Credit Card Debt Rising

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  Studies reflect an increase in use of consumer credit

Credit Card Debt Rising

It’s no wonder more people are seeking help, as recent studies are starting to show alarming trends in consumer credit card spending. Most recently the Q2 of 2013 increase was 200% higher than in Q2 of 2009 when we first started emerging from our most recent recession. We are now entering a time where even FICO is changing its standards to adapt to the rise of unsecure credit and medical debts and its effect on consumer credit.

As the housing market remains sluggish consumers are leaning more and more on credit cards according to the most recent CARDHUB study. More of our friends and neighbors homes are precariously close to instability. The average household credit card balance is expected to top $7000 mark during 2014. These are levels that have not been witnessed since 2010.

Credit Card Debt Rising

“Assuming the above projection holds true, by the end of 2014 U.S. consumers will be roughly $1,300 away from the credit card debt tipping point, where minimum payments become unsustainable and delinquencies skyrocket,” CardHub said. Meanwhile, CardHub, said, “Consumers will charge-off on $30.35 billion in credit card debt during 2014. If that projection holds true, consumers will have defaulted on nearly $300 billion ($298.5 billion) in credit card debt since 2009.”

Fortunately for consumers FICO 9 effects charge-off accounts, which can now be eliminated once debt has paid down to a zero balance. It is apparent that consumers need to start to address this systematic issue afflicting the nation. Credit card debt is on the rise and many homes are starting to struggle to cope.

Q2 2013 By the Numbers:

Net Result in Debt Load: + $17,015,594,709

Relative to Q2 2012: – 3%

Relative to Q2 2011: – 12%

Relative to Q2 2010: + 75%

Relative to Q2 2009: + 80%

Outstanding Credit Card Debt: + $9,669,679,600

Credit Card Charge-Offs: $7,345,915,109

Main Findings:

  • At roughly $17 billion, the Q2 2013 build-up was 3% smaller than that in Q2 2012 and 12% smaller than in Q2 2011. However, it still represents a significant increase relative to second quarters of 2009 and 2010. We are therefore still heading in the wrong direction, just at a slower pace.
  • The average household now owes $6,658 to credit card lenders (up from $6,590 after Q1).
  • U.S. consumers have charged-off on more than a quarter of a trillion dollars since the beginning of 2009.
  • The charge-off rate, at 3.86%, is at the lowest point since 2006.
  • After initially predicting a $47 billion increase in credit card debt for 2013, CardHub revised this number down to $41.2 billion in light of data from the second quarter of the year year.

Quarterly Credit Card Charge-Off in Dollars

CreditHub Household

 

 

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