A new report from WalletHub proves that debt is as American as apple pie.
According to their data, Americans added $92.2 billion in credit card debt last year, the most since 2007, before the Great Recession.
When you include all outstanding balances, the Federal Reserve estimates that Americans owe more than $1 trillion in credit card debt.
So what’s the deal? In the fourth quarter of 2017, Americans added $67.6 billion in credit card debt, which was the highest quarterly accumulation in 30 years. Looking back over the past couple of years, you can also see a speedy incline in debt, with debt climbing from $43 billion in 2015 to $87 billion 2016. This growing burden could be attributed to historically low charge-off rates, or the percentage of customers whose unpaid balances cannot be collected. During the Great Recession, charge-off rates were high and banks tightened their lending guidelines, restricting who could get credit.
Now, banks are extending more credit to consumers with below-average credit scores. This could be why we’ve seen a slight bump in credit-card delinquency rates, up to 7.5% from 7% the previous year. While this is nowhere near the 15% delinquency rate peak during the financial crisis, it is a red flag for people to get serious about tackling their debt.
In the last quarter of 2017, the average credit card debt per household was $8,600, up 6% from Q4 of 2016. According to WalletHub’s 2018 credit card study, 62.3% say their credit card debt partly stems from health care expenses. This is no surprise, seeing as the Centers for Medicare and Medicaid Services reported that Americans paid $338 billion in out-of-pocket medical expenses like deductibles, copays, and other spending in 2015.
Brittany is reporter at Yahoo Finance.