The amount of outstanding credit card debt in the United States exceeds $1 trillion for the first time ever, according to the results of a study released late last week by WalletHub. To get over the $1 trillion mark, Americans added more than $90 billion of credit card debt last year, only the fourth time in the past 30 years that so much was spent in a calendar year.
In each of the previous three times that the amount spent in a year exceeded $90 billion, the charge-off rate increased in the following year, according to WalletHub. From the study:
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.
The average household had $8,600 in credit card debt at the end of 2017, up from $8,100 a year earlier. The $8,600 is $138 higher than what WalletHub deems to be “sustainable.”
For those individuals with credit card debt, WalletHub offers a number of strategies. One of them is to repay the debt with the highest interest rate first.
Most people with serious credit card debt have multiple balances. If that’s the case for you, try the “snowball method.” That means putting the majority of your monthly debt payment toward the balance with the highest interest rate and making the minimum payment required on the rest. Once your most expensive debt is paid off, repeat the process until you’re debt-free.
