06Jun

Consumers are paying off their credit card debt in amounts not seen since the Great Recession a decade ago.

WalletHub study says that since the beginning of the year, Americans paid down $118.5 billion in credit card debt. In the first quarter alone, credit card debt declined by $60 billion, the biggest first quarter credit card debt paydown ever, says WalletHub.

Then, in Q2 and Q3, debt declined by another $58.8 billion. WalletHub says it’s “the first time in more than 30 years that credit card debt has dropped from April through September.” The Q3 paydown was the first for any third quarter in 35 years.

Taking into account fourth quarter credit card debt – which typically rises due to holiday shopping – WalletHub projects consumer credit card debt for the year will have declined by $89 billion.

It may turn out to be even more. Bloomberg says October credit card debt declined by $5.5 billion bringing overall credit-card debt to a three-year low.

Through the end of the third quarter in September, the WalletHub study puts average household credit card debt at $7,849, down almost 11% from $8,798 in the same quarter last year.

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WalletHub Analyst Jill Gonzalez said the $119 billion paydown “is actually one clear silver lining of the pandemic.”

“Paying off debt is one of the best ways to pandemic-proof your finances, and too many of us were way far too overextended at this time last year, so it’s great that we’ve collectively cut back.”

The study includes a list of cities with the least- and most-sustainable credit card debt. Topping the least-sustainable list is Magnolia, TX. The small city of 1,400 is within the Houston metro area.

Cupertino, in California’s Silicon Valley, is at the top of the most-sustainable list. In all, nine Silicon Valley cities rank in the top 10 for most-sustainable credit card debt.

Photo by Avery Evans on Unsplash

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Jun 6, 2023

New Report Is Bullish on Alternatives’ Future

The future of alternatives is bright, with the financial sector growing at an annual rate of almost 10% between now and 2025.

Preqin, an alternative assets data and analytics firm, predicts that in five years the sector will have $17.16 trillion in assets under management (AUM), a 60% increase from today’s $10.74 trillion.

The two biggest drivers of that growth will be private equity at a 16% compound annual growth and private debt at 11%. By 2025, $9.11 trillion will be invested in private equity funds, accounting for over half the total in alternatives. Private debt will grow 72% to $1.46 trillion.

“Growth in the other asset classes will be more modest,” says Preqin in the first of its Future of Alternatives 2025 series, “but with our forecasts around 5% for each segment, it will still likely outpace increases in GDP.”

Preqin predicts hedge funds will continue to be the second largest class at $4.26 trillion, however growing at only about a 3.6% CAGR. Real estate, at a predicted 3.4% annual growth, will be the slowest.

The bullish report says Asia Pacific will see the fastest growth with assets increasing from $1.62 trillion to $4.97 trillion over the next five years. That will represent about 29% of the total AUM. By contrast, North America will grow modestly, reaching $8.6 trillion by 2025.

The first installment of its series offers a broad look at the future of alternatives with projections of AUM in each asset class, as well as projected growth for the industry as a whole globally, as well as regionally. Detailed insights and analysis are provided for each of the asset classes.

Future installments will focus on investors, opportunities for fund managers, global and regional developments. One installment entitled “How Megatrends Will Transform Alternatives,” will discuss diversity, big data regulation and the investment landscape post COVID.

Photo by Gilly on Unsplash

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