The Debt Service Ratio (DSR) of American consumers continues to hover in single digits during the third quarter. The slowdown in credit card debt, the migration to more debit card use and very low mortgage rates, are major factors in the DSR decline.
According to the Federal Reserve the DSR declined to 9.92% in the third quarter of this year, compared to 9.93% in second quarter, and 9.98% one-year ago.
Since peaking at 13.18% in the fourth quarter of 2007, the beginning of the Great Recession, the DSR has declined steadily since, dipping into single digits for the first time in the fourth quarter of 2012.
Over the past five years as the credit crisis of 2008 subsided, the DSR has declined 123 basis points (bps). Mostly notably the period between 2011 and 2012 when the U.S. economic recovery took hold.
RAM Research predicts the DSR is likely to edge above 10% in 2015 and may reach 10.15% by the fourth quarter of 2015.
The household DSR is an estimate of the ratio of debt payments to disposable personal income. Debt payments consist of the estimated required payments on outstanding mortgage and consumer debt.
U.S. CONSUMER DEBT SERVICE RATIO
Source: Federal Reserve
For more data on the U.S. DSR access CardData®. For information and commentary on the U.S. DSR visit the searchable CardFlash® Library of more than 58,000 articles published since 1995. RAMResearch® forecasts on the U.S. DSR are available exclusively through CardWeb.com.®