Is Credit-Card Debt Out of Control?

Balances are on the rise, but defaults are still low.

Couple Discussing Credit Card Bills
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A dollar sign followed by 13 digits tends to swivel heads. So credit card research site CardHub’s recent prediction that U.S. credit card holders will carry roughly $1 trillion in outstanding balances by the end of the year raises questions about how consumers are faring as debt levels grow. CardHub, which issued the forecast based on data from the Federal Reserve, warns that consumers may be on the path to spending beyond their means—a return to the bad habits that predated the 2007–08 financial crisis. Credit card balances recently sat at about $885.4 billion, by CardHub’s reading of the latest quarterly figures, compared with $832.5 billion a year earlier.

Finally, a look at other consumer debt provides some context. Credit card debt, higher than both auto loan balances and student loans in 2009, is now below both of those categories. Auto loan debt has reached $1.1 trillion, according to recent quarterly data from the New York Fed, although delinquencies still are a relatively manageable 3.5%. More worrisome is student loan debt, at $1.26 trillion. That’s a $69 billion increase from mid 2015, and the debt carries a 90-day delinquency rate of 11.1%, up from 8.5% at the end of 2011.

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Lisa Gerstner
Contributing Editor, Kiplinger's Personal Finance

Lisa has spent more than15 years with Kiplinger’s Personal Finance and heads up the magazine’s annual rankings of the best banks, best rewards credit cards, and financial-services firms with the best customer service. She reports on a variety of other topics, too, from retirement to health care to money concerns for millennials. She has shared her expertise as a guest on the Today Show, CNN, Fox, NPR, Cheddar and many other media outlets around the nation. Lisa graduated from Ball State University and received the school’s “Graduate of the Last Decade” award in 2014. A military spouse, she has moved around the U.S. and currently lives in the Philadelphia area with her husband and two sons.