Consumer debt hit an all-time high at the end of 2021, reaching a total of $15.6 trillion. According to figures from the Federal Reserve New York district, this figure represents a year-over-year increase of $333 billion during the fourth quarter of 2021, as well as a $1 trillion increase for the entire year.
This quarterly consumer debt increase is the largest one seen since 2007. Looking at it from an annual perspective, this increase is the largest one since 2003.
These figures have been released after the Federal Reserve announced that they will increase interest rates to slow down inflation, which has been reported to be increasing at the fastest rate seen in 40 years. The central bank is expected to start increasing interest rates in March of this year, which will be the first of five increases throughout the year, totaling 1.25 percentage points.
A large portion of this consumer debt comes from mortgages. Mortgage balances increased by $890 billion for the year and $258 billion in the fourth quarter of 2021 to a total of $11 trillion. Credit card balances also made up a large portion of consumer debt, increasing by $52 billion in the last three months of 2021. This increase created a new quarterly record, bringing the total credit card debt to $860 billion.
Car loan balances also increased in 2021 by $90 billion to a total of $1.46 trillion. Financial experts attribute this increase to the dramatic rise in prices. New car prices increased by 11.8 percent in 2021, while used car prices went up by 37.3 percent.
Not all consumer debt saw such a dramatic increase. Student loan debt saw a smaller increase during 2021, increasing by only $20 billion. The fourth quarter of 2021 actually showed a slight decrease in student loan debt. During the year, forbearance programs kept balances and delinquencies at bay, and a freeze on federal student loan interest rates kept balances stable. Now that these forbearance programs have expired, balances could substantially increase in 2022.
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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.