U.S. consumer debt drops

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WASHINGTON, Oct. 15 (UPI) -- Debt loads among U.S. consumers have receded to levels unseen since before the recession, data from private and public sources say.

U.S. Federal Reserve records indicate less than 16 percent of the average household's income after taxes is being used to pay debt and rent. That's the smallest combined debt and rent load since 1984, the Los Angeles Times reported Monday.

Moody's Analytics data shows consumer debt, including fixed and revolving debt, is lower than it has been since 2006.

Fixed loans include car and mortgage loans, while revolving debt refers to credit cards and other lines of credit.

The only category of consumer debt that is increasing is student loans, which are much higher than before the recession, as tuition costs have continued to climb and people without jobs are returning to school to increase their chances of finding one.

Overall, debt is lower because consumers are cautious, because monetary policy has pushed interest rates to historic lows and because foreclosures have reduced mortgage debt and lowered credit scores for many consumers.

"It's sort of a new reality that you have. We're going to try to live within our means because living beyond it didn't work out," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

Moody's said the average credit card balance dropped to $4,940 April through June, 24 percent lower than the second half of 2008, when credit card debt was an average of $6,500 per household.

In 2008, there were 600 million credit card accounts in the United States. That has dropped to 470 million, Moody's said.