America's credit card debt might hit $1 trillion soon, according to a recent analysis from the American Bankers Association.
According to the latest Credit Card Market Monitor from the association, the number of new credit card accounts soared by 80.3 million compared to 12 months previously, marking an increase of 16.3%.
This suggests that card issuers are relaxing the purse-strings slightly compared to the stringent years of the recession, even to customers with relatively low credit scores, the report suggested. According to data from the first quarter, 10% of new cards went to individuals with credit scores of 583 or less. In fact, the average amount of credit available was at just $626.
Currently, the amount of credit card debt stands at $662 billion, according to the analysts Moody’s and Equifax. When this is added to the $593 billion in outstanding credit card balances, and over $68 billion on retail cards, it nudges the significant $1 trillion figure. And yet, this still puts the credit levels below pre-recession numbers, say economists, meaning that lenders are remaining cautious but slowly becoming more open.
Mark Zandi, chief economist for Moody’s Analytics, said: “Consumers are borrowing more and lenders are more willing to make loans, but at least so far it has been a prudent increase in debt. It may be something a year from now, but I don't think card debt is currently a significant problem."
For consumers, this suggests creative yet cautious use of credit could be the way forward, with cashback cards offering competitive deals (offering bonuses and money back with each purchase), generous 0% deal offers for those with good credit, and access – if you’re lucky and careful – to a higher line of credit than before.
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