Comment by dcolkitt | Hacker News Reader

Comment by dcolkitt | Hacker News Reader

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The people accumulating large credit debt have very little overlap with homeowners. The reason for this is very simple. The vast majority of homeowners purchased their house before 2021, and therefore are sitting on gigantic amounts of home equity. They have access to HELOC at much more favorable interest rates than credit card debt. (And no, we've seen barely any increase in HELOCs[1]).

In addition the average recent homebuyer has a FICO score of 768[2]. These are not the type of people who are running up credit card debt and living beyond their means. So while credit card delinquencies may go up, it's primarily concentrated among the poor, the young and renters whose budgets are squeezed by rising lease costs. In this group there are barely any homes to foreclose on.

[1]https://fred.stlouisfed.org/series/RHEACBW027SBOG

[2]https://www.bankrate.com/real-estate/average-credit-score-to...

> The people accumulating large credit debt have very little overlap with homeowners > HELOC

That sounds sensible, however I didn’t find any data to back up that assertion.

I did find “Higher-income people have more credit card debt, as do people who own their own homes.” which hints that you might be stating something incorrectly, or our definitions differ. Source text seems credible: https://www.moneycrashers.com/average-credit-card-debt-ameri...

Higher income people have higher credit card debt because they spend more money. The issue is whether they're paying their bill at the end of the month or using it to finance their consumption and letting the balance grow.

Guess to be more accurate I should say "accumulating large credit card debt relative to their ability to pay the monthly balance". Which to be honest there's not much evidence is growing in any segment of the population. Wages have risen faster than credit card debt, so it's likely the "record debt levels" are simply people getting wealthier (in nominal terms).

Sure. Sounds sensible. But it seems difficult to find figures that actually support your intuition.

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