The Trillion Dollar US Credit Card Bubble Nobody’s Talking About

  • American credit card debt hit $1 trillion this year, surpassing 2008 crisis highs.
  • Delinquencies are at four-year highs, while delinquencies at small banks hit record rates.
  • Credit card interest rates are at all-time highs, making it harder than ever to pay back.

There are “bubbles everywhere” according to Nobel prize winner Robert Shiller, from stocks to bonds to the housing market. But add another one to the list: credit cards.

American credit card debt now stands at $1 trillion – nominally higher than during the 2008 crisis. And delinquencies are rising. At small banks, the delinquency rate is now worse than 2008.

As for interest rates? They’re at all-time highs. This isn’t a crisis yet, but it’s an unsustainable trend. A bubble waiting for a pin.

Total American credit card debt surpasses 2008 crisis levels. Source: Fed Board of Governors/WolfStreet

Record levels of nominal credit card debt

Household credit card debt recently hit $1 trillion. It’s the fastest-rising household debt, outstripping the pace of auto loans or student loans. By the New York Federal Reserve’s own admission, we’re back at 2008 figures.

“[It] marks the first time credit card balances re-touched the 2008 nominal peak” – New York Federal Reserve.

More than half of users are rolling balances over every month, incurring record levels of interest. And a third are over-extending themselves, claiming they’re worried about maxing out their card when they make a payment.

Credit card interest rates at all-time highs

It’s getting harder and harder to pay back that $1 trillion credit card debt, too. Interest rates hit 17.14% earlier this year – an all-time high, eclipsing 2008 levels.

Credit card interest rates hit record highs in 2019. Source: Federal Reserve Bank of St. Louis

What’s unnerving is that the Federal Reserve has lowered the federal funds rate three times this year. So your bank is not passing on the lower interest rates to you.

Delinquencies are…

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