Credit Card debt hits record high $4 Trillion - household net worth hits record low

[Bladewire]

Trumps failing economy continues to unravel the lives of millions of Americans.

"Credit card debt hits record high of $4 Trillion and another signal of weaker demand, the closing of credit cards and other accounts, jumped to its highest level since 2010, while flows into serious delinquency for credit cards rose 5 percent, up from 4.8 percent in the third quarter."

Red flags emerge as Americans' debt load hits another record | Reuters

NEW YORK (Reuters) - Some red flags emerged for the U.S. economy late last year as credit card inquiries fell, student-loan delinquencies remained high and riskier borrowers drove home automobiles, according to a report that could signal a downturn is on the horizon.

The U.S. household debt and credit report, published Tuesday by the Federal Reserve Bank of New York, showed that the overall debt shouldered by Americans edged up to a record $13.5 trillion in the fourth quarter of 2018. It has risen consistently since 2013, when debt bottomed out after the last recession.

While mortgage debt, by far the largest slice, slipped for the first time in two years, other forms of borrowing rose including that of credit cards, which at $870 billion matched its pre-crisis peak in 2008.

Consumer spending accounts for two-thirds of growth in the world’s largest economy and it is expected to hold strong this year even as the overall expansion cools after a hot 2018.

However one sign of consumer demand, credit inquiries, slipped in the second half of 2018 to the lowest level recorded by the New York Fed.

Another signal of weaker demand, the closing of credit cards and other accounts, jumped to its highest level since 2010, while flows into serious delinquency for credit cards rose 5 percent, up from 4.8 percent in the third quarter.

Serious-delinquency flows, a warning bell for economists because they can prelude defaults, spiked in the third quarter for student debt and remained there in the fourth quarter, with 9.1 percent of the $1.5-trillion total debt seriously delinquent.

[Bladewire]

[Rochard]

We had two card that were maxed out $10k each, and we paid them both off last year. Now we have one card with $900 on it and we should have that paid off shortly.

[Bladewire]

Originally Posted by Rochard

We had two card that were maxed out $10k each, and we paid them both off last year. Now we have one card with $900 on it and we should have that paid off shortly.

That's awesome well done

[2MuchMark]

Originally Posted by Rochard

We had two card that were maxed out $10k each, and we paid them both off last year. Now we have one card with $900 on it and we should have that paid off shortly.

Congrats Rochard. When I was a kid I blew up my credit cards too like and really paid the price. Today I carry one in my wallet and the rest are tucked away, all with nice $0.00 balances, and used sparingly. Love it.

[pimpmaster9000]

I wrote this haiku poem:

Trump fucked you
Magic beans did not grow
Bet you feel stupid now, suck a fat dick LOL

[SBJ]

my cc debt is ZERO.. I carry 2 debit cards around but own zero CC since the late 90's when I maxed out into 9k of cc debt. My grandma bailed me out and I paid her back in under 2 years. Funny thing is she told me I was the first family member to fully pay her back.

[Bladewire]

Originally Posted by SBJ

my cc debt is ZERO.. I carry 2 debit cards around but own zero CC since the late 90's when I maxed out into 9k of cc debt. My grandma bailed me out and I paid her back in under 2 years. Funny thing is she told me I was the first family member to fully pay her back.

Great job man that's awesome

[Phoenix]

How do you guys not hold some cc debt? I purposely hold a little on 4 different cards. I sometimes pay them off in full but i want to keep it going as that is 4 entities who report to the credit bureaus.

[SBJ]

Originally Posted by Phoenix

How do you guys not hold some cc debt? I purposely hold a little on 4 different cards. I sometimes pay them off in full but i want to keep it going as that is 4 entities who report to the credit bureaus.

Keep doing as they want you to. I pay my loans and payments on time so my credit is good enough. Yes, my score could be better if I had CCs but fuck that I don't want to go in debt just to have a better credit score. It's all part of their scheme to have you in debt so that you will go along with the status quo.

