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Consumer default rate rose slightly between November and December

Struggles with debt can have major impacts on consumers. Recently, the Wall Street Journal reported on some debt-related statistics. The statistics are from a survey by Standard & Poor's Indices and Experian and they regard consumer default rates in the U.S. in December of 2011.

According to the statistics, between November 2011 and December 2011, consumer defaults went up in regards to several types of debt. Reportedly, between November 2011 and December 2011:

  • The auto debt default rate of consumers rose from 1.17 percent to 1.27 percent
  • The first-mortgage debt default rate of consumers rose from 2.17 percent to 2.19 percent
  • The second-mortgage debt default rate of consumers rose from 1.26 percent to 1.33 percent

There was one type of debt in which the consumer default rate went down in December of 2011 as compared to November of 2011. The type of debt in question was bank card debt. In December of 2011, the consumer default rate for bank card debt was 4.6 percent. In November of 2011, this rate was at 4.91 percent.

This month-to-month drop in bank card debt defaults by consumers was not enough to completely offset the month-to-month rises in consumer defaults that were seen in the other above-mentioned types of debt. Reportedly, the overall consumer debt default rate increased from 2.22 percent to 2.24 percent between November of 2011 and December of 2011.

However, the overall consumer debt default rate and the default rates of the four above-mentioned types of debt were all lower in December of 2011 than they were in December of 2010.

The trends in consumer default rates which are shown in these statistics give rise to some questions. What impacts have these trends and their causes had on consumers? How long will these trends continue? What do these trends in default rates say about the types of debt struggles consumers in the U.S. are facing? One wonders what the answers to these questions will ultimately turn out to be.

Source: Wall Street Journal, "S&P/Experian: December Consumer Defaults Rise On Mortgages," Nathalie Tadena, Jan. 17, 2012

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