Consumers Are Borrowing Less
In the month of August 2009, consumers once again reduced how much they are borrowing for the seventh consecutive month. Instead of taking on more debt, American households are working to pay off their existing debt.
The Federal Reserve reported that consumer debt fell by $12 billion. That represents a 5.8% reduction in the annual rate. The latest debt reduction comes on the heels of a revised drop of $19 billion in July 2009.
While this is certainly good news for consumers and the country as a whole we still have a long way to go as far as getting a handle on our debt is concerned.
There are several factors at play and chief among them is the fact that many consumers are shying away from credit card use. The reasons for this include higher interest rates, lower credit limits and the fact that many accounts have been closed due to the poor economy.
Total outstanding consumer debt is now estimated to be $2.46 trillion. Yes that’s trillion with a ‘t’. The number is actually down 4.6% from a record high.
The factors that make up consumer debt consist of automobile loans, personal loans and of course everyone’s favorite, credit cards. Mortgages are not included when compiling consumer debt numbers.
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