Consumer Debt

Consumer debt includes obligations resulting from the purchase of expendables and / or unreadable goods. Consumer debt is often associated with household debt because it is usually associated with credit cards, mortgage loans, car loans, and payday loans. However, it is necessary to note that the mortgage is private investment.

The main difference between consumer debt and other forms of debt (such as corporate collateralized obligation) is that consumer debt is often used for consumption rather than investment and business. This is the amount that individual consumers should bear in comparison with companies and governments.

The most common consumer obligations include credit card debt, payday loans and other consumer finance. These forms usually exist at higher interest rates than long-term secured loans (such as mortgage loans).

Consumer loans may be borrowed from banks, credit unions and / or federal government in the form of credit cards (cycles, monthly payments) or fixed payment loans (not normal) by banks, credit unions and / or the federal government You can do. . Underlying asset)

The consumer's leverage ratio (CLR) measures the average amount of obligations held by consumers in the United States compared to disposable income. The expression is as follows.

Total household debt is based on the FRB report, while disposable personal income is reported by the Department of Economic Analysis of the US Department of Commerce. CLR has been used as an indicator of the health of the US economy, stock market, inventory level, unemployment rate and so on.

At the individual level, we recommend that consumer leverage ratios not exceed 20% of individual's actual wages. In particular, long-term consumer debt is often seen as financially unsatisfactory, as most consumer goods (such as new flat panel TVs) do not have a high level of utility to demonstrate short-term debt.

Consumer debt is often associated with predatory lending, which is broadly defined as "unfair and abuse of loan terms for borrowers". Predator loans often target groups with less access or understanding of more traditional forms of funds. A looter can claim an unreasonably high interest rate and in the case of a default by a borrower a large amount of collateral can be requested

In August 2017, consumer debt amounted to the highest level of 12.8 trillion dollars since 2008 from 12.7 trillion dollars. This is mainly due to the surge in student loans and car loans since the fourth quarter of 2009, as well as the highest level of credit card debt. Card default rate is rising

Consumer debt is an obligation held by an individual, not a government. Consumer debt may occur in the form of debt, mortgage, student loan, auto loan, or other loan. Consumer debt is also called household debt. According to the Federal Reserve Board, the total US household debt in 2007 was $ 13.3 trillion. The average US household debt in 2007 is equivalent to 14.29% of total revenue, which is called the family repayment rate (DSR). According to the report, the average American citizen has a credit card debt of more than $ 9,000. This is actually a misleading statistic. In fact, dividing the total credit card debt in the US by the number of US citizens will be $ 9,000. But a more accurate statistic is the median of credit card debt - half of the family's overdue, half of the overdue bill - that is, $ 2,200.

Consumer debt includes obligations resulting from the purchase of expendables and / or unreadable goods. Consumer debt is often associated with household debt because it is usually associated with credit cards, mortgage loans, car loans, and payday loans. However, it is necessary to note that the mortgage is private investment. Total household debt is based on the FRB report, while disposable personal income is reported by the Department of Economic Analysis of the US Department of Commerce. CLR has been used as an indicator of the health of the US economy, stock market, inventory level, unemployment rate and so on.