Will more Americans fall behind on their credit card debts this year?
According to a recent Time article, a report issued by the Federal Reserve Bank of New York said that Americans’ credit card debt rose by $2 billion in the third quarter last year. This rise in credit card debt occurred even though Americans’ total debt dropped. (Much of the drop reflects mortgage debt. Americans also added $23 billion in new student loan debt and $18 billion in car loans during the same quarter.) And, according to a credit bureau, while the average borrower had just under $5,000 in debt as of the third quarter of 2012, the average borrower will likely have almost $5,500 in debt by the end of this year.
While delinquencies on bank-issued credit cards were as low as they’ve been in nearly two decades during the third quarter of 2012, slow job growth and falling consumer confidence could indicate a rise in delinquencies in 2013.
Another problem concerns subprime customers. Banks seem to be signing up customers who are more likely to default on their debts. The number of subprime borrowers rose more than five percentage points between 2010 and 2012. Banks seem especially interested in signing up millennials. These young adults haven’t established a credit history yet and are just beginning to realize their earning potential.
Maxed out credit cards may send some consumers to bankruptcy court. If you feel like you could benefit from legal advice regarding your debts, call a knowledgeable and trusted San Diego bankruptcy attorney.