Our Kentucky readers may have noticed that our overall debt as a nation has decreased. According to the Federal Reserve Bank of New York, America’s total debt fell a nearly $74 billion in the third quarter, but credit-card debt actually went up an estimated $2 billion during the same time period.
Financial experts believe that even though Americans are paying down mortgages, credit-card debt, new student loan debt and car loans are going to get most of us in over our heads in 2013. As of last year’s third quarter, American borrowers were just shy of $5,000 in debt, a number that is expected to rise to almost $5,500 by the end of this year.
Households are projected to bring in about $1,000 less in take-home income tax this year when the payroll-tax cut expires. Slow job growth and falling consumer confidence will also play factors in the raising percentage of people who pay their credit-card bills more than 90 days late.
Banks are hoping that by borrowing at extremely low rates right now, consumers will use other bank products in the future, such as financial advice, mortgages and even small-business loans. Even with the risk of default numbers going up, banks are putting stock into current college students to fuel the recovery of the recession.
With a reported $23 billion in new student-loan debt from last quarter, it is difficult for college students to get a credit card. Banks are hoping this generation will begin to realize its earnings potential and reach out for financial assistance in paying down their debt.
Source: time.com, “Why More Americans Will Fall Behind on Credit-Card Bills This Year,” Martha C. White, Jan. 7, 2012