Rising Debt Burdens: Americans Struggle Year-Round with Unaffordable Car Loans and Card Debt

Key Points:

* Traditional post-holiday debt surge has diminished due to persistent debt throughout the year.
* Rising car loan and credit card balances are driving financial stress.
* Serious delinquency rates for auto loans and credit cards are at 14-year highs.
* Inflationary pressures, higher interest rates, and increased uncertainty are compounding financial burdens.
* Seeking credit counseling early is crucial to avoid worsening financial situations.

Changing Debt Landscape:

The post-holiday debt surge has become less pronounced as Americans now face year-round financial challenges. Credit counselors report an increase in calls from individuals feeling overwhelmed by high car loan payments and credit card debt. This shift is attributed to escalating costs of living, including groceries and gas, prompting many to rely on credit.

Persistent Car Loan Delinquencies:

The share of borrowers 90 days or more past due on car loans has reached a 14-year high. Unaffordable car payments are consuming a significant portion of individuals' income, leaving less for other expenses and contributing to financial stress.

Rising Credit Card Debt:

Credit card balances have also surged, with serious delinquency rates hitting a 14-year peak. Inflationary pressures and higher interest rates are amplifying debt burdens, particularly for those using credit cards to cover basic living expenses.

Impact on Auto Insurance:

Rising motor vehicle insurance costs have further exacerbated financial strain. Credit counselors are struggling to find solutions for individuals facing unaffordable payments and insurance premiums.

Unsustainable Car Loan Terms:

The average term length for car loans has extended to 78 months, increasing the duration of unmanageable payments. This trend has contributed to the increasing reliance on credit cards.

Credit Card Interest Rate Burden:

Credit card interest rates are averaging above 20%, compounding the financial struggles of individuals turning to credit for basic expenses.

Economic Uncertainties:

Ongoing uncertainties over consumer prices and potential tariff impacts are adding to the financial stress experienced by Americans.

Importance of Early Intervention:

Credit counselors emphasize the importance of seeking help early to avoid worsening financial situations. "Act now rather than wait and see how things pan out," advises Bruce McClary, spokesman for the National Foundation for Credit Counseling.