In the United States today, subprime borrowers are gaining access to credit cards like it’s 2006.
According to a new report from the New York Federal Reserve, credit card use among individuals with low credit scores is soaring, and it’s leading to higher debt loads since they’re being given higher limits.
The Fed report states that the issuance of new credit cards has been skyrocketing since 2009. During the post-recession and post-financial collapse era, the nation’s lowest-scoring borrowers, which are those with credit scores under 660, are receiving new credit cards at an alarming rate.
Ostensibly, these consumers identified as subprime borrowers are scooping up new credit cards at pre-recession levels.
Here is what the New York Fed states:
“Nearly half of all card closures in 2010 and 2011 belonged to borrowers with credit scores of 660 and below, although they comprise only 33 percent of card borrowers. Reversing the sharp net decline in the number of credit cards during 2008-10, in recent years, the level of new card issuance to this group has been strong and is now approaching pre-recession levels.”
And it isn’t just the number of credit cards they’re receiving. The median limits are doubling. In 2009, the median limit for new cards was $500. In 2015, it has spiked to $1,000.
Again, here is what the New York Fed reports in its study:
“Over the same period, borrowers in the 720-779 and 780-plus credit score groups have seen their median new card credit limits increase from $3,600 and $4,200 to $5,500 and $8,000 respectively.
Much to the surprise of no one, total outstanding U.S. credit card debt at the end of the first quarter climbed 2.4 percent to $729 billion. This is still down from the peak of the economic collapse: $866 billion.
When it comes to other forms of debt, the numbers are just befuddling. Auto loans jumped three percent to an all-time record high of $1.1 trillion. Student loan debt, though falling by $2 billion, stands at a whopping $1.26 trillion. In total, consumer debt totals $12.29 trillion.
It seems we as human beings never learn our lessons from the past. The more things change, the more they stay the same.
When the next “Bubble” bursts, it is going to be far worse for the economy and the People than the 08-10 period.
Being Prepared to ride out this collapse is prudent to those who understand the facts and ignore the hyperbole of the talking heads who only promote the “narraitve” of the economy as being strong.
Those who buy into the “narrative”, well, they are just going to increase the problems that will plauge this nation in short order; and feed larger problems into being.
An Empty Stomach makes for a Willing Slave