Financial experts believe the average household credit card debt will reach the “tipping point” of financial sustainability by the end of 2016. During the first quarter of 2016, Americans paid down approximately $26.8 billion in credit card debt; however, this is the lowest amount paid down in one quarter since 2008. By the end of 2015, credit card debt had reached $917.7 billion, up $71 billion from 2014. Analysts predict that national credit card debt will exceed $1 trillion dollars by the end of 2016.
A study conducted by CardHub found that the average American household’s credit card balance was more than $7,500. The amount is approximately $831 less than what the study considers the “tipping point” of financial sustainability.
Another study conducted by Dun & Bradstreet found that on average, people spend 12 to 18 percent more when they use a credit card, rather than cash.
The number of cards the average American uses is also on the rise. In 2015, data from Experian revealed that the average number of cards borrowers had was 2.24 cards per person, up from 2.18 cards per person in 2014.
One of the factors financial experts attribute to the rise in credit card debt is the lack of emergency funds. Many Americans are using credit cards for unexpected expenses without reducing their expenses, rather than using credit cards as a substitute for cash.
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