As the U.S. economy is pulling out of the doldrums from the last global financial crash, a new study suggests that consumers are once again piling up credit card debt to dangerously high levels.
The study, released Monday by the personal finance company, CardHub, found that consumer credit card debt, which is long considered an indicator of spending trends and economic health, is growing at levels not seen since the Great Recession of 2008.
Americans increased their net credit card debt load by over $57 billion last year, a 47 percent increase from 2013, when Americans increased credit debt by $38.8 billion. Indeed, Americans are using their credit cards more and more. Credit card debt in 2012 rose $36.7 billion.
The improving economy has meant a mixed picture for plastic borrowers. Defaults are now as their lowest level since 2008, but the average household card balance at the end of 2014 was $7,200, “dangerously close to the $8,300 tipping point previously identified by CardHub as being unsustainable,” the study found.
In the fourth quarter of 2014 alone, Americans added $45.5 billion in credit card debt, an increase of 6 percent from the year before. CardHub now projects that Americans will add another $60 billion in new credit card debt during 2015 — a 5 percent increase from last year.
The economy has now seen more than six consecutive quarters of year-over-year increases in credit card debt load.
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The latest figures on credit card debt increases show that “people may not have learned from the financial crisis of 2008,” said CardHub spokeswoman Jill Gonzalez. While spending may be good for the economy, she said, spending money “you don’t have can have serious consequences going forward.”
Data appear to show that Americans are swimming in credit card debt, while at the same time living off their savings accounts.
According to a Bankrate.com survey conducted earlier this year, 32 percent of people between the ages of 30 and 49 said they had more credit card debt than emergency savings. That percentage dips down to 21 percent for those in the 18-to-29 age demographic, and 14 percent for those who are 65 years old or more.
“People between ages 30 and 49 are in the worst shape, probably because of the expenses associated with children and paying a mortgage,” said Greg McBride, chief financial analyst for Bankrate.com.
If you owed $2,000 on a credit card with a 15.76 percent rate, it would take more than 10 years to pay off that card if you only made the minimum payment each month, and you’d pay an extra $1,330 in total interest, Mr. McBride said.