Credit Tips: Consumer Debt Research
Written by carnold
Posted On: April 1, 2005
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Post subject: consumer debt research
Ira Stoller
Date: 1/20/2001 11:58 pm CDT
An interesting commentary on the state of consumer debt in the United States appears on page 40 of the anuary 29th issue of Business Week.
Here are just a few highlights which might be of interest:
1. Borrowers are more leveraged and vulnerable today than at any time since the 1990-1991 recession. The savings rate is in decline, and more lower income people who were never offered credit before are piling up debt.
2. The most telling increase in leverage is in the home. In 1990 homes were mortgaged for about 35% of their value; today that percentage is close to 50%
3. In 2000, total consumer debt was 34.1% of income, up from 28.2% in 1990.
4. Debt service payments (finance charges) were at 13.7% of disposable income in Q2, 2000. This is the highest since late 1987.
5. To replace revenue lost in “crackdowns on nuisance fees,” the credit card industry has increased solicitations & credit lines.
6. Nearly 14% of families in the $25,000 to $50,000 income range were making credit card payments of more than 40% of income. Only 5.7% of families in the $50,000 to $100,000 income range were in that deep.
7. Lenders are steeling themselves for higher losses on consumer loans in the coming years.
I’d advise everyone to read the entire article. Very interesting.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Board Monitor-CS
Date: 1/21/2001 0:15 am CDT
Thanks Ira. Very interesting.
Take Care,
Casey L. Smith
cardrevolt.com
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
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Curtis Arnold, a nationally recognized consumer educator and advocate, has been educating consumers about credit cards since 1998. Curtis is the author of "How You Can Profit from Credit Cards: Using Credit to Improve Your Financial Life and Bottom Line" (FT Press, 2008). He is also the co-author of the upcoming Complete Idiot's Guide to Person-to-Person Lending (Alpha Books/Pengiun Group USA, April 2009), a contribitor to The Ultimate Allowance (InnerWealth Publishing, 2008) and is extensively featured in 42 RulesTM for Driving Success With Books (Super Star Press, January 2009).
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