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The Federal Reserve Consumer Debt Numbers: What They Mean for Households

Nov. 7, 2012
Personal Finance
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As the Federal Reserve announced today, consumer credit card debt fell by an annualized rate of 4.08% between September and August, a difference of nearly $3 billion. At the same time, total debt – such as mortgages and student loans – rose by an impressive $11.6 billion.

By NerdWallet estimates, the average household’s debt fell by an annualized rate of 4.9%.

Here are the latest credit card debt statistics from the Federal Reserve:

Total Credit Card Debt Average Household Credit Card Debt* Average Indebted Household Debt*
September 2012 (August 2012) $852.0 billion ($854.9 billion) $7,150
Change from August 2012 -0.34% -0.41% -0.41%
Change from September 2011 0.51% -0.31% 0.31%
Change from August 2012 (annualized) -4.08% -4.90% -4.90%
Change from September 2011 (annualized) 6.09% -3.77% -3.77%

*NerdWallet estimates, see methodology for details.
Key takeaways:

  • Average household credit card fell just slightly between September and August, meaning that the average indebted household is still deeply underwater.
  • While the absolute amount of credit card debt rose year over year, when you account for population growth, debt per household actually fell.

What does this mean? Credit card debt is on the rise – but whether or not that’s a good thing is up for debate. On the one hand, higher consumer spending puts the economy on a positive track. Higher spending leads to more jobs and higher incomes, which in turn lead to higher spending. However, if wages and employment are improving at this sluggish pace, this might well be an indication that families are borrowing to make ends meet rather than a reflection of a well-founded increase in consumer confidence.

Overall consumer debt

Total Outstanding Debt Average Household Debt*
September 2012
(August 2012)
$2.737 trillion
($2.726 trillion)
Change from August 2012 0.42% 0.35%
Change from September 2011 5.54% 4.20%
Change from August 2012 (annualized) 5.02% 4.68%
Change from September 2011 (annualized) 66.47% 56.11%

*NerdWallet estimates, see methodology for details.

Key takeaways:

  • The growth of overall debt has been dramatic. The main increase is in non-revolving debt – student and auto loans, mortgages – that are repaid in installments rather than flexible lines of credit.
  • Again, the per-household year-over-year numbers are less dramatic than they initially appear, due to population growth.
  • That said, the increase is still significant, signaling the growing debt burden.

For historical debt statistics, methodology and a more in-depth discussion of debt and the American household, please see our analysis of US consumer debt.