I like business charts. I like to see things in lines, over time, it helps me visualize. I’m often recommending that for business plans. Today I noted the chart in Credit Cards, Bankruptcy and Agency Costs by Luke Froeb at Management R&D.
That orange-brown line at the bottom of the chart is revolving credit debt. You can see how it increases in the late 1990s.
In the past quarter century, unsecured credit card debt has replaced other kinds of (secured) consumer debt, including retail store credit, personal finance companies, friends and family, and pawnbrokers. The graph above shows an increase in “revolving” consumer debt service (as a percentage of income); and a corresponding decline in “non-revolving” debt service.
Luke quotes Todd Zywicki on how bankruptcy behavior affects consumer debt. Consumers were using bankruptcy to escape credit card debt until changes in 2005 made that harder to do. Bankruptcy statistics are down since then.