Tuesday, January 9, 2018

Credit Card Debt Hits New Record High

What happens when you want or need things that you don't have the money for? 

Simple!  Your borrow the money by using your credit card!

So what happens when you don't pay it off at the end of the month when your bill comes due?

Simple!  They charge you 18% until you DO pay it off.

Sounds fun!!

Credit card debt hits new record, raising warning sign

Americans' outstanding credit card debt hit a new record in November, highlighting a more confident U.S. consumer but also flashing a warning signal of potential trouble down the road.

Revolving credit, mostly credit cards, increased by $11.2 billion to $1.023 trillion, the Federal Reserve said Monday. That nudged the figure past the $1.021 trillion highwater mark reached in April 2008, just before the housing and credit bubbles burst. Over the past year, revolving credit has surged by $55.1 billion, or 5.7%, according to the Fed and Contingent Macro Research.

Non-revolving credit, such as auto and student loans, rose by $16.8 billion to $2.8 trillion in November.

The new all-time-high for credit card debt doesn’t pose the risks to the economy that existed in 2008 because incomes are higher, says UBS Credit Strategist Stephen Caprio. The ratio of credit card debt to U.S. gross domestic product is about 5%, compared with 6.5% in 2008, he says.

“It’s a potential early warning sign but not a financial stability issue” for the broader economy, Caprio says.

Still, Caprio notes that credit card delinquencies have increased to about 7.5% from 7% a year ago, underscoring, growing stresses for low-income households in particular. While that’s still below the 15% delinquency rate reached during the financial crisis and the 9% historical average, he says the increase over the past year raises some concerns. With jobs and income growing, the rise isn’t creating significant problems now but it could if the economy and labor market take a downward turn.

“People should make 2018 the year they focus on knocking down their credit card debt,” says Matt Schulz, senior industry analyst for CreditCards.com. With the Federal Reserve continuing to raise interest rates, “that credit card debt is going to grow faster and faster,” siphoning off money Americans should be putting aside for retirement,” Schulz said.

Here;  https://www.usatoday.com/story/money/2018/01/08/credit-card-debt-hits-new-record-raising-warning-sign/1014921001/

Earlier in 2017 this same newspaper also reported that 70% of Americans don't have $1000 in savings....so we really aren't sure how many of these credit card users are actually saving for retirement.

It would appear that a slow motion train-wreck is coming to America.  We keep seeing all the signs that the train is about to come off the rails but we figure that we can certainly keep going down the same tracks for another day!

"Why think about tomorrow when there is so much fun to be had today?"....says the 26 year old man living in his mother's basement as he signs the loan papers for a $70,000 jacked-up truck.


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