Debts mounting as Americans ditch paper for plastic
This week the Fed reported that credit card debt rose 6.7% in the first quarter of this year to $957.2 billion. No surprise there.
This comes on the heels of news that several discount retailers posted solid sales increases in the first quarter while many higher-end retailers suffered losses. People are definitely looking for bargains and whether the purchases are for wants or needs, Visa and MasterCard are reaping the benefits. (Thanks Jon for the comment!)
The staggering prices of necessities such as fuel and food have forced many Americans to finance the purchase of basic goods with debt. This is dangerous territory.
The number of credit cards issued has risen by about 7%, seemingly in tandem with the amount of debt.
So if credit card debt is up and the number of credit cards issued is up, delinquency should (and did) follow.
According to Moody’s, credit card delinquency rates hit a 4-year high of 4.53% in February. Americans paid a record $18.1 billion in credit card penalty fees last year (R.K. Hammer Investment Bankers).
Hopefully some price relief is on the way…do you think things will get worse before they get better?
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POSTED IN: Consumer Debt, Economy, News
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