Study Finds That Credit Card Debt Remains a Problem for Many US Consumers

A recent study by the Federal Reserve Bank of Boston (Boston Fed) found that the number of people racking up credit card debt is going up, with just 35 percent of credit card holders in the United States actually paying off their monthly balances in full. Whether it’s a person who simply elects to hold off on paying their credit card debt immediately or it’s a person who has no choice but to accumulate debt and later attempt to negotiate a payment plan with the credit card company, credit card debt is a serious problem for many consumers.

Researchers who conducted the study used information obtained via the Federal Reserve Bank of New York Consumer Credit Panel (CCP), which has a small sample of every credit account in the U.S. between 1999 and 2014 covered by Equifax, one of the major credit reporting agencies.

Some of the most important findings of the study include:

  • The availability of credit is a major influencer of consumer debt in the United States. Moreover, this is true for accumulation of both short-term debt and long-term debt, which means that people with credit cards and the ability to push off paying their debts for a few months or even a few years are more likely to do so. In fact, Equifax data indicates that a 10-percent increase in the availability of credit is typically followed by a 1.3-percent increase in debt within a three-month period.
  • As a young person gets older and their credit limits increase, they become more likely to increase their debts. According to the data, this is true of US consumers’ debt until the consumer reaches the age of 50, at which point “overall credit utilization” actually begins to decline slowly. The average credit utilization for a 25-year-old consumer is approximately 50 percent, while the average credit utilization for a 70-year-old consumer is just 20 percent.

Credit Card Debt Problems in New Jersey

The Boston Fed study also noted clear geographical patterns when it comes to credit card debt. For instance, states like New Jersey and New York did very poorly in terms of both credit card debt per capita and debt delinquency rates. New Jersey has one of the highest delinquency rates in the nation at 7.7 percent, as well as the second-highest credit card debt per capita at $3,620. New York does not fare much better.

For additional information, view the SFGate.com article, “Consumers in These States Carry the Most Credit Card Debt.”

 

If you are struggling with credit debt or any other kind of debt problems, you should speak with a qualified debt management lawyer immediately. Joel R. Spivack, Esq., is an experienced debt relief and bankruptcy attorney who can offer guidance when it comes to debt-related issues in New Jersey. Contact Joel Spivack today to schedule a free consultation and explore your legal options.

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