Debt

This week’s top stories about consumer debt

Hello Readers!

Welcome back to my blog!!! Today, I’m going to share this week’s top stories about consumer debt. The main story of this week is that the total consumer debt has increased by $32 billion in the last 3 months of 2018. The total household debt stands at $13.5 trillion. I will talk about it in detail in this post. But before we dig into it, let look at the other major news in the consumer debt industry.

US Credit card debt reached $870 billion
Total US student loan debt crossed $1.5 trillion
Good news for lenders – No more restrictions on them

US Credit card debt reached $870 billion

Congrats! Americans have done it again. They have created a new history. The US credit card debt rose by $26 billion in the fourth quarter of 2018. The total credit card debt in the country stands at $870 billion.

More than 470 million plastic cards are in circulation. This figure is 100 million more than what was there 10 years back.

Around 37 million credit card accounts holding $68 billion in debt are delinquent for more than 90 days in the last quarter. This number is again 2 million more than what was there in the fourth quarter of 2017. But the most startling revelation is that one-third of the credit card debt is held by people who are 60 years old or more than that.

The total credit limit has increased by 1.5% in the last quarter of 2018.

Total US student loan debt crossed $1.5 trillion

As per the latest statistics, 44 million borrowers owe $1.5 trillion on student loan debt alone. It is the second highest consumer debt in the country now. The student loan debt is higher than credit cards and lower than the total mortgage debt in the country. The student loan delinquency rate is 11.4% in the country where most borrowers are delinquent for more than 90 days.

Here’s a quick recap of the student loan debt statistics to give you an overall idea.

  • 5.1 billion borrowers are delinquent on their loans for more than a year.
  • 2.6 million borrowers have $111.1 billion in forbearance.
  • More than 890,516 borrowers are enrolled in Public Service Loan Forgiveness.
  • The federal government has already forgiven $12.3 billion.
  • Calfornia has the highest amount of student loan debt. 3.4 million borrowers owe $111.7 on student loans.  

Good news for lenders – No more restrictions on them

The CFPB has decided to roll back protections that were conceived during the Obama era. The proposed regulations would have protected millions of people who take out cash advance every year. The proposed regulations were:

1. Payday loan company would lend money only after verifying borrowers’ income and affordability.

Interest rates on payday loans are very high. Some loans carry an interest rate of 391%, which is very difficult for borrowers to pay. These people have 90% chances of getting into debt. The new regulation aimed to safeguard those borrowers and restrict the lenders.

2. The number of times borrowers can refinance their payday loans would be curtailed.

The new laws were introduced with the goal to stop borrowers from taking out more loans than what they can tackle. But CFPB’s new decision has put the victory caps on the heads of payday lenders.