In the third quarter of 2012, consumer debt fell to just under $11 trillion. While the number is still large, it does still show a continued decrease over the past year. Current debt is 2.26 percent lower than it was in 2011 during the same quarter.
To mark the difference, total debt is down by $256 billion. The current debt is mainly due to mortgage debt which makes up for about 75 percent of the $11 trillion; consider that approximately another $1 trillion is student loan debt.
The fall of debt amassed is possibly due to the changing consumer who now seems to have a better understanding of debt management. Consumers are becoming more responsible about new debt and pre-existing credit. Trey Loughran, president of the Personal Solutions unit at Equifax has coined the term “disciplined consumer”.
In terms of all debt there was an increase in non-mortgage consumer debt by 0.7 percent. Auto debt grew the most with a 7.1 percent increase.
Mortgage debt has seen the biggest drop, it fell by 3.4 percent. However, keep in mind that foreclosure writes off mortgage debt so while the debt has dropped it it may be tied into the foreclosure rates.
Nationally cities that unfortunately saw the biggest rise in debt include Houston, Pittsburgh, and Dallas-Fort Worth. Cities that got rid of the most debt include Las Vegas, Phoenix, Fort Lauderdale-Miami, and Sacramento.
Although this news is good, it should be noted that debt usually sees a rise during the final quarter when the holidays come around. Until the next report is publicized will we know if consumers paying off their debts is a habit that will continue through 2013.