American Households Spend Bigger Slice of Income on Debt Payments

Working-class families saw debt levels rise last year as incomes grew slower than for consumers as a whole

Families making between $25,300 and around $43,000 devoted 15.6 percent of their income to paying their debts last year, the first increase since 2010, and a factor that may be contributing to rising consumer default rates, according to Moody’s Investors Service. Debt levels for these households are rising even as the broader economy expands and unemployment is low, in part because incomes are growing slower than for U.S. consumers as a whole. Consumer lenders are eager to step into the breach: many have loosened their standards since the financial crisis to win new business.

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