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Crudele: Exploding US Credit Card Debt Is Omen for More Trouble

Crudele: Exploding US Credit Card Debt Is Omen for More Trouble
(Eduardo Huelin/Dreamstime)

By    |   Thursday, 18 January 2018 10:41 AM

The New York Post’s John Crudele says that he is seeing some economic warning signs that remind him of 2008.

In a cryptic column for the Post, Crudele wrote:

“The Federal Reserve said last week that Americans’ outstanding debt hit a record level in November. And judging from anecdotal evidence provided by retailers, December probably had a pretty good follow-through,” he wrote.

U.S. consumer credit outstanding rose in November by the most in 16 years as credit-card balances surged, recent Federal Reserve data showed, by $11.2 billion, to $1.023 trillion.

“That went past the previous record set in April 2008,” Crudele wrote. “You remember 2008, don’t you? That’s when all the trouble began,” Crudele wrote in reference to the 2008 financial crisis, commonly regarded by many economists to have been the worst financial crisis since the Great Depression of the 1930s.

The acceleration in revolving debt shows Americans’ credit-card balances were mounting during the holiday-shopping season, Bloomberg reported.

The increase in non-revolving credit outstanding probably reflects more motor vehicle purchases.

While household wealth is climbing on the heels of higher home prices and record stock values, the risk to the economy is that consumers with fewer assets may have to temper their spending until debt loads become more manageable.

Crudele isn't alone in his warning.

Newsmax Finance Insider Chris Markowski recently warned that soaring credit card debt should be wake-up calls for Americans.

"Even if you personally think you currently have a good handle on your credit card debt, all it takes is one emergency to go from feeling your debt is manageable to being in over your head — or in over your credit card limit. A common mistake that I frequently encounter, is people asking for investment returns that surpass the interest they are paying on their debt," Markowski wrote.

"The fact is that credit card debt is never truly manageable. If you are paying interest on your outstanding balance, you already have a financial problem on your hands,"  Markowski wrote.

"The average monthly balance for borrowers who cannot pay their balance in full is $9,600, on $1,254 in credit card interest is paid each year. Interest rates are only expected to go up. Banks love to pass rate hikes directly onto credit card holders, so as the Fed ratchets rates up, consumers can expect to see their credit card interest increase as well."

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Economy
The New York Post’s John Crudele says that he is seeing some economic warning signs that remind him of 2008.
john crudele, credit, card, fed, data
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2018-41-18
Thursday, 18 January 2018 10:41 AM
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