According to WalletHub’s 2016 Credit Card Debt Study, U.S. consumers accumulated $21.9 billion in credit card debt in the third quarter of 2016 alone—the seventh-largest third-quarter credit card debt accumulation in the past 30 years. This comes just after the second quarter’s record-setting $34.4 billion debt accumulation, as well as the smallest first-quarter pay-down of the nation’s cumulative debt since 2008.
The net credit card debt increase for 2016 is projected to hit roughly $80 billion. This number would not only surpass the recent peak of $71 billion, set in 2015, but also push the nation’s cumulative outstanding credit card debt closer to the 2008 peak of $984.2 billion—a number perilously close to $1 trillion. The average amount of debt owed per household would also rise, to $8,380, coming close, again, to pre-recession records.
Currently, the nation holds $927.1 in outstanding credit card debt, the highest cumulative amount recorded since Q4 2008, during the height of the recession. This total also sits only $300 million below the $927.4 billion in outstanding debt recorded in Q3 2007, identified by WalletHub as the quarter before the recession officially began. “Q3 did nothing to divert us from a collision course with the $1 trillion mark,” says WalletHub’s Alina Comoreanu.
Comoreanu also notes that the $21.9 billion in credit card debt added this quarter is nearly 60% above the average amount of debt added in the post-recession years. In fact, 16 of the past 23 quarters have shown a regression in consumer performance year over year, and the current average debt balance per indebted household had risen to $7,941 as of Q3 2016.
In order to manage one’s personal debt, Comoreanu suggests making a budget, building an emergency fund, improving one’s credit standing, using different cards for different kinds of transactions (the “island approach”), and paying off the debts with the highest interest rates more quickly (the “snowball method”). If all else fails, searching for a higher-paying job may be the best way to ensure financial security.