MINNEAPOLIS (WCCO) — Consumer reports show that we are borrowing more money than we have since the Great Recession.
The New York Federal Reserve says Americans now owe more than $12 trillion.
“As Americans, we’re in debt a lot, and that has stayed the same,” said Darryl Dahlheimer, a program director with LSS Financial Counseling.
He sees us spending the majority of our money in three different ways.
“Right now, one out of every three people is 90 days late on their student loans,” Dahlheimer said.
Consumer reports show that college students and college grads owe more than $1 trillion in student loan debt.
“We’re spending more on student loans because college costs keep creeping up, and because there’s no limits on what you can borrow,” he said.
We’re also spending more money on things that look nice and go fast. More than 17 million vehicles were sold last year, which is a new record.
Dahlheimer says when consumer confidence is up, there is a mentality of buying more of what you want than what you need.
And that’s where credit cards come into play.
“It’s easy to take out credit, so it does function like a magic bailout,” Dahlheimer said.
After seeing a decline in credit card use after the recession, consumers are starting to use them again.
“Interest rates are clearly being raised in general,” he said. “And with credit cards you could have a low-rate card, miss one payment and it jumps.”
Dahlheimer says even though consumer spending has increased, we are in better shape than when the housing market collapsed in 2008.