Consumers in Almost Record Amount of Debt?
It looks like consumers didn’t learn a valuable lesson following the financial crisis of 2008. If you will recall, a record number of credit card debt was reached at $973 billion dollars in August 2008. A sea of credit card defaults followed that record. I believe there was a 145 billion loss of overall credit card debt that followed.
According to Cardhub.com, consumers racked up $52.4 billion in credit card debt in the fourth quarter of 2015. That puts us well over $900 billion which is an important mark. $900 billion is the amount that industry experts suggest is the amount that if exceeded credit card debt becomes unsustainable.
According to www.usdebtclock.org total credit card debt is over $933 billion dollars. Cardhub predicts that is won’t be long before default rates begin to rise and credit availability tightens. Thus, if you have available credit limit with the ability to consolidate debt at lower rates you might want to consider these offers before the window starts to shut. Although the Card Act was the reason why credit card companies shut down available credit lines and took other drastic measures, don’t be surprised if it happens again. I am sure that if the credit card industry starts to see rising defaults, they will take drastic measures once again.
Incidentally, student loan debt has exceeded $1.3 trillion. Will we see a day where credit card debt and student loan debt have both exceeded a trillion dollars? There is one thing for sure. With the average interest rate being charged is higher than it has ever been, even with defaults credit card companies are making tons of profit.