Debt Declines for the First Time Ever
Saturday December 13, 2008
A recent Federal Reserve report shows that American's debt shrank for the first time since it began tracking data about debt in 1951. Credit card debt went down, but very slightly. The biggest drop was in non-revolving debt which includes mortgages and auto loans. Unfortunately, one of the primary reasons debt dropped is because of the millions of dollars in home foreclosures. Mortgage debt simply shifted from consumers to banks.
As credit card issuers continue to increase interest rates and cut credit limits, credit card usage is expected to continue to drop.
Debt Management Resources:Source: Federal Reserve G.19 Report, CNNMoney.com
Comments
Even individuals that have not suffered a loss of income/employment are cutting back on spending. More are using cash instead of credit cards.
Folks that are able to will naturally try to improve their on balance sheet to help weather the financial storm that we are in.