WASHINGTON–The latest news around Americans’ credit card borrowing habits is “not good,” according to a new analysis released by WalletHub that also identifies which cites in the U.S. have the most sustainable and least sustainable levels of credit card debt.
With Americans now owing more than $1 trillion in credit card debt, including adding a record $92.2 billion in 2017, WalletHub noted that “only four times in the past 30 years have we spent so much in a year. And in each of those prior cases, the charge-off rate – currently hovering near historical lows – rose the following year. There wasn’t nearly as much kindling on the fire, either.”
The question now, suggested WalletHub in its analysis, “It’s not a question of whether consumers are weakening financially, but rather how long this trend toward pre-recession habits will last and just how bad it will get. The $67.6 billion in credit card debt that we added in Q4 2017 is the highest quarterly accumulation in the last 30 years – 68% higher than the post-Great Recession average. We ended 2017 with $92.2 billion in new credit card debt, most for a year since 2007 and 105% above the post-recession average.”
According to WalletHub, since the end of the Great Recession, consumer performance has regressed on a year-over-year basis in two out of every three quarters.
“The fact that charge-off rates remain near historical lows continues to fuel lenders’ appetites for extending credit, but there will be a tipping point eventually,” the company said. “The average household’s balance, at $8,600, is $138 higher than the level WalletHub has identified as being sustainable.
WalletHub has released a new report that examines the impact of Fed rate hikes and the cities that are most at risk. To determine which cities have the biggest problem with credit card debt, WalletHub said it used its payoff calculator to compare more than 2,500 of the largest U.S. cities based on how long it will take the average person to pay off their debt and how much balances have increased in the last year.
The list of cities can be seen below. For the full report, go here.