CardHub: Outstanding Credit Card Debt Could Hit $1T in 2016

Outstanding credit card balances could reach $1 trillion by the end of 2016, according to a CardHub study released last week. The prediction comes after U.S. households paid down just $26.8 billion in credit card debt in the first quarter — the smallest first quarter debt reduction since 2008, at nearly 25 percent below the post-recession average paydown. The paydown covers only 38 percent of the $71 billion that was added to the household debt balance in 2015.

Overall, consumer performance has regressed over the last two years — in 8 out of the last 10 quarters, consumers increased their debt relative to the preceding quarter, which could suggest a shift back to pre-recession bad habits, CardHub said. The current average household debt balance stands at $7,597, a 6 percent increase from a year prior, while charge-offs remained near historic lows.

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Monica C. Meinert

Monica C. Meinert is deputy editor of the ABA Banking Journal and editorial director at the American Bankers Association, where she oversees ABA Daily Newsbytes.