Expect Credit Card Debt to Pass $1 Trillion This Holiday Season


Credit card revolving balances hit a historical high, as shown in the Federal Reserve’s most recent update.  Revolving credit card debt in the United States, seasonally adjusted, rose to $929.5 billion, a hair short of $1 trillion.  Once holiday spending settles on consumer accounts, you can be sure that consumers will push their credit card debt burden up to the 13-digit number of $1,000,000,000,000, a landmark in U.S. consumer credit.

Tighter Budgets, Rising Interest, and Inflationary Prices are Key

Expecting credit card debt to push up again is common during the winter holidays.  However, the New York Times recently reported that “Retail Sales Fell in November, Despite Black Friday.”

  • Retail sales fell in November, with spending on even traditionally popular gift categories like clothing and sporting goods declining, indicating that high prices for necessities like food are affecting how people approach the holiday shopping season.
  • U.S. retail sales fell 0.6 percent in November from October, the Department of Commerce said on Thursday. The figure does not account for price changes, and inflation did ease slightly during the month.
  • Spending increased in some areas, including grocery stores, health and personal care stores, restaurants, and bars. But categories like motor vehicles, furniture, consumer electronics, clothing, and sporting goods declined. Gas prices also fell during the month, meaning consumers spent less money filling up their cars.

Retail sales remain Strong, and Online Sales are Surging.

TechCrunch reported information from Adobe Analytics.

  • Black Friday broke $9 billion in sales for the first time yesterday, with online sales of $9.12 billion, according to figures from Adobe Analytics. This is a record figure for the day, and up 2.3% on sales figures a year ago, and slightly higher than Adobe had estimated leading up to the day. Adobe doesn’t break out volumes in its report, so it’s hard to know if those figures are due to items simply costing more this year because of inflation, or if the higher numbers are a result of more buying.

$1 Trillion in Debt, 124,010,992 Households = $8,063.81 in Credit Cards Debt

Using the latest numbers from the U.S. Census our 124 million households hold $8,064 in credit card debt at the $1 trillion mark.  Now with a median household income of $70,784, that means that 8.7% of income aligns to the outstanding debt.

Last Minute Holiday Shopping? Be Practical

Forget about last-minute shopping, or at least be practical.  A Savings Bond, perhaps.  A Prepaid gift card, no one ever whines.  Or a good old U.S. Dollar.  Just keep the household budget in mind.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group.


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