It’s taken a little longer than originally estimated, but the total amount of U.S. consumer credit card debt is about to reach $1 trillion. At the end of last year, U.S. credit card debt stood at $980 billion, just missing a prediction that the $1 trillion mark would be reached in 2016.
The average American household increased its credit card debt by 5% to $7,996 compared with the second quarter of last. In the fourth quarter of 2007, household credit card debt averaged $8,461, the highest ever.
American consumers hit the pause button in the first quarter of 2015, and actually paid down their credit card debt by $31.5 billion, reducing the total outstanding to $940 billion when charge-offs are added in. In the second quarter, however, Americans borrowed another $33 billion on their credit cards, adding back more than they paid off in the first quarter.
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Credit card debt is currently higher than it’s been since the end of 2008 when Americans owed $983.9 billion. U.S. credit card debt totaled $936.1 billion at the end of the second quarter. If that pace continues through the second half of the year, U.S. credit card debt will reach $1 trillion by the end of 2017, according to researchers at WalletHub.
Americans added $87.2 billion to credit card debt last year, most of it in the second half of the year. Credit card debt rose by $80 billion, following the same pattern we’re seeing this year — in the first quarter of 2016 Americans paid down nearly $27 billion in credit card debt before adding $34 billion to the total in the second quarter.
To say the WalletHub researchers are concerned is, perhaps, an understatement:
So it’s not a question of whether consumers are weakening financially, but rather how long this trend toward pre-recession habits will last and just how bad it will get.
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