year fees are deducted.

  12. billbillbillbill says:

    Congrats PeteRR, I can’t imagine that much debt or having to dig out of that. My wife and I are digging out of about $8k of credit card debt and are counting the days until September when we are debt free other than the house!

  13. humphrmi says:

    @ClayS: Wow, eight grand per person. And it’s actually a lot higher because that 300 million people you divided by includes a lot of children (not that they aren’t in debt too, but probably that not many).

    It’s astounding. We are addicted. We are consumers! :)

  14. B says:

    @ClayS: I only have about $150 in credit card debt. I’m way behind. Time to go on a charging spree!

  15. PeteRR says:

    Luckily being single, I just pulled in my horns and didn’t spend money unless absolutely necessary. I also started volunteering at work for as much overtime as they would give me. I’m down to about $5k and I’m in the process of selling one of my three vehicles. That’ll more than cover the outstanding balance.

  16. Bryan Price says:

    Hmmm. I zero out that credit card bill every month. Sometimes I even put even more into it because I know I’ve got a higher bill than I like coming the next month.

    That leaves >$8k for the two year old car, and >$50K left on the mortgage on the house.

    I don’t peak at my wife’s AmEx bill. With multiple out of the country round-trip tickets on that plastic, I don’t want to give myself a heart attack. But she gets all those $s paid back to her. I’m just wondering how that five figure check that comes in (electronically) and then goes out the same day (electronically) goes with the feds, being out of the country and all.

  17. banmojo says:

    Well, I guess it’s a step in a better direction, but still accumulating MORE debt, so not fixing the situation yet either.

  18. howie_in_az says:

    @banmojo: Maybe those are just late penalties and associated fees?

  19. pal003 says:

    That will be $2,540,000,000,000 – $600 when I get my economic stimulus check and pay off the bad, bad BofA card. Thanks fellow taxpayers!

  20. BingoLong says:

    But if I live within my means then the economy suffers! (And we don’t want a recession, now, do we?)

  21. cerbie says:

    A cuter pic than those cat ones—what was the article about?

    OK, anyway, with fuel prices still on the climb (see diesel), it’s just getting thinner and thinner. Will it go out with a whimper or a bang?

    As of now, it’s not like everyone can just start over and not have interest-collecting debt over their heads.

    We’ve been in the hole for years, and now it is getting to be too late to make it look nice.

  22. Erwos says:

    @cerbie: This is why it’s important to not bail people out in the current round of foreclosures. Do that, and people will just keep on demanding it – and the people who have the money (aka, responsible people) will foot the bill.

    Moral hazard isn’t a theoretical thing. It’s VERY real.

  23. SOhp101 says:

    @Erwos: Except we’re doing it with Bear Sterns.

    I don’t think anyone is disputing that moral hazard isn’t real though. The federal reserve is full of bs.

  24. charlie.evans says:

    Yeah. $8467 in consumer debt would be nice. But, being a college student at a private university is raping my wallet (pardon the use of bad language). I have about $67000 in student loans and I still have another year with my Bachelor’s. Gross stuff.

  25. FLConsumer says:

    Damn, I need to start racking up more debt. Paying it off every month isn’t helping the cause.

  26. Erwos says:

    @SOhp101: The federal reserve, though, can regulate the commercial investment banks now that they’re in bed with them – and they apparently are going to. Given that their management of regular banks has been surprisingly effective (I mean, none of them have failed… yet), that’s actually not a bad thing.

    But the only way to regulate consumers is to essentially take choices from them. Consumers generally don’t appreciate that.

    FWIW, I was against Bear Stearns, too.

    @charlie.evans: It’s probably time for people to understand that private colleges are generally so-so deals compared to state schools, especially if you can’t really afford them. A degree from Harvard is nice, but the cost is pretty damned high for the benefit.

  27. onesix18 says:

    Consumer spending will slow, but not as fast as it needs to, because we have indeed become a nation dependent on material goods for happiness.

  28. mduser says:

    Oh I’ve been cutting back on my spending for the last year. It helped that I kicked a deadbeat boyfriend to the curb.

    I’m down to just over 5k, and I already have the budget worked out to pay it off in 1 year or less. The plan after that is to take the money that was going towards my credit card and split it between saving for a car and extra payments on my student loan.

  29. As soon as I go cash my tax refund check (I must have given the IRS the wrong routing number or something), my share of all that debt will be limited to my car and my house. Zero credit card debt – gotta love it.

  30. @ChuckECheese: Don’t bet on it. This year’s offers weren’t as good as last year’s. Next year’s will suck. Better pay the thing down as best you can while you can.

  31. mduser says:

    @mduser: Just over 5k in credit card debt that is.

  32. dragonfire81 says:

    You know the banks and credit card companies are as much to blame for this as consumers.

    They just keep shoving deceptive “low interest” or “preapproved” cards to people and of course, they are jumped on and quickly maxed out (since it many cases they end up given to people who are tight on money to begin with).

    Add in those scummy store credit cards that seem to be proliferating at an ungodly fast rate and you’ve got a credit problem.

    With prices for food and gas rising by the day and the job market worsening, I expect the debt levels to keep going up for the foreseeable future.

  33. synergy says:

    I use my credit card all the time, but that’s because I get cashback. Then I pay it off when I get paid. I wonder if this number includes all CC usage or if this is only how much people are heavy, that is, not paying off after the grace period.

  34. synergy says:

    @PeteRR: Congrats!

  35. Rusted says:

    Oops. I owe nada.

    @dragonfire81: Some of us just don’t shove.