Avg. American Household Has $8,284 in Credit Card Debt

[Anonymous]

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@OmarR wrote:

I know you are just trying to help family, but you are just enabling her.

And I say that as someone that has been at both ends of that stick.

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You're right. Her family is also part of the working poor and just doesn't want to acknowledge it, so they can't help. It's a rural area and without a car my niece can't get to work. But yeah, you're still right.

[Revelate]

I have a strong suspicion HELOC's are including in those revolving numbers, and that will skew things badly if those aren't accounted for separately.

Actually, and this is somewhat strange, looking at my Experian report doesn't appear to be a difference even if I know it's excluded from some revolving calculations nd I believe all utilization metrics FICO 8 wise; as a result I'm pretty sure that's factored in, and right now I look like an eggregious example with 27k carried on a HELOC (at 5% currently, not 16+%).

The problem with claiming the sky is falling is the bulk of the debt is going to be carried under 5% these days for anyone with an average credit score and paying attention to even the radio at all with the mortgage refinance advertising blitz that occurred over the last half decade or so.  That's just looking at the numbers posted in the analysis.

So yeah, while we know Americans suck at saving and people seem to be dependent on inheritance for their own retirement at this point, ultimately I don't see this as a leading indicator towards a 2008 style collapse.

[trusty]

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@Revelate wrote:

I have a strong suspicion HELOC's are including in those revolving numbers, and that will skew things badly if those aren't accounted for separately.

Actually, and this is somewhat strange, looking at my Experian report doesn't appear to be a difference even if I know it's excluded from some revolving calculations nd I believe all utilization metrics FICO 8 wise; as a result I'm pretty sure that's factored in, and right now I look like an eggregious example with 27k carried on a HELOC (at 5% currently, not 16+%).

The problem with claiming the sky is falling is the bulk of the debt is going to be carried under 5% these days for anyone with an average credit score and paying attention to even the radio at all with the mortgage refinance advertising blitz that occurred over the last half decade or so.  That's just looking at the numbers posted in the analysis.

So yeah, while we know Americans suck at saving and people seem to be dependent on inheritance for their own retirement at this point, ultimately I don't see this as a leading indicator towards a 2008 style collapse.

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I'm pretty sure that any mortgage loan - in whatever position - falls under mortgages. The credit bureaus list Revolving, Installment, Mortgage, other.

Either way is, debt is debt. The question is, are wages growing sufficiently to pay the debts back timely?

The stat that concerns me the most; is that in a decade, we've gone from two thirds participation in the stock market, to just over half of society. That's striking - that so many people have completely lost faith in the stock market, especially when considering that companies just aren't offering pensions like they used to. It's a bleak outlook, because the third option is reaching an age where they can be on the dole; which is also failing.

So, it's all around just a bleak future for anyone that doesn't already have a plentiful trust setup for their family's future; which is about 9 out of 10 people - to the negatory.

Also, speaking of inheritance, baby boomers are running out of assets to pass on. Sure, there's still a large enough swath of society that's still living off of old money, and the spoils of war. But, when that runs out, probably in the next few decades, there exists no fundamentals to replace it, none.

I'd love to be hopeful for the future for everyone. But, I'm only hopeful for selfish reasons... and, I suspect that most people feel similarly. - Which, is more a tribute to a symptom of a larger problem - an utter lack of sense of service to society - than anything else.

It's all gladiators and circuses at this point, I suspect from here on in. Let them eat cake; or is it just bread? I don't know. I just know that it's not good, whether we're looking at it from a macro, or a micro standpoint. Like they say in sports, there's no such thing as a moral victory. We're taking on a lot of losses, at this point, to multiple sectors of the economy... with no real replacements on deck. Moral victories surrounding the holidays are just that... Pyrrhic, temporary, and unsustainable.

[Anonymous]

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@Revelate wrote:

I have a strong suspicion HELOC's are including in those revolving numbers, and that will skew things badly if those aren't accounted for separately.

 You made such a good point, I just had to find out! 

