American consumers are racking up credit card debt again and are likely to end the year with an average household balance of $8,000, the highest amount since the Great Recession, according to new findings from CardHub.
The year started off on a positive note, with consumers repaying nearly $35 billion in credit card debt during the first quarter. But those savings almost completely erased by the end of the second quarter, when Americans racked up a whopping $32 billion in new balances, CardHub found.
And that was followed up by adding $21.3 billion to the nation’s credit card balances during the third quarter – the largest second and third quarter surges since CardHub began conducting this study in 2009.
Says CardHub: “While the fact that we incurred less new credit card debt in the third quarter of 2015 than in the second might lead some to believe that credit responsibility is improving, this mirrors a historical trend where a first-quarter paydown is followed by a spike in debt levels during the second quarter, a more-modest increase during the third quarter, and a relatively massive buildup to end the year.”
Here are CardHub’s highlights from its third quarter report:
• The $21.3 billion in new credit card debt added in Q3 2015 is the largest third-quarter buildup since the Great Recession – 71% higher than the post-recession average.
• With 8 of the past 10 quarters reflecting year-over-year regression in consumer performance, evidence is mounting to support the notion that credit card users are reverting to pre-downturn bad habits.
• CardHub expects outstanding credit card debt to surpass $900 billion by the end of the year, bringing the average indebted household’s balance above $8,000 – the highest amount since the Great Recession and roughly $400 below the tipping point CardHub identified as being unsustainable.
• While credit card debt levels are trending significantly upward, charge-off rates remain near historical lows and are, in fact, down on a year-over-year basis. Something clearly has to give, and it does not seem to be our spending habits.