WASHINGTON—Consumers racked up sizeable debt in the second quarter, according to a new report.
CardHub’s latest Credit Card Debt Study shows that while consumers repaid nearly $35 billion in credit card debt during the first quarter of the year, they erased almost all of that paydown, posting $32.1 billion in new balances from April through June – the largest second quarter binge since CardHub began conducting its study in 2009.
“As a result, CardHub now projects that we will end 2015 with a net increase of more than $60 billion in credit card debt – putting us perilously close to a tipping point at which balances become unsustainable and delinquency rates skyrocket,” the company stated.
Other study findings:
- With seven of the past 10 quarters reflecting year-over-year regression in consumer performance, evidence is mounting to support the notion that credit card users are reverting to pre-downturn bad habits.
- CardHub expects outstanding credit card debt to cross $900 billion by the end of the year, bringing the average indebted household’s balance to $7,813—the highest amount since the Great Recession and $615 below the tipping point CardHub identified as being unsustainable.
- While credit card debt levels are trending significantly upward, charge-off rates remain near historical lows and are, in fact, down on a year-over-year basis. “Something clearly has to give, and it does not seem to be our spending habits,” CardHub stated.
- Consumers tend to incur less credit card debt in the third quarter of the year than in the second, before spending spikes during Q4. “Just how bad this year will be for our wallets may thus depend on how flush we’re feeling during the busy holiday shopping season,” CardHub said.