Consumer Credit And The American Dream Today

The New York Exchange with an American flag in the front of the building
A Short History of Lending In The US
Part 1 American Lending In The 20th Century
Part 2 The 20th Century Boom In Consumer Goods And Lending
Part 3 The Power Of Consumers In The 20th Century
Part 4 Consumer Credit And The American Dream Today

Lenders will always promote loans and many are not always ethical often offering credit to those who can least afford it. This is being addressed by the regulatory bodies which oversee the US credit industry but it is a slow process and may take many years. It is always difficult to accept that your situation has changed for the worse and most people still hold onto their vision of becoming more prosperous in the US of their dreams. In this article we examine:

  • Consumer credit and sub prime lending
  • Debt among the elderly
  • The evolution of American credit

Figures published in August 2017 showed that collectively, households in the US owe more than $1 trillion and that is just on credit cards. Take into account personal loans, payday loans, auto loans and mortgages and the total sum is much higher.

Consumer credit and sub prime lending

The current level of revolving debt, that is, credit card balances is the highest in history with analysts now issuing a warning that this must come down if the country is to be prevented from falling into another financial crash.

22.5% of household debt is being held  by US citizens over the age of 60

All it will take is a few hikes in the bank interest rate and many people will start to struggle with their financial commitments. A high level of sub prime lending is once again on the increase. And, auto loans are seen to be at the heart of the problem. Sub prime loans for buying a car are at a very high level and in December 2016 there were over 6 million people who were at least 90 days in arrears with their loan payments.

In December 2016 there were over 6 million people who were at least 90 days in arrears with their loan payments.

Experts have pointed out that this behavior is similar to that which occurred just before the last financial crash and there are worries that what happened in 2008 could easily happen again.

Debt amongst older US citizens

One of the more startling facts about modern day consumer credit is that debt amongst the older generation is also on the increase with 22.5% of the total amount of household debt being held by those over the age of 60.

A couple of elderly citizens are estimating their debt

It seems that as well as paying down their own mortgages, parents are subsiding their children so that they do not rack up huge amounts of student debt when going through college. Credit card debt and auto loans are also on the increase for older people and this may be due to the fact that younger ones are unable to get the credit they need and are being aided by parents. All of this debt is putting at risk the retirement plans of seniors and it is being viewed as a financial time bomb that at some point will explode.

The evolution of credit in the US

Credit in the US has evolved from basic lending and borrowing between individuals to the multi dollar business that it is today. This short history of lending in the US will give you some idea of the background to the way in which credit has expanded in the US from the first settlers up to the modern era. Whether you view credit and loans as an essential part of everyday life or disapprove of borrowing in general, you can learn more about how to avoid the problems that are often associated with credit.

A Short History of Lending In The US
Part 1 American Lending In The 20th Century
Part 2 The 20th Century Boom In Consumer Goods And Lending
Part 3 The Power Of Consumers In The 20th Century
Part 4 Consumer Credit And The American Dream Today

About the author

Mark Larsen

Mark Larsen has worked in the finance industry for over 20 years. Over the course of his career, Mark has amassed experience in personal finance and especially short-term lending. He shares his valuable insights on onlinecreditusa.com