Consumer debt in America rose during the year's first quarter in all loan subsets but credit card debt. In fact, credit card debt dropped almost 2 percent, which averages out to over $300 per household.
The subset with the most significant change, however, was mortgage debt. During the first quarter, mortgage debt increased 2.15 percent. That breaks down to nearly $4,000 per household.
One financial credit card expert explained that credit card debt frequently levels off during the first quarter of the year because consumers are still working towards meeting New Year's goals that they set. They tend to allocate additional funds to meet their goals.
Alternatively, the expanded mortgage debt indicates that consumers are working to fulfill long-term goals of homeownership. Mortgage debt carries lower interest rates and can produce an appreciating asset if all stays on track for the rest of the year.
It's better for consumers who are struggling to get their finances in line to prioritize repaying debts with the highest interest rates. However, they must also remain current and make at least the minimum payments on mortgages, car loans and student loan debts. This will build up your credit history, which can open the door to lower-interest-rates on loans later.
Unfortunately, for some people whose debts have already spun out of control, this might be a case of "too little, too late." If that is where you fall on the financial spectrum, it's not too late to turn your crisis around. Consulting with a bankruptcy law attorney can help you understand all of your options, allowing you to choose the most efficient and practical way out of financial distress.
Source: NerdWallet, "Credit Card Debt Shrank in Early 2017," Erin El Issa, July 06, 2017