Credit card debt went up 4.5% from the first to second quarter of 2023, and topped the $1 trillion mark for the first time. American’s debt as a percentage of GDP. Table of ContentsJP Morgan study tells a different story What happens next? The Federal Reserve Bank of New York’s recent announcement that consumer credit card debt has exceeded $1 trillion for the first time is alarming news. Article at a Glance Americans are piling on debt as interest rates increase Some view the debt as a sign of consumer confidence, others as a depletion of savings that could lead to a severe economic downturn We are a long way to catastrophe as American’s credit card debt represents only 6% of the money they have saved. It’s no secret that credit card debt can quickly spiral out of control, especially when consumers aren’t paying off balances in full each month. However, topping $1 trillion in credit card debt is less of an issue than it may seem at first since Americans are sitting on a ton of cash relative to their credit card debt. As the Tweet below demonstrates, the percentage of credit card debt to bank deposits is the lowest in 20 years. You: OMG credit card debt just hit a record $1 tril…Me: stop right there. credit card debt is just 6% of $$$ people have in the bank, around the lowest %age in 20 years pic.twitter.com/Vb2Gk6lAK3— Callie Cox (@callieabost) August 8, 2023 At present, the Federal Reserve Bank of New York’s announcement shows that consumers are spending with confidence on travel and meals, but that they still have the ability to pay down debt and avoid financial hardship. JP Morgan study tells a different story According to a study by JP Morgan, which analyzes checking and savings balances from 9 million Chase customers between January 2020 and March 2023, the cash on hand statistics for Q2 could be partly attributable to tax refunds. The JP Morgan study found cash balances declined in the second half of 2022. Year over year, cash balances are down from April 2022. Overall, the JP Morgan study shows Americans running steadily out of cash. What happens next? It may be that the long-promised recession from many economists is on the rise, it just may take a year or two longer than originally thought. Deutsche Bank still predicts the chance of a US recession at 100%. FacebookPinTweetEmail Walter Metzen Walter Metzen is a Board Certified Specialist in Consumer Bankruptcy with over 28 years of experience. He’s represented more than 20,000 bankruptcy clients in and around Detroit where his firm is located. View his profile here. Help us match you with a local attorney Free Bankruptcy Evaluation "*" indicates required fields First Name* Last Name* Phone* Email* Δ Leave a Reply Cancel replyYour email address will not be published. Required fields are marked *Comment * Name * Email * Save my name, email, and website in this browser for the next time I comment. Δ
Credit card debt went up 4.5% from the first to second quarter of 2023, and topped the $1 trillion mark for the first time. American’s debt as a percentage of GDP. Table of ContentsJP Morgan study tells a different story What happens next? The Federal Reserve Bank of New York’s recent announcement that consumer credit card debt has exceeded $1 trillion for the first time is alarming news. Article at a Glance Americans are piling on debt as interest rates increase Some view the debt as a sign of consumer confidence, others as a depletion of savings that could lead to a severe economic downturn We are a long way to catastrophe as American’s credit card debt represents only 6% of the money they have saved. It’s no secret that credit card debt can quickly spiral out of control, especially when consumers aren’t paying off balances in full each month. However, topping $1 trillion in credit card debt is less of an issue than it may seem at first since Americans are sitting on a ton of cash relative to their credit card debt. As the Tweet below demonstrates, the percentage of credit card debt to bank deposits is the lowest in 20 years. You: OMG credit card debt just hit a record $1 tril…Me: stop right there. credit card debt is just 6% of $$$ people have in the bank, around the lowest %age in 20 years pic.twitter.com/Vb2Gk6lAK3— Callie Cox (@callieabost) August 8, 2023 At present, the Federal Reserve Bank of New York’s announcement shows that consumers are spending with confidence on travel and meals, but that they still have the ability to pay down debt and avoid financial hardship. JP Morgan study tells a different story According to a study by JP Morgan, which analyzes checking and savings balances from 9 million Chase customers between January 2020 and March 2023, the cash on hand statistics for Q2 could be partly attributable to tax refunds. The JP Morgan study found cash balances declined in the second half of 2022. Year over year, cash balances are down from April 2022. Overall, the JP Morgan study shows Americans running steadily out of cash. What happens next? It may be that the long-promised recession from many economists is on the rise, it just may take a year or two longer than originally thought. Deutsche Bank still predicts the chance of a US recession at 100%.