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Consumer Debt Continues to Climb as 2018 Concludes

Consumer debt in the US is about to hit $4 trillion.

Consumer debt continues to climb as 2018 comes to a close. Recent figures estimate that consumers will carry $4 trillion in debt by the end of the year. How will this affect consumers and the agencies that continue to offer them credit? How can a collection agency help mitigate this risky state of affairs?

Consumer Debt Trending Up

Consumers are in over their heads, and it’s a risky situation for issuers of credit in any industry. Yahoo! Finance says by the end of 2018, consumer debt will have hit $4 trillion. In the past five years, that the volume of consumer debt increased by one trillion. As consumer debt rises where are most of these liens residing?

Yahoo! Finance suggests the most common type of debt today includes:

  • $1.04 trillion in credit card or some other type of revolving debt. That number has increased by 22% in the past five years.
  • $2.9 trillion lies in non-revolving debt such as auto or student loans. That number has gone up by 30% in the past five years.

Lending Tree predicts the holiday season will add another 5% to consumer credit card debt. This is bad news for family budgets long-term; Yahoo! Finance says Americans have already paid $100 billion in credit card interest fees this year. With an average interest rate of 16 to 17%, it seems Americans are walking a careful tightrope-balancing act.

To find out how each state ranks for consumer indebtedness, click this interactive map from the Urban Institute.

With the Federal Reserve predicting several interest rate hikes next year, what will this do to the heavy debt load Americans are carrying? What will it do to the volume of accounts receivables outstanding for the average American company?

Collection Agency and Consumer Debt

The Washington Post reported in 2017 that about 33% of these consumers have at least some debt being pursued by a collection agency.  One of the most common debts recovered by a collection agency like TSI has been healthcare-related past due balances. The Post article reported one of five American households has an average past due medical balance of $681.

For companies of all sizes, having a consumer population with rising debt makes for a worrisome outlook. If the economy takes a downturn, the likelihood of consumer past due balances increasing are high.

These economic indicators suggest a partnership with a collection agency like TSI could help protect companies from consumer insolvency by improving the amount collected on bad debt accounts. We offer our clients peace of mind, whether they are a large, multi-state hospital network attempting to maintain the doctor-patient relationship while pursuing bad debt or a small business collecting from the individual consumer. Our work spans most industries, and we have a nearly 50-year track record coupled with a proprietary data analytics platform that maximizes your netback.

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