[Bladewire]

Originally Posted by Phoenix

How do you guys not hold some cc debt? I purposely hold a little on 4 different cards. I sometimes pay them off in full but i want to keep it going as that is 4 entities who report to the credit bureaus.

Great question

[directfiesta]

Originally Posted by Phoenix

How do you guys not hold some cc debt? I purposely hold a little on 4 different cards. I sometimes pay them off in full but i want to keep it going as that is 4 entities who report to the credit bureaus.

All cards are reported to the Credit Bureau , including closed account by client or Bank ( with a note to that effect ) .
They track the highest balance , credit limit and actual balance .

I do not get leaving a balance generating 23% or more of interest ... Pay them in full .....

[Bladewire]

Originally Posted by directfiesta

All cards are reported to the Credit Bureau , including closed account by client or Bank ( with a note to that effect ) .
They track the highest balance , credit limit and actual balance .

I do not get leaving a balance generating 23% or more of interest ... Pay them in full .....

Part of your credit score is having a balance of, around 10% utilization, that you pay off every month to show that you're using the card and you're paying it on time it builds up your credit worthiness.

If you have a card and you're not using it then you're not showing A-Reliable payment history because you're not making payments.

Credit scores: Is 1 percent utilization better than 10 percent or zero?

[MaDalton]

Real credit cards virtually don't exist here (they do kind of, but hardly anyone has one). All Visa/Mastercards are debit cards and the money is automatically taken from your account 2-4 days after the purchase.

So if you can't cover your purchases, you have a problem.

[directfiesta]

Originally Posted by Bladewire

Part of your credit score is having a balance of, around 10% utilization, that you pay off every month to show that you're using the card and you're paying it on time it builds up your credit worthiness.

If you have a card and you're not using it then you're not showing A-Reliable payment history because you're not making payments.

Credit scores: Is 1 percent utilization better than 10 percent or zero?

That is what I do, and never use more then 30% of the available credit.

I understood from his post that he was leaving an unpaid balance, paying only part of it.

Btw, my transunion score us... 900 !, biggly score.

[Bladewire]

Originally Posted by StefanG

Real credit cards virtually don't exist here (they do kind of, but hardly anyone has one). All Visa/Mastercards are debit cards and the money is automatically taken from your account 2-4 days after the purchase.

So if you can't cover your purchases, you have a problem.

Do they charge you a percentage like a credit card does? Or is there something purchase fee?

[MaDalton]

Originally Posted by Bladewire

Do they charge you a percentage like a credit card does? Or is there something purchase fee?

not sure i can follow - from consumer POV or merchant?

[Sly]

Originally Posted by Bladewire

Do they charge you a percentage like a credit card does? Or is there something purchase fee?

It's just a debit card like we have.

Nobody on our European team has a credit card, very few of our European clients do.

[Phoenix]

Originally Posted by directfiesta

All cards are reported to the Credit Bureau , including closed account by client or Bank ( with a note to that effect ) .
They track the highest balance , credit limit and actual balance .

I do not get leaving a balance generating 23% or more of interest ... Pay them in full .....

yes for sure, mine are almost always paid in full. Just i like to keep 4 going so all 4 are reporting

[MaDalton]

Originally Posted by Sly

It's just a debit card like we have.

Nobody on our European team has a credit card, very few of our European clients do.

if that was the question - yes

no interest, no extra fees - no spending of money you don't have

tbh - I could get a credit card but I don't see the point

[Bladewire]

Originally Posted by StefanG

not sure i can follow - from consumer POV or merchant?

Consumer POV

It's just like a debit card so there are no charges or Bank fees to the consumer? They make their money off merchant fees only?

[MaDalton]

Originally Posted by Bladewire

Consumer POV

It's just like a debit card so there are no charges or Bank fees to the consumer? They make their money off merchant fees only?

yep, exactly

[Sly]

Originally Posted by StefanG

if that was the question - yes

no interest, no extra fees - no spending of money you don't have

tbh - I could get a credit card but I don't see the point

There are quite a few perks to using credit cards, in the United States at least (outside of spending more money than you have!)

