Student loans of $1.59 Trillion in the United States are now the second largest category of consumer loans behind only Mortgage loans. With students now taking classes remotely there is little opportunity to work part time either at school or at nearby businesses to pay off those loans.
According to data from leading consumer credit agency Equifax, limits for newly issued bank credit cards collapsed as COVID accelerated within the United States. Average origination credit limits compressed from $5,000 in early January, dipping as low as $3,500 in April. At the same time overall bank card balances had decreased more than 5% between early March and mid April. This balance reduction is equal to the total increase in US bank card balances from a year ago.
With COVID-19 leading to a massive increase in unemployment, many creditors are allowing consumers to defer payments, causing reduced visibility into the health and credit worthiness of many US consumers.
According to data from leading consumer credit agency Equifax, the total amount of consumer loans delinquent more than 60 days dropped by more than 25% month over month for the week ending April 20th. This compares to a maximum decline of 8.5% over the previous 12 months. At first glance one could view this decline as a positive, potentially signaling that people are paying off their bills and are therefor less delinquent. The reality unfortunately isn’t a positive one.