BACK

Research and Statistics

Americans’ credit card debt hits $1 trillion

Summary

Our national credit card balance is hitting $1 trillion this month – the highest level since the Great Recession

The editorial content below is based solely on the objective assessment of our writers and is not driven by advertising dollars. However, we may receive compensation when you click on links to products from our partners. Learn more about our advertising policy.

The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Please see the bank’s website for the most current version of card offers; and please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

Dollar bills

Hi, America. Here’s your credit card bill. You owe $1 trillion.

U.S. credit card balances have now hit $1 trillion, according to a CreditCards.com projection that uses consumer credit data from the Federal Reserve. That’s the highest level of card debt since January 2009, at the worst point of the Great Recession.

At first glance, the debt level seems daunting. A debt of $1 trillion is greater than the GDPs of all but 15 countries, according to data from the International Monetary Fund. But with steady job growth and relatively low debt burdens, American consumers are in a stronger position to manage their credit than they were during the recession.

“Consumers currently have the capability to manage their debts and their overall financial obligations,” said Scott Hoyt, senior director at Moody’s Analytics. “This is not to say there aren’t individuals in trouble – I’m sure there are – but the aggregate level of debt payments is low relative to income, which suggests it’s manageable.”

2017: A banner year for credit card debt
Credit card balances stood at $992.4 billion in November, according to the Fed’s consumer credit report released Jan. 9. Revolving debt has grown by $5 billion per month on average since November 2015. A straight-line projection at $5 billion per month shows card balances clearing the $1 trillion mark sometime in January.

We won’t know the exact moment that our national credit card bill crosses the $1 trillion mark for at least another month or two, because of a lag in the data. The Fed’s consumer credit reports for December and January will be released in February and March. If we splurged as we did in November, when credit card debt surged by $11 billion, then we already crossed the $1 trillion threshold last year. A slower buildup in spending might push the trillion-dollar milestone back to February or later.

U.S. revolving debt reached $1 trillion for the first time in December 2007 and stayed above that mark for 13 subsequent months. Card balances began to decline in October 2008 and didn’t hit bottom until April 2011, when they fell to $832 billion. Much of the decline in consumer debt was attributed to billions of dollars in write-offs and more cautious lending by banks. However, in a 2013 report, Federal Reserve Bank of New York economists said consumers also reined in new borrowing and paid off substantial amounts of their credit card and auto loan balances.

Barring any sudden shock to the U.S. economy, cardholders are poised to break the all-time revolving debt record of $1.02 trillion, set in April 2008, in May. Chief economists at the nation’s largest banks expect steady economic growth through 2018, the American Bankers Association (ABA) said earlier this month.

Americans owe $1 trillion on their credit cards

No sign of a credit bubble burst
Despite the growth in debt, consumers’ recent credit behavior suggests the likelihood of a card debt crisis is low. Card delinquency rates have remained at 15-year lows since 2012, though they have ticked up in recent months, according to the ABA. Charge-off rates, which spiked dramatically during the recession, were at 22-year lows in the third quarter of 2016. Meanwhile, the Fed’s household debt service and financial obligations ratios have held steady at historic lows for the past four years.

Hoyt of Moody’s said more delinquencies are inevitable amid rapid growth in card balances, but an epidemic of defaults is unlikely.

“There’s no reason to think [delinquencies] are going to return to ridiculous levels,” he said. “If anything, delinquency levels that we’re seeing now are, by historic standards, ridiculously low.”

Delinquency levels that we’re seeing now are, by historic standards, ridiculously low.

\u2014 Scott Hoyt
Senior director, Moody’s Analytics

Credit card balances will keep climbing in the near term, perhaps tempered by rising interest rates, a new tightening in lending standards and higher debt payments made by consumers.

“The level of debt will likely continue to grow,” Hoyt said. “However, at some point growth will slow such that the growth of payments at least approximately matches income growth.”

Warning signs of a potential crisis might include a rise in overdue payments above historically normal levels and a surge in borrowing relative to income and spending. A sudden upturn in the unemployment rate – which stood at 4.7 percent in December – and slower income growth could also portend a credit bubble burst. Additionally, higher interest rates could hinder consumers’ ability to make their payments on time. The Fed hiked rates by 0.25 percent in December and more increases are expected this year. Many issuers raised variable APRs on their cards in response to the last rate hike, and the national average APR on new card offers rose to a record high this month.

“Increasing credit card balances against the backdrop of rising unemployment and flattening personal income would be a concern,” said Perc Pineda, senior economist at the Credit Union National Association. “I don’t think our economy is at or approaching a threshold of consumer over-borrowing.”

See related: Poll: Americans more optimistic about getting out of debt

What’s up next?

In Research and Statistics

CFPB warning: incentives can harm consumers

The U.S. Consumer Financial Protection Bureau issued a broad warning about sales incentives, possibly signalling a new enforcement priority

Published: January 19, 2017

See more stories
Credit Card Rate Report Updated: July 17th, 2019
Business
15.61%
Airline
17.59%
Cash Back
17.68%
Reward
17.58%
Student
17.79%

Questions or comments?

Contact us

Editorial corrections policies

Learn more

Join the Discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company’s business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.