The recent economic downturn had a significant impact on the way we view our finances, and prompted many to try to get out from under the significant debts they may have built in the years leading up to the recession.
The number of families nationwide that carried any sort of debt fell between 2007 and 2010, as more sought to get their finances under control, according to new data from the Federal Reserve Board’s latest Survey of Consumer Finances. In all, just 74.9 percent of households nationwide carried any amount of debt at the end of 2010, down from 77 percent in 2007. However, those who did carry debt saw little change, as median balances and the number of families who owed more than 40 percent of their income were both largely unchanged.
However, one area in which consumers were far more diligent in cutting their debt obligations was on their credit cards, the report said. Credit card debt as a portion of total obligations declined to just 2.9 percent in 2010, down from 3.5 percent and the lowest total observed in the previous decade.
This may have been the result of more consumers successfully reducing their outstanding balances entirely, the report said. In all, just 39.4 percent of consumers carried any sort of credit card balance, down substantially from 2007’s total of 46.1 percent, the result of cuts in nearly all demographics. The only two groups that saw an increase in their outstanding credit card debt were those families with a head of household aged 75 and older, and those whose head did not have a high school diploma.
Beyond those efforts, consumers who still carried some amount of debt were also successful in reducing balances, the report said. The median amount owed by those who carried a balance slipped to just $2,600, down 16.7 percent from 2007’s total.
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However, during this time, millions of Americans saw their credit card debts diminish because of charged off accounts. Many lenders were forced to write down significantly millions of delinquent balances as being uncollectable during this time, leading many consumers to face significant financial hardships as a result of diminished credit ratings, and many were unable to obtain new lines of credit until recently.
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