Here’s what you need to know.
During the fourth quarter of 2016, total household debt in the United States jumped more than it has in three years, increasing from $226 billion to $12.58 trillion. According to the Federal Reserve, our debt is only 0.8 percent below its all-time peak of $12.68 trillion (during the 3rd quarter of 2008).
This rise in debt came from every type of household debt, including mortgages, auto and student loans, and credit card balances (with credit card balances being the highest increase). According to the Federal Reserve, “This boost in balances was in part driven by new extensions of credit.”
Though this debt is alarming, it’s entirely different than the all-time high household debt total of 2008. 2008’s debt was composed of mostly mortgage loans (79%). Of the $12.58 trillion debt, about $607 billion (4.8%) is delinquent debt, which looks to be declining compared to previous years.
What does this mean? With household debt approaching an all-time high, delinquent payments will be on the rise. Knowing when to have a collections agency step in and help you track your businesses’ payments will benefit you in the long run. Feel free to contact us today with your questions.