Cashback and rewards programs are very attractive. I get 2% cashback on my primary credit card, which really adds up to some nice extra cash. Others prefer the travel programs, which I've been told can be great deals if you use them right.

Another great benefit is protection. If somebody steals your debit card or if a company overcharges your debit card, your cold hard cash is completely out of your hands until the bank straightens everything out, which could take weeks in some cases. With a credit card that's not a problem at all because you can almost instantly fight any charge and you are not out the cold hard cash.

I'm not sure what it's like in other countries but that's what it's like here. I refuse to use debit cards due to somebody cleaning out my checking account about 15 years ago when they stole my debit card.

[MaDalton]

Originally Posted by Sly

There are quite a few perks to using credit cards, in the United States at least (outside of spending more money than you have!)

Cashback and rewards programs are very attractive. I get 2% cashback on my primary credit card, which really adds up to some nice extra cash. Others prefer the travel programs, which I've been told can be great deals if you use them right.

Another great benefit is protection. If somebody steals your debit card or if a company overcharges your debit card, your cold hard cash is completely out of your hands until the bank straightens everything out, which could take weeks in some cases. With a credit card that's not a problem at all because you can almost instantly fight any charge and you are not out the cold hard cash.

I'm not sure what it's like in other countries but that's what it's like here. I refuse to use debit cards due to somebody cleaning out my checking account about 15 years ago when they stole my debit card.

well, you are insured against someone stealing your card and emptying your account - but yeah, you would be temporarily out of that money.

Chargebacks work the same way as with credit cards - once again though you are temporarily out of that money.

Insurances are the same.

Rewards programs I never really look into, even when I had a credit card. Too lazy and not using my card that often that it seemed worth the hassle setting them up.

[abshard]

Originally Posted by Phoenix

How do you guys not hold some cc debt? I purposely hold a little on 4 different cards. I sometimes pay them off in full but i want to keep it going as that is 4 entities who report to the credit bureaus.

I have never paid credit card interest, but use them every month and pay the full balance every month. My credit score is towards the max of credit ranking. If you run my credit report I have a "balance" on them but it's only for the current month.

Paying cc interest is a waste of money unless you can't afford to pay off the card.

[crockett]

Originally Posted by Rochard

We had two card that were maxed out $10k each, and we paid them both off last year. Now we have one card with $900 on it and we should have that paid off shortly.

I had about 10k combined and paid it all off last year as well. I'm 100% debt free at the moment.

I'm also sitting at 800 on my credit score. I really want to buy another house but I'm kinda worried that shit will hit the fan again soon..

I don't want to buy then have prices fall out from under me. If I was buying long term then it wouldn't be as big of a deal but I'm looking mainly for 2-3 year flips.

[crockett]

Originally Posted by Phoenix

How do you guys not hold some cc debt? I purposely hold a little on 4 different cards. I sometimes pay them off in full but i want to keep it going as that is 4 entities who report to the credit bureaus.

I use mine for eating out, fuel, hotels and small buys but keep them paid off or a very minimal balance carry over just to show payments each month.

[Bladewire]

Originally Posted by crockett

I use mine for eating out, fuel, hotels and small buys but keep them paid off or a very minimal balance carry over just to show payments each month.

Same here

[AmeliaG]

This is a good thing. You have to keep in mind that the total debt figures include amounts that the user will pay off in full when their statement cycles.

People actively using charge cards means that commerce is happening. That amount growing probably says more about consumer confidence than impending disaster.

A lot of small businesses charge their credit cards up each month and then pay them off each month before incurring finance charges. This establishes creditworthiness and gives an operating capital buffer.

Access to capital is crucial for business and small business often has easier access to credit card debt than other types.

[onwebcam]

I have the most CC debt I've ever had at the moment.. But that's because I bought a skidsteer on one CC and a Cadi on another. Both of which are worth twice what I paid so the interest doesn't matter. I'll pay those 2 off in a few months. Outside of those 2 large purchases I usually keep about 4k-8k balances on various cards running my business.

