The economy has been surging for the past two years, and Americans are still borrowing as much as ever. But rather than doing it the old-fashioned way---ringing up credit card debt---more people, especially younger generations, are taking out personal loans. A new report from the lender Lending Point shows a surge in the number of Americans using personal loans. "There are now 19.2 million outstanding personal loans in the U.S. compared to 16.9 million last year...so that's a jump of over two million in just a year," says Mark Lorimer, Chief Marketing Officer at Lending Point.
A closer look at Lending Point's numbers shows the biggest increase in those personal loans is to millennials. Since 2015, the proportion of personal loan borrowers under age 35 has doubled, and the proportion of personal loan borrowers under the age of 30 has quadrupled.
This trend may not be surprising, considering the happy-go-lucky attitude many millennials have toward their finances. "If you have really high credit card debt, like most millennials do, it makes a heck of a lot more sense for them to consolidate that into a loan, and pay it off in installments," says Lorimer. "(Millennials) generally just prefer the certainty of a fixed payment that goes away in two or three years, rather than compounding credit card interest."
While consolidating credit card debt may be a wise reason for taking out a personal loan, many are doing it for other reasons. "We see requests for weddings, for medical expenses, for moving, for adoptions, for fertility treatment, you name it," says Lorimer.