According to a new study conducted by WalletHub, American credit card debt rose by 6% in 2017 compared to last year and reached $936 billion, up from $884,7 billion as per 2016 figures. That’s 12 billion more in just a year and even if that doesn’t sound like much for the average reader, take a look at this number: the average household credit card balance in America is now almost 8 grand, i.e. $7,996, while interest rates are slowly rising and they add to the accumulated debt.
It’s obvious that perpetual debt is not perpetual after all, as in a broken system will eventually come apart, because you can’t fix debt with more debt and kick the can down the road forever. The study shows that in the 2nd quarter of this year, American consumers added $33,000,000,000 in credit card debt, which makes for the 2nd highest amount of quarterly debt since the 2008 financial crisis.
The same study predicts that by the end of 2017, the credit card debt of US consumers will reach one trillion dollars. Despite mainstream media claims that Obama managed to get the US out of recession and the economy was recovering after the system was flushed with cheap money like never in history, resulting in a doubling of the national debt during Obama’s 2 terms in office, 2016 was the worst year for credit card debt since 2008. In 2016 alone, American consumers hoarded $87,2 billion in new credit card debt. Prior to taking another 33 billion dollars in debt in the second quarter of 2017, Americans paid $30,5 billion of the respective debt during the first quarter, thus making the year 2017 to look very promising.
However, as the Federal Reserve started raising interest rates, things degenerated and US credit card debt reached new highs. Moreover, the main reason Americans owe so much in credit card debt is that people got accustomed to spending money they don’t have due to FED’s cheap-money policy (ZIRP, NIRP, QE et al).
Live within your means and the problem is solved. Put some money in savings instead of buying the latest $700 iPhone, cook at home instead of always eating out, ask yourself how many big screen TVs does your house really need etc.