[h/t to CindyCo]
According to Money.com, Americans credit cards are ‘booming’.
“Americans paid banks $113 billion in credit card interest during 2018, according to a new study from MagnifyMoney. That’s up 12% from interest paid in 2017, and up by roughly half over the last five years.”
One big reason is that, 10 years after the financial crisis, Americans finally feel confident enough to borrow more, and total credit card debt recently reached a record high. But borrowers are also paying more on what they borrow, as banks pass recent Federal Reserve rate hikes onto customers.
Even without any additional rake hikes in 2019, Americans will spend $122 billion on credit-card interest in 2019, almost $10 billion more than they did in 2018, according to banking comparison site MagnifyMoney. The average APR on credit card accounts has risen nearly 4 percentage points over the last five years, and now stands at 16.86%, according to the Federal Reserve.
$1 Trillion in Debt
While a single rate increase doesn’t seem like much, they add up quickly. “If your budget is already tight, that becomes increasingly difficult for American households,” says Chris Horymski, Senior Research Analyst at Lending Tree, MagnifyMoney’s parent company.
Based on the Federal Reserve’s Survey of Consumer Finances, 40% of active credit card users carry debt month to month. In 2017, total credit card debt eclipsed $1 trillion for the first time since the financial crisis, according to the Fed. At $1.034 trillion as of January, it’s near record highs.
Credit card delinquency rates, on the other hand, remain stable – and far below their peak in 2009, when the economy was in free fall.
As economic growth rebounded since the 2008 recession, so too has public sentiment. Americans today have a more positive view of the country’s economic situation than they have had at any time since 2002, according to the Pew Research Center. Roughly two-thirds of the U.S. says the economy is in good shape – that’s up 17% from 2009, the data shows.
On A Side Note (Opinion)
“Roughly two-thirds of the U.S. says the economy is in good shape…”
And they have the credit card debt and interest payments to prove it.