With home equity credit lines, some consumers have doubled their debt troubles.

Publication: The Dallas Morning News (Dallas, Texas) (via Knight-Ridder/Tribune Business News)

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COPYRIGHT 2004 The Dallas Morning News

Byline: Danielle DiMartino

Nov. 22--The mortgage refinancing craze of a couple years ago, fueled by historically low interest rates, brought with it a welcome trend: It slowed the growth of credit card debt dramatically.

In 2002, Americans' "revolving debt" levels -- that is, credit card debt that doesn't have to be paid off every month -- grew an average of about $1 billion a month, according to the Federal Reserve. In 2003, growth averaged about $1.5 billion a month. While that sounds like a lot of money, the 10-year average for monthly growth is $3.5 billion.

It would be nice to report that consumer debt levels fell overall in that period. But as the revolving debt growth slowed, home equity debt rose faster and more than filled the gap because consumers were extracting equity from their homes as they refinanced.

"What people had been doing was using home equity-related debt rather than their credit cards," said Steven Wood, chief economist at Insight Economics in Danville, Calif.

Today, consumer debt, including mortgages, is approaching $10 trillion and climbing. Consumer...

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