According to a new report from the Federal Reserve Bank of New York, Americans are sitting on more household debt than ever. Total household debt increased by $92 billion (.7 percent) to almost $14 trillion in the third quarter of 2019. Several economic factors have contributed to this rise including:
- Low unemployment. US employers added 128,000 jobs in October according to a job report by the Bureau of Labor Statistics.
- Strong consumer confidence. Despite a dip in October, consumer confidence remains high.
- Cheap borrowing costs. The federal funds rate is now between 1.5% and 1.75% after the Federal Reserve cut rates for the third time this year.
According to the NY Fed, several figures that comprise the total debt continue to rise:
- Mortgages. At $9.44 trillion, mortgages are still the bulk of Americans’ debt, up by about $31 billion from the end of the second quarter.
- Student loans. Climbed to $1.5 trillion, about 1.4% higher in the third quarter.
- Credit cards. Balances rose $13 billion during the third quarter.
- Auto loans. Balances increased by $18 billion in the third quarter.
Despite low unemployment rates and increasing wages, aggregate delinquency rates worsened with 4.8 % of outstanding debt overdue. Student debt, specifically, had high delinquent rates: one in nine borrowers were 90+ days delinquent or in default.
Although having well-managed debt may not be detrimental to your finances, out-of-control monthly bills can contribute to poor financial health. With so many monthly payments to monitor, consumers shouldn’t have to worry about sneaky billing practices from their internet, wireless and cable providers. There’s a good chance you’re paying more than you should and