Here’s an unsettling number as you gear up for holiday shopping: consumer debt is on pace to hit $4 trillion by the end of 2018. In fact, in just the past five years, consumer debt has gone up by $1 trillion.
Taking a closer look at the breakdown for borrowers: $1.04 trillion is revolving or credit card debt, which has jumped 22% since 2013, and $2.9 trillion in non-revolving debt, which includes student and auto loans, jumping 30% in the past five years. (Mortgage debt is not included in this number.
Based on the rate of holiday spending reported in these past few weeks alone, LendingTree analysts expect credit card balances to grow by at least 5% for the remainder of 2018.
Already this year, Americans have shelled out over $100 billion in credit card interest and fees. Adding fuel to the fire are all-time high interest rates with APR’s averaging 16% to 17%. And borrowing will only get more expensive as there will likely be three to four more interest rate hikes by the end of 2019.
This level of spending and borrowing cannot continue. If you know anyone who has an issue with debt, the best advise you can give them is to seek help. Bankruptcy is not evil – it is an effective tool to deal with debt in that upon filing, an individual will be given a forced “cooling off” period to reassess and live without credit cards for a period of time. This could be a life changing event.