According to credit card research firm CardHub, 2016 could see credit card debt return to levels it hasn’t been at since 2008. This growing reliance on credit cards may show that consumers are beginning to return to the bad spending habits they exhibited prior to the financial recession.
It was estimated that consumer credit card debt would reach $900 billion dollars in 2015, but the final total surpassed that mark. The year ended with the national credit card debt reaching $917.7 billion thanks to the additional $71 billion that consumers amassed in 2015. That was a 24 percent increase from 2014. Much of this debt came in the last quarter of the year as the holiday season approached; some $52.4 billion was charged to credit cards during these three months. In 2014, the year’s total credit card debt was only $57.4 billion.
Out of the past two and a half years, eight quarters have shown consumers backsliding into spending habits they exhibited in the years prior to the 2008 financial crisis. While 2015 may have started with many consumers using their annual bonuses or tax refunds to pay off almost $35 billion dollars in debt, the second quarter saw almost that much – $32 billion – charged back. The average debt per consumer last year reached over $7,800, an almost unsustainable level.
However, there is good news: the average consumer is currently on top of their credit card debt. This should help to avert a second financial crisis for now.
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