Americans Owe More Than One Trillion Dollars in Credit Card Debt

In 2008, Keynesian economics, financial wizardry and “creative” accounting led the whole world blindfolded into the greatest economic meltdown since the Great Depression. Why did the economists, bankers, finance experts, and academics fail to predict what was about to unfold?

If they relied on their economic theories, and those theories did not help them to foresee disaster, have they updated those theories or developed new theories? Now, almost 10 years later, the world economies appear to be still floundering in unexplained little to no growth, increasing consumer spending, and rising personal debt, especially an increasing levels of credit card debt.

 

Struggling With Credit Card Debt?

 

So, are the economists applying lessons learned from the 2008 meltdown, if any? Are the economists warning the national policymakers? Why does it look like the world is heading for a credit card bubble?

Let’s examine major economies to see what is happening in terms of credit card debt, which appears to be in crisis.

In the US, the Federal Reserve reported that revolving credit, which includes credit cards, increased to ONE TRILLION dollars in February 2017, up from about $940bn at the same point in 2016.

An expensive piece of plastic…

Unfortunately, a credit card is one of the most expensive ways to borrow, averaging 19.36% interest per year. Just about every major retail store now issues its own brand credit card, with the promise of rewards and discounts.

Their interest rates range between 25% and 30%. These credit cards are real cash cows for the stores because cardholders who do not clear the monthly debt and accumulate a lot of interest.

More than 157 million Americans owe on one or more credit cards. Altogether, debt is nearly as much as it was at the start of the recession in December 2007, which begs the question: Is the US heading for a credit card bubble?

Please read more here.

 

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