How Are You Doing With Your Debt? 4 Key Facts About Our Financial Recovery

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Have consumers forgotten what it was like during the depths of the Great Recession? Not according to the latest data from Equifax (EFX).

The company reports that credit balances rose year over year in the 12 months ending in July. It is the first such increase in five years.

The Results Are Mixed

American banks hold $536.5 billion in credit card debt as of this writing. That's up marginally from $533.3 billion a year ago at this time, Equifax reports. And yet, interestingly, credit card revenue wasn't up across the board last year. American Express (AXP) saw a 1.6 percent increase in U.S. card revenue, while JPMorgan Chase (JPM) suffered a 4.5 percent decline in credit card proceeds in 2012.

But the story doesn't end there. Despite the rise in credit card balances, consumers have made improvements in managing other types of debt.

This is definitely a story of silver linings peeking out from under the gray news. Here's a closer look at the four key areas Equifax tracks in its annual National Consumer Credit Trends Report.

1. Credit card balances are rising again, but delinquencies are not. Blame new credit applications for rising balances. According to Equifax, consumers applied for and received $72.9 billion in new credit from January to May -- a 6 percent increase over the same period last year. New loans and new credit now sit at a five-year high. The good news? Delinquencies fell to just 1.86 percent in July -- an 11 percent decrease year over year.

2. Fewer young adults will enter the workforce financially crippled, but ... : Student loan applications fell 9.3 percent from January to May. The bad news? Balances grew 4 percent to $24.3 billion. Those who carry student debt are shouldering more of a load than their graduating peers, leading to record write-offs. Regulators had already forgiven $11.6 billion in student debt through May, an eight-year-high and 58 percent more than than last year at this time.

3. We're ready to go on a spending bender. Good news for Ford Motor (F) and other car makers. Dealers and banks have teamed up to boost auto financing from $745.3 billion at this time last year to $826.8 billion as of Equifax's report, a 10.9 percent increase.

4. We're also ready to buckle down on our biggest debt -- real estate. Home loan write-offs fell more than 22 percent and now stand at their lowest level since 2007. Severe delinquencies (i.e., 30 or more days past due) fell 22 percent while primary mortgages 90 days past due or in foreclosure fell 25 percent to a five-year low. Home equity installment debt fell 4.1 percent while revolving equity debt fell 8.9 percent. Count them all as signs of a sustained recovery in the housing market.

"Only two major consumer credit segments are currently growing: auto financing and student loans," said Equifax Chief Economist Amy Crews Cutts in a press release. "In all other segments, consumers are reducing their debt burdens, either negatively, through foreclosures and bankruptcies, or positively, through payoffs -- payoffs are dominating in most cases today. We expect mortgage balances to begin rising again over the next several months as new home purchase loans overtake foreclosures and payoffs."

Trading burdensome credit card debt for tax-deductible mortgage debt? Talk about a long-overdue step up.

So while there's still a ways to go -- $536 billion in credit card debt isn't to be taken lightly -- efforts to pay off existing balances and avoid late payments and other fees suggest many of us are making progress.

Where do you stand? Have you paid off debt in the last year? Tell us your story in the comments box below.

Motley Fool contributor Tim Beyers had no position in any stocks mentioned at the time of publication. Find him on Twitter @milehighfool. The Motley Fool recommends American Express and Ford. The Motley Fool owns shares of Ford and JPMorgan Chase.

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11 Comments

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Ed

got me a refi 30 yrs Fixed for 3.25% paying off my c.c. got one with balance but % free for one year and the other one pay off 1/3 of the balance and replaced my 5 yr old SUV for a New one at Big Fat 0 % with better gas mileage and Investing few more bucks in our IRA with companies that Pay Us Back, 7% to 12 % a year either mothly or quarterly . . . . Life is Good ! thanks God for all the blessings

September 14 2013 at 7:03 PM Report abuse rate up rate down Reply
RICH

Refinanced house to pay off 6.2% commercial loan, now have 3.2% 15 yr fixed loan on my home paid off high priced commercial loan and now have lower monthly payment and deductable interest. Looks like the proverbial win-win for me; not so good for the bank who was not interested in cutting me some slack on the commercial loan. Went to another lender who came up with the creative solution. Pays to shop around.

September 10 2013 at 3:57 PM Report abuse +1 rate up rate down Reply
1 reply to RICH's comment
vlady1000

Yep, last year was the time to get cheap long term money locked in and using RE is one of the best ways to do that. I revamped all my loans and borrowed more to buy more RE investments. I owe 2X more than 4 years ago, but much better off in the long run. Now starting to pull back as rates are going up.

September 10 2013 at 11:20 PM Report abuse rate up rate down Reply
ectullis

How Are You Doing With Your Debt? My debt is doing just fine, it is increasing day by day thanks to Obsama

September 10 2013 at 3:54 PM Report abuse rate up rate down Reply
yaketyyak48

have no debt. thankfully. but we are not spending, charging, and only saving. we simply spend on what our family needs and bank the rest. Makes for better sleeping at night.

September 10 2013 at 2:17 PM Report abuse +1 rate up rate down Reply
toosmart4u

I have NO debt. Everything is paid in full. Worked my life with the good years when the democrats ran the government. Have social security, medicare, a pension and money in the bank. I am still saving each month to help my 2 children. Only the democrats will take care of you to GOP will take care of the very rich and very large corporations. They will blow smoke for the rest of you.

September 10 2013 at 11:26 AM Report abuse -2 rate up rate down Reply
2 replies to toosmart4u's comment
sam54ct

I second your comment, also debt free, living below our means, even though insulted by co-workers until we retired in our early 40's, while they continue humping it to work to support their granite counters, stainless appliances, etc.

September 10 2013 at 11:53 AM Report abuse -1 rate up rate down Reply
burthurt

Then your part of the problem living on the gravy train with biscuit wheels . You actually think that what you paid into medicare and social insecurity even partially pays for the services your getting ? There in lies the problem . Democrats can't do basic Mathmatics .You paid about 12 % of the services you'll get if you live to 80 . Guess who picks up the tab ?The rest of us poor saps who are actually responsible and can do basic addition and subtraction .

September 10 2013 at 4:45 PM Report abuse +1 rate up rate down Reply
loann452390

I paid off $12000 credit card debt in 2 years during the recession. I vow to never have debt again!!!

September 10 2013 at 8:26 AM Report abuse +4 rate up rate down Reply
2 replies to loann452390's comment
yaketyyak48

Good for you! do not use credit cards either...pay cash.

September 10 2013 at 2:19 PM Report abuse rate up rate down Reply
ectullis

We can only hope you succeed

September 10 2013 at 3:56 PM Report abuse rate up rate down Reply