Americans' debt slashing nears $1 trillion

chart_fed_debt2.top.gifNearly $1 trillion has been shaved from consumer debt since its peak in 2008. By Jessica Dickler, staff writer


NEW YORK (CNNMoney.com) -- Americans have paid off nearly $1 trillion in debt over the past two years, although the pace of repayment has slowed, according to a regional Federal Reserve report released Monday.

Total consumer debt was $11.6 trillion as of Sept. 30; down 7.4%, or $922 billion, from the peak reached in the third quarter of 2008, according to the Federal Reserve Bank of New York. Consumer indebtedness fell another 0.3% in the third quarter, after a 3.3% decline in the prior quarter.

In addition, total household delinquency rates fell for the second consecutive quarter. The report said 11.1% of outstanding debt was in some stage of delinquency at the end of September -- compared to 11.4% on June 30, and 11.6% a year earlier.

"If consumers can continue to repair their balance sheets, that bodes well for the sanity of the economy in the long term," said economist John Canally of LPL Financial.

About 457,000 people went into foreclosure in the third quarter, a 5.5% decrease from the number of new foreclosures in the second quarter of this year. Bankruptcies also fell 16% from the previous quarter.

Excluding the effects of defaults, non-mortgage debt fell for the first time since 2000, according to the Quarterly Report on Household Debt and Credit. Also, mortgage debt paydowns, which began in 2008, reached nearly $140 billion by the end of 2009.

The number of open credit card accounts fell 24% from their peak in 2008.

"Americans are borrowing less and paying off more debt than in the recent past. This change, which we continue to study carefully, can be a result of both tightening credit standards and voluntary changes in saving behavior," Donghoon Lee, senior economist in the Research and Statistics Group at the New York Fed said in a statement.

"Lending practices are tight making it more difficult for people to secure new debt," said Chris Viale, president and CEO of Cambridge Credit Corp., a nonprofit credit counseling agency based in Agawam, Mass. "The only choice they have is paying down debt."

At the state level, Arizona, California, Florida and Nevada continued to post higher-than-average delinquency and foreclosure rates than the nation as a whole. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,098.45 18.88 0.11%
Nasdaq 4,580.27 22.58 0.50%
S&P 500 2,003.37 6.63 0.33%
Treasuries 2.34 0.01 0.39%
Data as of 3:03pm ET
Company Price Change % Change
Bank of America Corp... 16.09 0.08 0.50%
Apple Inc 102.50 0.25 0.24%
Intel Corp 34.92 0.27 0.78%
Facebook Inc 74.82 0.96 1.31%
General Electric Co 25.98 -0.03 -0.12%
Data as of Aug 29

Sections

The deal would value Vice at $2.5 billion. The online media company would also create content for the cable network, delivering a wider audience. More

Gas prices are falling to nearly $3 a gallon in some parts of South Carolina, and that will soon be common in much of the country. More

Netflix told the FCC that its speed on the Comcast network became so slow that customers began dropping their service. More

The Coolest Cooler is the most successful Kickstarter campaign in the site's history, raising $13.3 million from over 62,000 backers. More

Five CNNMoney readers share stories about saving that you can learn from: What they would do differently if they had another chance. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.