[Bladewire]

Originally Posted by AmeliaG

This is a good thing. You have to keep in mind that the total debt figures include amounts that the user will pay off in full when their statement cycles.

People actively using charge cards means that commerce is happening. That amount growing probably says more about consumer confidence than impending disaster.

A lot of small businesses charge their credit cards up each month and then pay them off each month before incurring finance charges. This establishes creditworthiness and gives an operating capital buffer.

Access to capital is crucial for business and small business often has easier access to credit card debt than other types.

I like your optimism but we've just reached 2008 financial crisis levels in the consumer credit sector with higher borrowing and less credit being given and increased delinquencies:

"..other forms of borrowing rose including that of credit cards, which at $870 billion matched its pre-crisis peak in 2008."

"However one sign of consumer demand, credit inquiries, slipped in the second half of 2018 to the lowest level recorded in history by the New York Fed."

"Another signal of weaker demand, the closing of credit cards and other accounts, jumped to its highest level since 2010, while flows into serious delinquency for credit cards rose 5 percent."

Another red flag is in the auto consumer lending sector. We've reached an all time record of auto loan delinquencies of 90+ days. 7,000,000 delinquencies. 90 days is the point of vehicle reposessed.

https://www.washingtonpost.com/busin...=.cb148dc11b19

[ilnjscb]

That's mostly me - but I got a really great deal on some Dutch tulips

[Paul Markham]

I've never understood Americans obsession to live beyond their means. Credit card interest is legalised robbery.

Get debit cards, so if you can't cover your purchases, you can't buy.

Other than mortgages I have never had debts.

[~Evilin~]

Never used CC and i dont like it all, but i have 2 debit cards with 30% of all earned summes.

[ilnjscb]

Originally Posted by Paul Markham

I've never understood Americans obsession to live beyond their means. Credit card interest is legalised robbery.

Get debit cards, so if you can't cover your purchases, you can't buy.

Other than mortgages I have never had debts.

That's a valid point Paul but if you try to live outside the norm in any society you're usually fucked. In the US, your FICO is used for more and more decisions - unless you regularly use credit they can't evaluate you and you don't exist. People keep credit lines forever because older lines count more.

To get the best mortgage rates you need to be a regular user of credit, is the upshot.

[Paul Markham]

Originally Posted by ilnjscb

That's a valid point Paul but if you try to live outside the norm in any society you're usually fucked. In the US, your FICO is used for more and more decisions - unless you regularly use credit they can't evaluate you and you don't exist. People keep credit lines forever because older lines count more.

To get the best mortgage rates you need to be a regular user of credit, is the upshot.

Using a credit card and paying it off at the end of the month has the best rating. Having money in the bank an even higher rating.

[MaDalton]

Originally Posted by ilnjscb

That's a valid point Paul but if you try to live outside the norm in any society you're usually fucked. In the US, your FICO is used for more and more decisions - unless you regularly use credit they can't evaluate you and you don't exist. People keep credit lines forever because older lines count more.

To get the best mortgage rates you need to be a regular user of credit, is the upshot.

that's idiotic

[directfiesta]

Originally Posted by Paul Markham

Using a credit card and paying it off at the end of the month has the best rating. Having money in the bank an even higher rating.

No, credit bureau do not have info on banks deposit ....
If you have 100K in the bank and $0 in credit history, you will be fucked.

[directfiesta]

Originally Posted by StefanG

that's idiotic

But true ... Even for jobs, employers will check the credit bureau .

I do so when I lease a rental unit ...

[pimpmaster9000]

Originally Posted by directfiesta

But true ... Even for jobs, employers will check the credit bureau .

I do so when I lease a rental unit ...

I got a friend in the USA who takes our loans he does not need and returns the same money to the bank just to raise his credit rating

[ilnjscb]

Originally Posted by StefanG

that's idiotic

But true my friend.

Originally Posted by directfiesta

No, credit bureau do not have info on banks deposit ....
If you have 100K in the bank and $0 in credit history, you will be fucked.

