Credit card debt reached $1 trillion last year, according to the Federal Reserve, returning to a level not seen since 2008 as the Great Recession was gathering force.
It’s a sign of increased personal spending and a boost for the U.S. economy, in which consumers account for some 70 percent of activity. The higher credit card balances represent a 16 percent increase from 2012, and 6 percent from 2015, Fed data released on Friday show. Card balances tumbled during the recession as consumers cut back on spending.
Preliminary figures, subject to revision, indicate that the card debt totaled over $1 trillion at the end of February.
The nonpayment rate has begun to tick up.
People carrying too much of a debt burden are a ticking bomb for the economy’s health at some point. Cards are still overshadowed by student loans.
A third of all outstanding card balances are paid off in full before the buyer incurs any finance charges, said David Robertson, publisher of the Nilson Report, which tracks card debt. He compared that to student loan debt, now totaling $1.4 trillion, which is entirely subject to finance charges, with only a small chunk of it paid off.
The average U.S. household had $16,748 in card debt in 2016, and $49,905 in student debt. Auto loans were $28,948, and mortgages $176,222.
Card debt is spread over more people than most other types, Nilson figures indicate. Some 157 million Americans had outstanding debt on plastic at year-end 2016, versus 44 million with student loan debt.