You’ve been reading BadCredit.org all year, working on paying off your debt as our how-to guides help you achieve financial freedom. Great job! Unfortunately not every American consumer is doing the same.
A new study of 2015 consumer trends has projected U.S. credit card debt to increase about $55.8 billion by the end of the year.
The study, done by CardHub and based on the Federal Reserve’s preliminary G.19 consumer credit report, notes that Americans paid $34.7 billion toward card debt in the first quarter of 2015, a 7 percent increase from the first quarter of both 2013 and 2014. CardHub attributed a number of factors as reasons debt payments did so well at the start of 2015: Annual bonuses, New Year’s resolutions and tax refunds were included, but the main reason was there was simply more debt to pay off in 2014 than there had been in previous years.
Past studies have shown the first quarter of each year usually shows debt being paid off, only for it to be racked back up over the rest of the year. Since 2009, the first quarter of each year saw an average pay off of $35.9 billion, with the median being $33.5 billion.
How Does Credit Card Debt Increase So Much?
The other three quarters of the year is where debt strikes back.
While Americans paid off a total of $874 million of their debt in 2009, 2010’s debt outpaced payments by $2.5 billion. 2011 was even worse, growing to a $46.6 billion increase by the end (jumping 1,696 percent). 2012’s hike slowed down by nearly $12 billion, but credit card debt still rose. The total debt surged in 2013 by $38.8 billion, and then 2014 amplified the consumer credit card debt situation with a $57 billion boost.
According to the CardHub study, Americans now owe $831.2 billion in credit card debt. The average credit card debt per household is $7,177.
April Showers Bring May Debtors
Card balances skyrocketed in April, according to the G.19 report. Revolving debt, which includes credit cards, hit $899.5 billion after hovering at or around $890 billion since the fourth quarter of 2014.
But card debt wasn’t the only debt to soar in April. Total consumer debt, comprised of car loans, student loans and revolving debt, rose $20.6 billion during the month. The increase brought the complete amount of total debt to $3.384 trillion.
But such spending is only the tip of the debt iceberg. The second quarter of each year since 2009 has been second only to the fourth quarter and its holiday season in terms of debt accrual.
There is one shining spot, though: Card defaults declined by more than $350 million compared to the first quarter of 2014. The first quarter default rate hasn’t been this low since 1995.
Photo sources: wbcityfcu.org, priroda-style.ru and expertbeacon.com.