This infographic provides an understanding of what changes in the American economy since 2010 might mean for credit card debt.
How American Credit Card Debt Has Changed in the Last 5 Years
At Financial Solutions of America, we recognize the value of putting your own debt situation in context and being aware of the bigger picture. To get an understanding of what changes in the American economy since 2010 might mean for credit card debt, consider these statistics:
- The average American in credit card debt as of January 2015 owed over $2,000 less than the average in January 2010.
As expected, consumer debt has improved with the economy in the past 5 years.
- The biggest yearly decrease in debt (about $3,000) was between January 2010 and January 2011.
Credit card debt began to decrease as the nation recovered from the Great Recession, which officially ended in 2009.
- In the second quarter of 2010, the charge-off rate was 10.9%.
The huge decrease in credit card debt that occurred in 2010 was mostly due to credit card companies writing off unpaid debts.
- The percentage of households with credit card debt increased over 3% between January 2010 and January 2011.
It seems as though the high charge-off rates, as well as a slow rate of economic recovery, encouraged more consumers to borrow in order to meet their needs.
- The biggest yearly increase in debt (about $500) was between January 2014 and January 2015.
The recent increase in credit card debt likely has to do with credit card companies letting consumers borrow more freely, while also becoming more strict about collecting unpaid debt since the high charge-off rates of 2010.
- The proportion of households in debt has remained at around 46.7% over the past 4 years.
Considering the slow climb of average debt amount in the past year or so, it could be that the rate of consumers falling into credit card debt is faster than those getting out of it.
- As of July 2015, the average indebted American’s outstanding balance is $15,863, while average student loan debt is at $33,090 and average mortgage debt is at $156,584.
Credit card debt ranks third, behind student loan debt and mortgage debt, in sources of indebtedness for Americans.
- The average debt across all American households is $7,400.
The average is significantly lower when including households not in any credit card debt, suggesting that most of the American population owes a relatively small amount.