Consumer debt has dropped by $1 trillion

[Indy Coug]

http://money.cnn.com/2010/11/08/news/economy/ny_fed_household_credit/index.htm?source=cnn_bin&hpt=Sbin

[byu71]

http://money.cnn.com/2010/11/08/news...n_bin&hpt=Sbin

Good for us. Because of estate tax reasons and not out of the goodness of my heart, I gifted some money to my kids last year with the provision the money had to first go to pay of any credit card balances.

I don't feel like prying, but I would sure like to know whether they kept their balances at 0.

Now if only the government would start doing the same tightening.

[wuapinmon]

Good for us. Because of estate tax reasons and not out of the goodness of my heart, I gifted some money to my kids last year with the provision the money had to first go to pay of any credit card balances.

I don't feel like prying, but I would sure like to know whether they kept their balances at 0.

Now if only the government would start doing the same tightening.

I'll keep my balance at zero should your planned giving needs ever exceed those of your bairn.

[Babs]

I don't have time to check, but I'd guess that least half of that has to be due to all the defaulting on home loans the last two years. Voila! No debt!

[Surfah]

I don't have time to check, but I'd guess that least half of that has to be due to all the defaulting on home loans the last two years. Voila! No debt!

Yeah are all of the charge offs and bankruptcies included in this figure?

[Babs]

Yeah are all of the charge offs and bankruptcies included in this figure?

yes. It's strictly an indication of how much debt is held now.

[byu71]

I don't have time to check, but I'd guess that least half of that has to be due to all the defaulting on home loans the last two years. Voila! No debt!

Is mortgage debt part of consumer debt. I thought consumer debt only related to credit cards. I guess I can go look it up myself.

The brief research I have done leads me to believe this was a poorly written article, as happens often with articles written by journalists concerning financially matters. By reading the article quickly, I would be lead to believe "consumer debt" includes mortgages. However, several definitions I read indicates it does not include mortgages.

I will now have to send an e-mail to our economist to get an answer as to what "debt" has dropped a trillion dollars. Quite frankly, that's why I don't read many of these financial articles.

[Clark Addison]

I don't know the complete breakdown of how much of the reduction is due to foreclosures, credit card charge-offs, etc, but credit chard balances have definitely gone down. As many know, I work at a large credit card issuer. In the last year or two, our total outstandings have decreased by over $10 billion. There are a lot of things that go into that number, but one of them is people paying off their balances.

Of course, of those that pay down their balances, some do it on their own, and some do it because they no longer have access to credit, at least at reasonable rates.

[Babs]

Of course, of those that pay down their balances, some do it on their own, and some do it because they no longer have access to credit, at least at reasonable rates.

That's what this says to me. The article summarizes what should be obvious: that because of mass mortgage defaulting and reduced home values, many Americans don't have as much debt and have access to less credit.

[CJF]

I'm proud to be contributing to this. I've knocked down about $10k or so of debt and about tripled my savings this year. It feels good.