Assets and Liabilities of Commercial Banks in the United States ( federalreserve.gov link )

Surprisingly, it actually shows 'Revolving home equity loans' going down month to month, while the 'Credit cards and other revolving plans' went up about $40 billion -  lines 13 and 21, respectively. Also a nice graph here: https://fred.stlouisfed.org/series/RHEACBW027SBOG

And then there is: "At $67 billion, current HELOC dollar volume pales in comparison to its 2006 heyday of $140 billion. But some, including Freddie Mac, say they expect it to continue its steady climb thanks to rising interest rates and home prices. In its 2018 forecast report, Freddie Mac said borrowers tapping their home equity will be a major trend driving the market forward this year."

https://www.housingwire.com/articles/43830-heloc-use-is-on-the-rise

[Anonymous]

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@trusty wrote:

I'd love to be hopeful for the future for everyone. But, I'm only hopeful for selfish reasons... and, I suspect that most people feel similarly. - Which, is more a tribute to a symptom of a larger problem - an utter lack of sense of service to society - than anything else.

 Socialism is for the rich, capitalism is for us. What I mean by that is they socialize their losses and privatize the profits.

The stock market must go up. Whatever it takes to get that good Q/Q is all that matters, and if we 'poors' need to die or be laid off on Christmas morning, so be it.

[Anonymous]

Running off of my memory which may not be as solid as I like, seems to me the ability to deduct HELOC interest will be impacted with the 2018 and beyond tax structures (standard deduction vs scheduling items). Some limits on mortgage interest now exist and if I recall there was a move afoot to restrict mortgage interest write offs more than exists today. Politics for sure (which I will not open the door on).

[Anonymous]

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@Anonymous wrote:

Running off of my memory which may not be as solid as I like, seems to me the ability to deduct HELOC interest will be impacted with the 2018 and beyond tax structures (standard deduction vs scheduling items).

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Your memory is fine (From IRS.gov): "Under the new law, for example, interest on a home equity loan used to build an addition to an existing home is typically deductible, while interest on the same loan used to pay personal living expenses, such as credit card debts, is not. As under prior law, the loan must be secured by the taxpayer’s main home or second home (known as a qualified residence), not exceed the cost of the home and meet other requirements."

https://www.irs.gov/newsroom/interest-on-home-equity-loans-often-still-deductible-under-new-law

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

Running off of my memory which may not be as solid as I like, seems to me the ability to deduct HELOC interest will be impacted with the 2018 and beyond tax structures (standard deduction vs scheduling items).

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Your memory is fine (From IRS.gov): "Under the new law, for example, interest on a home equity loan used to build an addition to an existing home is typically deductible, while interest on the same loan used to pay personal living expenses, such as credit card debts, is not. As under prior law, the loan must be secured by the taxpayer’s main home or second home (known as a qualified residence), not exceed the cost of the home and meet other requirements."

https://www.irs.gov/newsroom/interest-on-home-equity-loans-often-still-deductible-under-new-law

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Thanks for the IRS information. That is what I was rummaging around trying to get a grasp on

[Revelate]

That is a truly excellent find @Anonymous !  Thank you for posting it!

Trusty: no, not all debt is created equally.  I agree the question is whether the debt can be repaid or not, but the interest generated off a 5% loan is vastly different than 20% on a credit card.  Also debt on a mortgage which goes to living expenses simply can't be compared in reality to consumer spending on non-essentials on a credit card as so many of us do.

Also making the blithe assumption about data is truly flawed: Equifax categorizes my HELOC under real estate, Experian explicitly has it listed under Card/Retail debt.  The exact same tradeline might report slightly differently between the bureaus, and as a result depending where and who they got their data from, which wasn't cited from what I saw, it can't possibly be 100% accurate... especially considering all the broken and wrong information from the bureaus.

That isn't to say it can be handwaved away as the Fed statistics are disclosed from the banks directly as I understand it: decreasing HELOC debt but increasing credit card debt seems a little strange from Cassie's link, home owners getting ahead?  Presumably cost-of-living for people who bought their home soon after the market crash is non-trivially cheaper than it would be for renters today, can likely extend that analysis out quite a bit actually. 

Bookmarked that site, at some point I really want to dig into those numbers heh.  Thanks again Cassie!

[Anonymous]

Here is some more interesting data: Subprime Rises: Credit Card Delinquencies Blow Through Financial-Crisis Peak at the 4,705 Smaller US...

"In the third quarter, the “delinquency rate” on credit-card loan balances at commercial banks other than the largest 100 banks – so the delinquency rate at the 4,705 smaller banks in the US – spiked to 6.2%. This exceeds the peak during the Financial Crisis for these banks (5.9%)."

There's some good data at that link, and it does check out with what the fed reported, although that site comes across as a 'doom and gloom confirmation bias haven'. If you look at the delinquency rate for the top 100 banks - which is basically what every CNN, Forbes, Fortune, etc. is going to report, things don't look so bad at around 2.5%.