2017 Was a Big Year for Consumer Credit
You might have been noticing more new cars in your neighborhood or more neighbors starting home improvement projects. There is a reason. According to a recent report from TransUnion, 2017 saw consumer credit grow at a steady pace, with more than 20 million new credit accounts opened in 2017 alone. TransUnion credits the strengthening economy and improved consumer confidence for the increase in borrowing, which shows no signs of slowing.
More Cars, Homes, and Credit Cards
In 2017, increased consumer credit was spread out across the entire economy:
- Credit cards: a 3.5% increase in the number of accounts year over year (YoY).
- Automobile loans: a 4.8% increase in accounts YoY.
- Mortgages: a 2.3% increase in the number of accounts YoY.
- Unsecured personal loans: a 7.5% increase in the number of accounts YoY.
Average debt per borrower also increased across all credit products, with mortgages rising the most at $7,321 and credit cards rising $158 per borrower.
Furthermore, consumers are having no trouble financing all of this new consumer credit. According to the same report, the serious delinquency rate rose only for credit cards, rising 8 basis points. Meanwhile, the rate of serious delinquency fell 54 basis points for personal loans and 42 basis points for mortgages. As this consumption fuels more economic growth—and more economic confidence—the amounts borrowed could increase again in 2018 as consumers look to spend even more money.
When the Music Stops
Unfortunately, the economy does not rise and fall for all people at the same time. Instead, some consumers continue to get into trouble, borrowing more than they can afford or suddenly finding themselves distressed after an illness or job loss.
As we move into 2018, you might encounter difficulty making payment on some or all of your credit accounts. The process for digging yourself out of debt is complicated and is made even more difficult if you suddenly lost a job or cannot work your normal hours. Nevertheless, consumers have options, such as:
- Refinancing loans to obtain a lower interest rate. Doing so can lower your monthly payment, freeing up cash for other necessities.
- Negotiating better terms with your lenders. For example, some credit card companies will waive late fees and penalties if you can explain your situation.
- Deferring some loans, such as student loans, until your income improves.
- Downsizing your life by moving into a smaller home and buying a cheaper car. If necessary, you might move back in with family or with friends until you get your financial feet back under you.
Just as night follows day, a hangover may eventually follow the recent consumer credit binge. At Nowack & Olson, we are here for consumers who find themselves struggling to make ends meet. If you cannot pay your bills, our bankruptcy attorneys can advise you about your options and explain how a Chapter 7 or Chapter 13 bankruptcy might afford you so breathing room. Contact us today for a free and confidential consultation at 888-813-4737 or fill out our online contact form.