Seven Sins of Debt
Before the economy started to slide American consumers were pretty good at paying their bills. According to US News and World Report about 95 percent of loans were paid on time before 2007. But that slipped to 92.3 in 2008, 88.8 percent in 2009 and 88 percent by the end of 2009.
US News and World Report looked at seven of the deadliest debt sins Americans have fallen into.
1. Mortgages: More than seven million homeowners are behind on their payments or currently facing foreclosure. Mortgage debt in America totals about $8.7 trillion, down from a peak of $9.3 trillion in Sept. 2008.
2. Home Equity Loans: There is reduced availability of home equity loans due to dropping home values and high foreclosure rates. There are currently $680 billion worth of outstanding home equity loans, down slightly from more than $700 billion for the past six quarters.
3. Credit Cards: Americans have about 380 million credit card accounts. Outstanding balances have fallen from $850 to $745. But Americans still have $740 billion in credit card debt, down from $870 billion at the end of 2008.
4. Auto Loans: According to US News and World Report, auto debts are more than double what they were ten years ago. Americans currently have $680 billion worth of auto loans, down from more than $800 billion for most of the 2006-2008 period.
5. Payday Loans: There’s no real data on payday loan values, but some say it could be around $50 billion. And it’s not unusual for the same consumer to go back for a payday loan several times in one year.
6. Education Loans: Some experts believe education loans will be the next credit bubble to burst. Americans have $510 billion in outstanding educational loans, a number that was just $300 billion three years ago.
7. 401(k) Loans: US News and World Report says borrowing against retirement is the saddest debt sin, but more and more Americans are doing it.