Consumer Credit Grew in August
According to a recent Federal Reserve report, consumer credit grew in August 2018 at the fastest pace in several months. Consumers added $20.1 billion in credit in August, bringing their total to $3.94 trillion. This represented a 6.2% growth rate.
Non-Revolving Credit Grows the Most
According to the report, nonrevolving credit grew by 6.4%. This type of debt includes auto loans and student loans (but does not include mortgages). This growth was equal to the growth rate in July.
Revolving credit grew slightly less fast, rising by 5.6% in August. However, this represented a dramatic increase from the previous two months, when growth had been sluggish. The August growth rate was the highest since May. In total numbers, consumers took on $4.8 billion of revolving credit in August, which was much higher than the $1.4 billion taken on in July.
Watch for Interest Rates
Growth in wages have underpinned this credit expansion, and the Federal Reserve expressed confidence that consumers can handle their debts, even as the Fed increases the short-term interest rate, which should cause borrowing costs to increase.
However, a recent report has shown that credit card interest rates have spiked. In fact, the interest rates for credit cards have risen to a little over 17%, which is an increase over the 16.15% the year before and the 15.22% from two years ago. Since the average household that carries credit card debt has a balance nearing $17,000, a 17% interest rate will certainly take a bite out of a consumer’s income.
What can consumers do? One thing is to ask your credit card issuer to reduce your interest rate. According to a recent study, around 56% of people who requested a lower interest rate received it. This was less than those who asked for a higher credit limit or the waiver of a late fee. But the odds are still better than 50/50, and the worst that can happen is that your lender says “no.”
Delinquencies are Also Down
Consumers seem to be handling rising interest rates in stride. For example, delinquencies for credit cards slipped below 3% to 2.93%, which is below the current average of 3.55%. In this economic environment, consumers should expect lenders to continue to sign up new customers for accounts and to approve many requests for increases in credit limits.
Speak with a South Florida Bankruptcy Attorney
Although the Florida economy remains strong, financial troubles can strike anyone. If you are struggling with a job loss or an unexpected medical expense, you should consider whether a consumer bankruptcy is right for you.
The attorneys at Nowack & Olson are here to help you discuss your options. In our experience, many consumers wait far too long before deciding to file for bankruptcy, costing them time and money in the process. We are happy to meet with you to perform a full examination of your financial situation and then walk you through your options.
For a free consultation, please call us at 866-907-2970 or submit an online contact sheet. Our consultations are completely confidential.