WASHINGTON–Consumers repaid $40.3 billion in credit card debt during Q1 2018, but the charge-off rate is also at its highest point in six years and one forecast for what’s ahead is rather gloomy.
“…The latest news may seem encouraging, but the complete picture is not pretty,” said WalletHub.
According to the 2018 Credit Card Debt Study by WalletHub, Americans began the year owing more than $1 trillion in credit card debt for the first time ever after adding a record $91.6 billion to the consumer debt tab in 2017.
“Only four times in the past three decades have we overspent so much in a year,” said WalletHub in its analysis. “And in each case, the charge-off rate – currently near historical lows – rose the following year. That’s true so far, as charge-offs jumped nearly 5% from Q4 2017 to Q1 2018. So it’s not a question of whether consumers are weakening financially. It’s a matter of how long this trend will last and just how bad it will get.”
According to WalletHub, the average household’s balance, at $8,166, is “roughly $300 shy of being unsustainable.”
Among other findings in the research:
- 37% of people think travel is worth getting into debt for, behind just housing (47%) and healthcare (61%)
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89% of people say their personal finances are run better than the federal government
- 41% of people with credit card debt say they’ll pay it off in less than a year