One analyst’s estimate this week that Myspace’s “real” debt could be nearly 2000 percent of GDP attracted plenty of attention.
However, analysts who study consumer spending habits say there’s a debt risk much closer: The amount and pace at which American consumers are racking up credit card debt.
“About American’s finances, the current situation is not too encouraging,” said Jill Gonzalez, senior analyst at personal finance platform WalletHub.
“We started the year owing more than $1 trillion in credit card debt, and although we paid off a large chunk in the first quarter, that could be a sign that more debt will be taken on by consumers.”
According to the Federal Reserve’s consumer credit tracker, revolving credit — a category in which credit card debt predominates — increased at an annualized rate of 11.25 percent in July, the most recent month for which data is available.
“In terms of revolving debt, we see spikes like this every so often, but they don’t jump by double digits all that much,” said Matt Schulz, chief industry analyst at CompareCards. Typically, big jumps occur around the holidays, though — not in July.
“Credit card debt can be read a couple of different ways. It can be read as a sign of confidence that people are feeling good and be willing to spend, or it can be seen that more and more people are needing to rely on credit cards.
According to Fed data, borrowers hit the trillion-dollar mark in outstanding revolving credit back in September 2017 for the first time since January 2009.
The total amount of revolving credit peaked in May 2008 at roughly $1.02 trillion. WalletHub’s Gonzalez estimated that consumer credit card debt will increase by $70 billion this year.
“Both revolving and non-revolving debt have been growing at a faster pace than household income for years,” said Greg McBride, chief financial analyst at Bankrate. “We haven’t seen signs of stress because unemployment is really low and so are interest rates, but as soon as either one of those or both increase in any measurable way, that’s when the cracks will start to appear,” he said. “All this debt is not a problem until it is.”
For more information, please visit us at: https://bestay.io/
Any information or inquiries, please contact us via email [email protected]