Household debt ticked upward at start of 2016, but credit card balances fell
Overall American聽聽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聽by almost $1,200 per household. Mortgage and student loan debt led the increase.聽
However, credit card debt decreased by nearly 3 percent 鈥� dramatic change in聽the quarter.
Average debt balances for households
| TYPE OF DEBT | Q4 2015 | Q1 2016 | CHANGE |
|---|---|---|---|
| Credit cards | $15,762 | $15,310 | -2.87% |
| Mortgages | $168,614 | $171,775 | 1.87% |
| Auto loans | $27,141 | $27,188 | 0.17% |
| Students loans | $48,172 | $48,986 | 1.69% |
| Any type of debt | $130,922 | $132,086 | 0.89% |
鈥淭his drop in household credit card debt, while good news, is actually very normal,鈥� says Sean McQuay, NerdWallet鈥檚 credit card expert. 鈥淗ousehold 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鈥檚 resolutions and paying off debt from the holidays.鈥�
McQuay continues: 鈥淢y advice to Americans is to set aside money every month to pay off your debt. Don鈥檛 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.鈥�
Erin El Issa is a staff writer at NerdWallet, a personal finance website. Email:聽erin@nerdwallet.com. Twitter:聽.
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