The latest Federal Reserve report out shows revolving credit card debt fell for the second straight month. In July, 2012 the amount of revolving debt consumers carry declined by 6.8 percent or about $5 billion.
Of course the concern in the debt relief industry is that declining unsecured consumer debt means the likelihood of a slower demand for debt relief services.
Non-revolving inched up by one percent. This debt creates additional pressure on consumers since more non-revolving debt like student loans leaves less disposable income available to deal with other types of debt.
This is not a new problem. The levels of non-revolving debt have been building and student loan debt now comprises a balance higher than all outstanding credit card debt combined.
If anything is a major concern for the debt relief industry, this should be. Increasing levels of non-revolving debt will prevent more and more consumers from being able to afford options other than bankruptcy. Non-revolving debt includes automobile loans and all other loans not included in revolving credit, such as loans for mobile homes, education, boats, trailers, or vacations. These loans may be secured or unsecured.
For me, what’s very interesting as well is the uniqueness of the divergence of debt since 2008. Before this, levels of non-revolving and revolving moved similarly since 1968. But it seems apparent that the rate of divergence is dramatically increasing.
Revolving Debt Falls Again in July. Increasing Obligations a Major Concern. by Steve Rhode
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