Credit card debt in the United States will officially top $1 trillion this year, warns WalletHub, a personal finance website, in a new report.
Citiing the latest figures from the Federal Reserve, U.S. consumers paid back $31.5 billion in credit card in the first quarter of 2017. This is a 14 percent improvement from the same time in the previous year, but it is still five percent lower than the post-recession average first-quarter paydown.
With these figures in mind, more than $60 billion in new credit card debt will be added by the end of 2017. This means total U.S. credit card debt will surpass $1 trillion sometime this year.
The website also listed a number of ways to reduce your debt totals:
– Establish an emergency fund.
– Create a budget and use it.
– Transfer a balance.
– Improve your credit.
– Pay off your most expensive debt first.
Everyone needs to manage their debt levels, but many are having to pay for needs like food, gas, and utilities with credit.
Why is this happening? Because wages have not kept up with price inflation. In 1974 I made $2.85 per hour and it had the buying power equal to $14.95 in 2017. Today, I cannot find employment that pays above $12 per hour although I have way more skills than I had in 1974. Record corporate profits, record low wages for the average worker. Almost 50% of workers make less than $15 per hour, it is no wonder credit card debt is so high.
It would be interesting to know how much credit card debt is due to essentials like groceries, food, rent, house and car payments, utilities, repairs, etc. as opposed to luxury items like jewelry, latest electronics, restaurant, etc. If the trend is towards living expenses because people are coming up short on their paycheck and they are deferring payments, then the country has a real problem.
We have a big problem. The average savings in retirement accounts is less than $60,000. Spending just $100 per month extra on credit cards, because you are coming up short, can grow into $12,000 in credit card debt in 10 years. Easy credit has exposed the banks to billions in unsecured debt and if the bubble pops it is going to one big mess. The only fix I see is increased wages for everyone, not just the ones at the top.
This will take years to fix, it took about 30 years of low wages to get us here.