US Credit Card Debt Nears $1 Trillion


#1

Credit card debt in the United States is approaching $1 trillion, according to a study by CardHub.com, a company that tracks consumer financial issues.

voanews.com/content/us-credit-card-debt-nears-one-trillion/3275222.html

Card-Hub reports evidence is mounting that credit card users are reverting to pre-downturn (pre-2008) bad habits.

While U.S. consumers were riding a wave of prosperity in the years before 2008, however, now they may be using credit cards just to keep up with expenses.

“My understanding,” Harrow said, “is that the cost of living in many big urban centers is outpacing the median salary. This is sure to cause many people to supplement their income with a credit card, thus driving credit card debt.”

…just one of many signs of economic turbulence.


#2

Of course I don’t know, but I think it’ll get worse before it gets better.


#3

This number by itself doesn’t tell us much. Household wealth in in the neighborhood of $85 trillion. Some of course, are overextended, but many have very manageable credit card debt.


#4

People want what they want when they want it, They worry about consequences later. Most people live over their means and have no savings.


#5

The average credit card debt is up to $5,700 per household. The average for balance-carrying, month-to-month households, is close to $16,000.

Although the collective net worth of US households reached an all-time high of approx. $88 trillion…the problem is that wealth distribution in the U.S. is bad and getting worse.

I’m betting that the U.S. credit card debt is probably in sync with the increasing disparity between the wealthy and poor. An increasing credit cart debt probably reflects consumers using credit to make ends meet.


#6

This is true for many but I continue to see increasing overall signs of downright poverty.


#7

I smell a bailout request coming years down the road.

Credit card companies are really in for tough times imo, people use them like its free money today, they use them to pay off other card payments (something that used to be illegal if Im not mistaken). Many of these cardholders will never be able to pay off their card debt, they will just keep swiping away as long as they are alive.

What happens when a cardholder dies? My uncle who recently passed, had a $120K balance on his Visa, his minimum monthly payment was over $500…but now hes gone…no more payments, Im sure this has happened to other folks too, how can the CC companies just absorb all that time and time again?

But the CC companies are the ones having to pay the retailer, so eventually something has to give, either the CC companies are not paying full retail price or there is a ‘deal’ in place…how else could they be making profit?


#8

Unpaid subprime car loans hit 20-year high

Americans with lower credit scores are falling behind on auto payments at an alarming pace.

The rate of seriously delinquent subprime car loans soared above 5% in February, according to Fitch Ratings. That’s worse than during the Great Recession and the highest level since 1996.

It’s a surprising development given the relative health of the overall economy. Fitch blames it on a dramatic rise in loans with lax borrowing standards that have helped fuel the recent boom in auto sales. More Americans bought new cars last year than ever before and the amount of auto loans soared beyond $1 trillion.

money.cnn.com/2016/03/15/investing/subprime-unpaid-auto-loans-oil-crash/


#9

Wow, thanks for posting this, this is very similar to what happened in the housing crash…putting people into cars they can never afford, by offering very cheap downpayments or even nothing down, ‘teaser rates’, etc. JUST so they can sell a car and sell the financing.

This could be the next bubble?

Its amazing more people do not see what they are doing, they saw what happened in 2007/08 with housing, yet its the same thing over and over again…these are the people that will be responsible when the US economy crashes.


#10

There are different courses of action to.try an collect,.Creditors may recourse to debt collection agencies or eventually debt buyers.
Someone will have inherited the debt.
Hopefully not you:)


#11

Many years ago, it suddenly occurred to me that the interest rate is not the worst of it, almost no matter how high it is.

All payments on credit cards are with “after tax” dollars. So we pay taxes at our marginal rate for the money we use to make payments on the card. Even the interest isn’t deductible in most cases. That’s a huge cost. If your marginal tax rate is 25% and your card interest rate is 18%, you’re paying 43% on that borrowed money; almost “payday loan” rates. People who get the payday loans we all criticize almost never pay taxes, and a lot of them get free “earned income credits” (check from the government). We think we’re better off with credit cards than they are with payday loans, but in many instances, we’re not.


#12

Lots of times those debts are more collectible than most creditors think they are. If the uncle had a “joint name” on his house, for instance, the creditor can usually collect against the house if he knows how to do it. As aggressive as they can sometimes be with living people who have wages and assets, they’re remarkably sluggish when it comes to debtors who died.


#13

It should be $999,999,999,500.00 now because I paid $500 on mine this morning. :cool:

They can get out of control quick.


#14

I think I see the problem with the article you quoted. The economy isn’t healthy. It’s been in recession since 08 and hasn’t recovered, it’s only treading water.


#15

:smiley:

It can, and not because of buying beyond one’s means. Often medical bills are put on credit cards.


#16

In my uncles case, there were 2 other people on the title to the house he co-owned, but after his death, the house was sold. the other 2 owners never heard anything from the credit card companies, its too late for them to come calling now, house is already under new ownership.

In fact, my uncle had 2 brothers, 2 full grown children, and an ex wife, none of them heard anything from Visa, this was close to 4 years ago, strange that Visa could just ‘eat’ $120K worth of debt from one single person and not be impacted???


#17

Im not sure I agree with you on payday loan outfits, after we divorced I found my ex wife had used a couple of these, apparently someone can use multiple ones at the same time, taking money from one to pay another!

And the interest rates…OMG…it would be cheaper to borrow money from the mafia.

Payday loan industry is nothing but loan sharking imo, but now they have the courts and legal system to back them up.

If I was a smart person, I would look into starting a payday loan company, ridiculous profit would almost be guaranteed. in terms of most successful small businesses, payday loan companies have to be very high on the list I imagine.


#18

Thanks.


#19

Actually, I think it’s a pretty tricky business. It’s can be profitable, but it’s a harsh thing to be in, and one could go bankrupt in a hurry operating one. I know two ladies, each of whom operates a payday loan office. It’s very tough. Some of them have bulletproof glass between the worker and the customer because they keep a lot of cash on hand and because a lot of the customer are unstable people to begin with. They work late at night and on weekends because the customers are usually not people who think ahead.

Credit losses are very high. People who are good at paying their debts have good credit ratings and don’t need to go to payday loan outfits. On the whole, it’s a very rough business and a very sad one.

But if a person needs money to fix his car to get to work and has no other source? What then?


#20

On the contrary, some see it as a good thing.

Wait till they lower the rates to negative. :eek:


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