If you’ve ever felt like you’re getting mixed messages from the media when it comes to how the U.S. is handling its consumer debt, you aren’t alone. Bankrate cites a recent report by CreditKarma.com that notes that U.S. consumer credit card debt was down 8 percent from December 2011 to January 2012. Yet according to the Federal Reserve, credit card debt jumped 4.5 percent over the past quarter. While it may be possible a quarterly spike followed a nine-month decrease, the indication is that personal finance media doesn’t know which end is up.
Determining true CreditKarma
Holiday credit card debt is shrinking in the U.S., claims CreditKarma.com. Released Wednesday, the CreditKarma study indicates that U.S. credit card debt was down 8 percent in January, to an average of $6,069 per person. Average credit card balances were down across the nation, save for in Wisconsin, where the average consumer credit card debt load was up by 4 percent, to $5,266. Perhaps Wisconsin is simply trying to catch up to the rest of America.
On the other hand, states like Arkansas, Nebraska, Iowa, South Dakota and West Virginia moved credit card debt numbers in the other direction. Each of these debt-conscious states slashed average consumer credit card balances by 15 percent or more.
Which states have the largest amount of credit card debt per consumer? According to Bankrate, Hawaii leads the pack at $7,524, followed closely by Alaska ($7,514) and Connecticut ($7,344). On the back end of the survey are Mississippi, Louisiana and West Virginia, with average credit card balances of $4,544, $5,070 and $5,110, respectively.
Late credit card payments and habitual delinquency lead to wage garnishments and bankruptcies. According to the CreditKarma survey, seven states were in the red when it comes to being at-risk for credit deterioration. The rest of the country is reportedly in “good shape.”
Fed sees good as bad
Here’s where things appear to go awry. A recent report by the Federal Reserve notes that credit card debt was up nationwide by 4.5 percent. It has – according to the Fed – climbed to $801 billion nationwide, after a 2 percent dip last quarter. As if that weren’t enough to soil the consumer debt picture, non-credit card uses of consumer credit climbed as a result of surging automotive sales. Such alternate forms of consumer credit were up 9 percent to nearly $1.7 billion. Across the board, consumer credit went up by $19.3 billion over the last two quarters, to $2.5 trillion.
Higher education loans tighten the knot
Sam Collins, the chair of the department of sociology, anthropology and criminal justice at Maryland’s Towson State University, sees a new “American Dream” taking shape: the dream of actually earning enough money to pay off student loans.
“People sort of narrowly define their aspirations based on how much salary they can get and sometimes they don’t have a choice,” he said. “If you go to law school or medical school, you owe so much that a non-profit job or a job in a community clinic sounds great. That may be your dream, but you can’t do that because you have to pay back enormous loans.”