Credit Card Debt Reaches Post Recession High
New credit card debt in America hit a post-recession high in the second quarter of 2014, reaching a total of $28.2 billion, according to a new study. That is the largest amount of debt since the economic downturn and almost 200% more than the second quarter of 2009.
This new debt comes as somewhat of a surprise since Americans just paid off $32.5 billion of credit card debt during the first quarter of 2014. Now, consumers have charged 86% more money in the second quarter, with the average household credit card debt near $6,800. This is still lower than the $8,431 average at the end of 2008, but experts expect it to reach $7,000 by the end of the year.
With the holiday season quickly approaching, there will most likely be an even bigger spike in American credit card debt. The Federal Reserve said back in July that revolving debt, which is mostly made up of credit card debt, had reached 7.4% in July. It could increase in the months to come.
A new study from the National Foundation for Credit Counseling reveals many Americans are simply living beyond their means. 20% said they couldn’t make ends meet without the use of credit, and 22% said they would have to make significant lifestyle changes to get rid of their credit cards.
“Breaking one of the basic rules of personal finance–spending more than you make–is not likely to have a positive outcome,” Gail Cunningham from the NFCC said in an interview with MarketWatch.