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Consumer Debt Creeps Up to $4.16 Trillion

Dawn Allcot
·2 min read
Top view of stressed  woman trying to find money to pay credit card debt.
Top view of stressed woman trying to find money to pay credit card debt.

This afternoon the Federal Reserve released a snapshot of consumer credit for October 2020. Overall, consumer credit increased at a seasonally adjusted annual rate of 2%. Revolving credit decreased by 6.75% and non-revolving credit, such as mortgages and personal loans, increased by 4.75%. In October, the Fed reported that number at $4.162 trillion, up from $4.157 trillion in September.

See Where You Rank: Average Credit Card Debt in Every State

Compare those numbers to the fourth quarter figures in 2019, where consumer debt totaled more than $4.180 trillion, and it seems like consumers may be more conservative with their spending amidst the pandemic. A dip to $4.137 trillion in total consumer debt in Q2 of 2020 may also indicate that at least some Americans used their tax refunds and government stimulus checks to pay down some of their existing debt.

Where That Cash Went: This is How Americans Spent Their Stimulus Money

The increase in non-revolving debt in October 2020 could indicate Americans tapping into their home equity to survive loss of income during the pandemic, or to pay down higher interest revolving debt. With interest rates on home loans still low and housing prices still high, a second mortgage or home equity line of credit can help many homeowners out of tight spots caused by the pandemic. As long as you make this move wisely, putting your credit cards on a hiatus once you’ve paid them off, a home equity loan can be a smart financial choice.