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Consumer Attitudes toward Debt - US - November 2017

"While half of consumers believe that taking on debt is a bad decision (regardless of type), US consumers continue to add to the overall debt total. Most are confident in their ability to make debt payments, but financial services are still charged with providing additional education and insight to help consumers understand what they need to pay back, and in what timing. Paying down debt is a top financial priority, and FSIs (financial service institutions) can make it easier by providing new technology and ways to make consumers feel more in control of their debt payment strategy."
- Jennifer White Boehm, Associate Director - Financial Services

This Report looks at the following areas:

  • Consumers see hierarchy of debt 
  • Half of consumers still see debt in a negative light, no matter the type
  • Nearly half of consumers significantly stressed by their debt

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • Overview
          • The issues
            • Consumers see hierarchy of debt
              • Figure 1: Debt hierarchy, by household income, August 2017
            • Half of consumers still see debt in a negative light, no matter the type
              • Figure 2: Belief taking on debt is a bad decision, by parental status and age of children in home, August 2017
            • Nearly half of consumers significantly stressed by their debt
              • Figure 3: Debt causing stress, by age, August 2017
            • The opportunities
              • More than a quarter of consumers continue to accumulate additional debt
                • Figure 4: Increase in debt vs prior year, by age, August 2017
              • Hispanic, Black consumers more concerned about remaining debt amount
                • Figure 5: Debt priorities, by race and Hispanic origin, August 2017
              • What it means
              • The Market – What You Need to Know

                • Mortgages and student loans comprise the largest portions of consumer debt
                  • Outstanding consumer credit keeps rising
                    • Consumer credit card balances reach more than $630 billion
                      • Debit card use considered a good way to stay out of debt
                      • Market Breakdown

                        • Outstanding consumer credit continues upward trajectory
                          • Figure 6: Revolving consumer credit outstanding, 2012-16 and Q2 2017
                          • Figure 7: Nonrevolving consumer credit outstanding, 2012-16 and Q2 2017
                        • Mortgage debt takes up largest portion of overall consumer debt, followed by student loans
                          • Figure 8: Total consumer debt by debt type, Q2 2017
                        • Mortgage debt has grown just more than 1%
                          • Figure 9: Consumer mortgage debt, 2012-Q2 2017
                        • Student loan debt surpasses $1.3 trillion
                          • Figure 10: Total student loan debt, Q1 2012-Q2 2017
                        • Number of auto loans increased by almost a third
                          • Figure 11: Number of auto loans, Q4 2011-Q4 2016
                        • Consumer credit card balances total more than $630 billion
                          • Figure 12: Total number of consumer credit cards and outstanding balances, 2012, 2015
                      • Market Factors

                        • Un- and underemployment remain low
                          • Figure 13: Un- and underemployment, January 2015-September 2017
                        • Household income rises as unemployment remains unchanged
                          • Use of debit vs credit
                            • Figure 14: PayPal Cash Mastercard email, October 2017
                        • Key Players – What You Need to Know

                          • Consumers continue to add on to their debt
                            • Startups aim to break traditions of lending and budgeting
                              • Consumers are struggling to make debt payments each month
                                • New regulation hopes to curb predatory lending in payday loans
                                  • Chase’s new mobile bank hopes to add emotion into banking
                                  • What’s Happening?

                                    • Nearly four in 10 young consumers continue to accumulate additional debt
                                      • Figure 15: Amount of debt compared to a year ago, by age, August 2017
                                      • Figure 16: TD Bank Express Loan email, October 2017
                                    • Point wants to invest in your home, not your loan
                                      • Digit helps consumers save money without thinking about it
                                      • What’s Struggling?

                                        • More than half of consumers are unable to make full monthly debt payments
                                          • Figure 17: Debt payment habits, by age, August 2017
                                          • Figure 18: Bank of America promotional credit offer, September 2017
                                        • Most younger consumers are not budgeting for their debt
                                          • Figure 19: Use of budget to track debt, by age, August 2017
                                        • Ohio renews ban on Wells Fargo
                                          • US credit card delinquency rates continue to increase
                                            • Figure 20: Credit card delinquency rate, January 2012-April 2017
                                        • What’s New and What’s Next?

