WASHINGTON—U.S. consumers added $33 billion in credit card debt during Q2 2017, according to WalletHub’s 2017 Credit Card Debt Study.
“This development lends credence to the notion that the nation is flirting with financial disaster, coming on the heels of last year’s record increase in credit card debt ($87.2 billion),” WalletHub stated.
Furthermore, the country is on track to surpass $1 trillion in outstanding balances for the first time by the end of 2017, with the average household’s balance in turn rising to a “perilous” $7,996, the company said.
“Q2 2017 also appears strikingly similar to Q2 2007, which ended less than six months prior to the start of the Great Recession,” WalletHub noted.
“Following the worst year for credit card debt since the Great Recession, we started 2017 with a $30.5 billion first-quarter paydown. But we borrowed it back and then some during Q2, racking up $33 billion in new debt. So 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,” WalletHub said.
WalletHub projects that we will end 2017 with more than $60 billion in new credit card debt.
“The $33 billion in credit card debt that we added in Q2 2017 is 45% higher than the post-Great Recession average. It also wiped out our Q1 paydown. We ended 2016 with $87.2 billion in new credit card debt, most for a year since 2007 and 130% above the post-recession average,” WalletHub explained.
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 company said.
“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,” WalletHub said.