Two new studies are painting a sobering picture of personal debt in America, just as the holiday shopping season gets off to a strong start and the Fed is poised to raise interest rates.
For two consecutive quarters, Americans have set post-recession records for consumer credit card debt. Now CardHub’s Q3 2015 Credit Card Debt Study finds consumers racked up $21.3 billion in new credit card debt from July through September – 34 percent more than consumers added to their tab over the same timeframe last year and the most for the third quarter of the year since 2009.
Coming on the heels of a $32 billion Q2 build-up, this puts consumers on pace to end 2015 with a roughly $68.5 billion net increase in credit card debt. If this projection holds true, the average household with credit card debt would ring in the New Year owing more than $8,000 – a threshold that has not been crossed since 2008.
Another study suggests America continues to polarize into a nation of haves and have-nots when it comes to debt.
According to a new CreditCards.com survey, the number of Americans with no debt is growing, but so is the number of indebted Americans who say they’ll never get out.
More than one in five Americans with debt (21 percent) believe they will never pay off all their bills, according to survey data. That’s up slightly from 18 percent last year and sharply from just nine percent in 2013.
However, 22 percent of all Americans said they don’t have any debt at all, which is up from 14 percent last year.
Other highlights of the study include:
- The average age that Americans expect to be debt free is 54 (including credit card debt, car loans, student loans, mortgages, etc.).
- Among those in debt, about half (48 percent) say they’ll remain in debt until age 61 or later.
- Surprisingly, debt-ridden millennials are more optimistic about their finances than any other age group; only 11 percent claim they’ll never be debt-free.
- People with no children are more likely to say they’ll never get out of debt than parents are (23 percent to 17 percent).
- About one in four whites say they’ll never get out of debt. That’s more than minorities (24 percent to 16 percent).
- Republicans are almost twice as likely as Democrats to expect to die in debt (25 percent to 14 percent).
- “It’s a troubling divide,” said Matt Schulz, CreditCards.com’s senior industry analyst. “While it’s great to see more people freeing themselves from debt, the fact that more and more people still feel trapped and hopeless means that Americans still have a major problem with debt.”
- The survey was conducted by Princeton Survey Research Associates International.