Interest rates are on the rise, but that hasn’t dampened Americans’ appetite for consumer debt.
On the contrary, consumers borrow more on credit cards or through auto loans than they have in years, and growth-seeking lenders are happy to oblige them.
Abe Schilling, a 33-year-old car salesman in Great Falls, MT, said he has taken out more than five credit cards in the past year, with issuers such as Capital One Financial Corp. and Discover Financial Services, after receiving offers. in the mail. He also took out a loan of $ 36,000 to purchase a new Jeep Grand Cherokee.
Mr Schilling, who is currently renting out his home, said the offers are coming in as his credit rating improves. He previously had dozens of collections and other negative ratings on his credit reports after failing to pay his bills. With a stable income and months of debt counseling behind him, Mr. Schilling says he feels confident in his ability to pay his debts.
The same goes for many other Americans. In the fourth quarter, consumer debt, excluding mortgages and other home loans, increased 5.5% from a year earlier to $ 3.82 trillion. This is the highest amount since the Federal Reserve Bank of New York began tracking data in 1999. In addition, non-housing debt of consumers accounted for just over 29% of their overall debt, too. the highest amount ever.