cards
In the second quarter of this past year, Americans added somewhere around $18.4 billion to their debt. If you take it upon yourself to study where Americans stood as a nation in regards to credit card debt the year before, that’s about a 368% increase (same quarter, too).
The last time Americans brought upon themselves the same amount of debt was circa 2008, during the height of our nation’s financial crisis. During that time, it was the official “recession.” Credit card balances surged up some $25.2 billion and it appears we are trying to repeat that trend.
This being said, it still is a lot lower than the debt lassoed in the previous years. In July, the outstanding credit card debt stood at $792 billion, says the Federal Reserve.
“This unusual behavior is unethical and not beneficial to the consumer,” said Arnold Taubman, an Economist with Credit-Land.com. “According to my research, and what history has demonstrated, if Americans don’t tighten their grip on their cards… they are headed straight for a big rut.”
This new comes at a time when credit’s close cousin, debit, is experiencing a lot of setbacks which have made it appear far less favorable in the eyes of consumers. And as a result, more and more people have turned to using credit.
“On the plus side,” said Taubman. “consumers might be bringing in more debt, but they’re defaulting a lot less. As well as generally being better about making their payments on time, which itself is a good sign.”
These fads were all experienced by the major card issuers such as Discover, Bank of America and Chase. Late payments and defaults decreased among all of them, as of August, according to Taubman.
Taubman also cited the high-intensity advertising campaigns being undertaken by credit card companies as a possible reason, such as the one recently done by CitiBank.
“People just need to spend money wisely, foolish spending leads to financial disasters. A lot of people just don’t seem to have a grasp on that,” he acknowledged. “People should understand what their income does and does not allow them.”
“As a result of all this, it’s probable we are going to see an upswing in delinquencies come the next few months,” he predicted. “All trends are leading unfortunately in this direction. It’s a repeat of 2008, all over again.”
