Americans are using and abusing their credit cards once again.

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Things are looking good as we bolt/crawl out of the pandemic, with a red-hot economy, companies hiring as fast as possible, savings up, and credit scores higher than ever.

 

But rampant enthusiasm about our financial near future also comes with a wave of consumer spending…on our credit cards

 

We’re charging, swiping, and clicking more than ever, as evidenced by the fact that US consumer credit has risen at the highest rate in at least a decade.

 

And while we’re all feeling a little jubilation that things may soon be back to normal and we want to live a little again (funded by our credit cards!), there definitely will be a reckoning when it comes to the credit card hangover.

 

So, today I wanted to present 10 facts, stats, and data points to explain the precarious state of credit card debt we’re in.

 

  1. Over the last year, consumer credit balances have climbed by 10.6%, the largest jump since summer of 2011.
  2. Compared to June of 2020, revolving debt (mainly consisting of credit cards), has skyrocketed 22%. The greatest such increase since 1998.
  3. At the same time, non-revolving debt (auto and student loans) has risen by 11.3%
  4. When we just focus in on credit card debt, Americans now have $770 billion in unpaid balances.
  5. But before we start sounding alarm bells, it’s important to note that our total credit card debt has actually dropped from a high of $819 billion in Q4 of 2020.
  6. We’re also not at an all-time high for credit card balances, which was $927 billion in Q4 of 2019.
  7. When factoring in inflation, the most irresponsible run-up of debt probably came in 2008, when we had a collective $866 billion – eclipsing what we now have if you converted to 2021 dollars.
  8. 53% of all credit cards have a balance now, and the average cardholder has $6,569 in unpaid balances.
  9. The US national average for credit card interest rates is 14.61% as of Q2 of 2021. But for new credit card offers, the average APR is 19.49%, and often goes up to 23%.
  10. Amid this tidal wave of credit card usage, there is some good news: delinquencies are extremely low. Only 1.89% of credit card accounts are delinquent right now, defined as at least 30 days late on payments. To put that low number in context, that’s the first time credit card delinquencies have fallen below 2% since 1991, and they climbed as high as 7% in 2009!

In light of this update, please carefully manage your credit cards and debt, and realize that frequent use of credit accounts and maxing out cards seriously impacts your score!

For more help, just reach out to Blue Water Credit.

 

 

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