Yes, exactly.

Originally Posted by directfiesta

But true ... Even for jobs, employers will check the credit bureau .

I do so when I lease a rental unit ...

Exactly.

Originally Posted by crucifissio

I got a friend in the USA who takes our loans he does not need and returns the same money to the bank just to raise his credit rating

This is just the beginning - people even time payments to try to raise their FICO score, and pay twice a month, and all sorts of other "techniques".

And for any non USA folks wondering, having a zero balance is NOT what is considered best. Having a 3-10% balance every month is optimal. Income or saving or net worth do NOT figure in.

[Paul Markham]

Originally Posted by directfiesta

No, credit bureau do not have info on banks deposit ....
If you have 100K in the bank and $0 in credit history, you will be fucked.

You just show the lender your bank statements. As for CC history I assume they can see you responsibly pay them off at the end of every month. If not show them you do.

[Paul Markham]

Originally Posted by ilnjscb

And for any non USA folks wondering, having a zero balance is NOT what is considered best. Having a 3-10% balance every month is optimal. Income or saving or net worth do NOT figure in.

So the debt situation is all down to the fucked up system.

[Acepimp]

[Bladewire]

Originally Posted by directfiesta

No, credit bureau do not have info on banks deposit ....
If you have 100K in the bank and $0 in credit history, you will be fucked.

Yet again Paul shows his ignorance about America, the country he obsesses on daily from halfway around the world in a foreign country he's an immigrant to from Britain.

[directfiesta]

Originally Posted by Paul Markham

You just show the lender your bank statements. As for CC history I assume they can see you responsibly pay them off at the end of every month. If not show them you do.

Maybe in UK or Chez .... but not in North America ...

You can show them a briefcase full of cash ... and still ber refused for a mortgage or other credits.

I am pretty sure that I know more then you ... on this subject.

[thommy]

Originally Posted by directfiesta

No, credit bureau do not have info on banks deposit ....
If you have 100K in the bank and $0 in credit history, you will be fucked.

I am not sure if that is the case in US but FOR SURE it is not in Europe.

in countries like germany less than 40% even own a credit card or debit card because they hate plastic money.

so do you think they do not get credit ?

[directfiesta]

Originally Posted by thommy

I am not sure if that is the case in US but FOR SURE it is not in Europe.

in countries like germany less than 40% even own a credit card or debit card because they hate plastic money.

so do you think they do not get credit ?

I travelled extensively in the 80's & 90's to Europe ( UK, France, Spain, Germany, Italy ) and at that time credit cards were non-existent there . Aside from Hotels, it was very hard to pay with a credit card. They would accept Amex travellers check .

Afterwards, they came with the Visa- MC debit card ( funds taken from account right away ) . I would even pay my suppliers in France ( movie rights ) with checks ( normal one ) because for them it is as good as cash ...

So , Germany is as you say , but America as I say ....

Credit is strange in America ... I have 5 mortgages , and none are listed on the Trans-Union or Equifax credit report ... but they list my cellphone ....

[Bladewire]

Originally Posted by thommy

I am not sure if that is the case in US but FOR SURE it is not in Europe.

in countries like germany less than 40% even own a credit card or debit card because they hate plastic money.

so do you think they do not get credit ?

When I lived in Australia I got a $50,000 Visa credit card after living there for a year. All they needed to see was my proof of employment and my bank statements it didn't matter that I wasn't a citizen of Australia yet.

[AmeliaG]

The reason membership site rebilling fell off a cliff in 2008 was all the banks being induced by leverage regulation to turn off tons of credit cards of perfectly good payers, just so the banks could get their bailouts and continued mortgage guarantees.

The increase in debt now is what economic recovery looks like for Main Street and the middle class in America.

Different financial analysts have very different views of ideal markers because different groups either do or do not wish to expand the prosperity of the middle class.

A college-educated employed homeowner, driving past a homeless encampment, in a late model car, will have a debt-heavy much lower net worth than the folks living in tents, under an overpass, but which of those options should be our goal in America?