Household debt ticked upward at start of 2016, but credit card balances fell(Read article summary)
Household credit card debt has dropped an average of 2 percent during the first quarter of every year for the past 13 years.
Marko Georgiev/The Record (Bergen County)/AP/File
Overall American household debt increased during the first quarter of 2016 compared with the previous period, according to NerdWallet research. For households carrying any type of debt, overall balances rose by almost $1,200 per household. Mortgage and student loan debt led the increase.
However, credit card debt decreased by nearly 3 percent — dramatic change in the quarter.
Average debt balances for households
|TYPE OF DEBT||Q4 2015||Q1 2016||CHANGE|
|Any type of debt||$130,922||$132,086||0.89%|
“This drop in household credit card debt, while good news, is actually very normal,” says Sean McQuay, NerdWallet’s credit card expert. “Household credit card debt has dropped an average of 2 percent during the first quarter of every year for the past 13 years. I expect several factors at play here: The biggest is likely year-end bonuses being used to pay down debt; others might also include working on New Year’s resolutions and paying off debt from the holidays.”
McQuay continues: “My advice to Americans is to set aside money every month to pay off your debt. Don’t rely solely on windfalls like bonuses or gifts to pay off your debt. Pay as much as you can with every paycheck. This will help you develop good financial habits and feel ownership over your money.”
This story originally appeared on NerdWallet.