                                          • CFPB releases new rules for payday lenders
                                            • Affirm’s new mobile app allows for quick loans for online purchases
                                              • Honeydue, the couples’ money manager
                                                • Finn by Chase
                                                • The Consumer – What You Need to Know

                                                  • More than half of consumer owe secured debt
                                                    • Credit card, student loans are more prevalent unsecured debt
                                                      • Less than half of consumers can completely pay off monthly debt payments
                                                        • Young consumers have more debt now than a year ago
                                                          • Paying down debt is a financial priority for most
                                                          • Secured Debt Ownership

                                                            • More than half of consumers own secured debt
                                                              • Figure 21: Secured debt ownership, August 2017
                                                            • Older men and women more likely to have secured debt
                                                              • Figure 22: Secured debt ownership, by age and gender, August 2017
                                                            • Mortgages and Home Equity
                                                              • Figure 23: Mortgage and home equity ownership, August 2017
                                                            • Black consumers are least likely to take out home equity or have a mortgage
                                                              • Figure 24: Mortgage and home equity ownership, by race and Hispanic origin, August 2017
                                                            • Auto loans
                                                              • Auto loan, mortgage ownership related to age, life stage
                                                                • Figure 25: Mortgage and auto loans, by age, August 2017
                                                                • Figure 26: BFSFCU auto loan email, October 2017
                                                            • Unsecured Debt Ownership

                                                              • Credit card, student loan debt most prevalent among consumers
                                                                • Figure 27: Unsecured debt ownership, August 2017
                                                              • Credit card debt increases as student loan debt is paid down
                                                                • Figure 28: Unsecured debt ownership – Student loan and credit card debt, by age, August 2017
                                                            • Use of Credit

                                                              • Consumers most likely to add to their debt for large purchases
                                                                • Figure 29: Use of credit vs cash/check, August 2017
                                                              • Credit is used for every day, while loans are preferred for car purchases
                                                                • Figure 30: Use of credit vs loan, August 2017
                                                              • Hispanic Millennials twice as likely to take out a loan for unexpected payments
                                                                • Figure 31: Use of credit vs loan for unexpected large purchase, by Hispanic origin and generation, August 2017
                                                            • Debt Payment Habits

                                                              • Less than half of consumers pay their debt in full each month
                                                                • Figure 32: Monthly debt payment, August 2017
                                                              • Lower income consumers more likely to budget for debt payments
                                                                • Figure 33: Budgeting for debt, by household income, August 2017
                                                              • Young consumers more likely to only pay the minimum on their credit card
                                                                • Figure 34: Paying the minimum balance on credit card debt, by age, August 2017
                                                              • Younger consumers burdened with more debt than a year ago
                                                                • Figure 35: Increase in debt vs prior year, by generation, August 2017
                                                            • Debt Prioritization

                                                              • Consumers keep repayment costs in mind when prioritizing debt
                                                                • Figure 36: How consumers prioritize debt payments, August 2017
                                                                • Figure 37: Quicken Loans mortgage review email, October 2017
                                                              • Hispanic, Black consumers more concerned about remaining debt amount
                                                                • Figure 38: Debt priorities, by race and Hispanic origin, August 2017
                                                            • Attitudes toward Debt and Credit

                                                              • Consumers see a debt hierarchy
                                                                • Figure 39: Debt hierarchy, by household income, August 2017
                                                              • Paying down debt is a financial priority for most
                                                                • Figure 40: Confidence in paying off debt, August 2017
                                                              • Half of consumers still see debt in totally negative light
                                                                • Figure 41: Belief taking on debt is a bad decision, by parental status and age of children in home, August 2017
                                                            • Appendix – Data Sources and Abbreviations

                                                              • Data sources
                                                                • Consumer survey data
                                                                  • Direct marketing creative
                                                                    • Abbreviations and terms
                                                                      • Abbreviations
                                                                        • Terms

                                                                        Consumer Attitudes toward Debt - US - November 2017

                                                                        US $3,995.00 (Excl.Tax)