Credit Card Debt Returns to Pre-Recession Highs

For anyone who remembers 2008, I feel kind of bad for you. It was a horrendous year in the economy, and for a while there, it looked like the whole thing might well have collapsed outright.

But through a series of arcane and sometimes bizarre methods, we muddled through, and are now almost 10 years later in time, where Americans have come together and spent cash on their credit cards sufficient to bring debt beyond what it was back before the bottom fell out of 2008.

Word from the Federal Reserve says that credit card debt is now right around $1.0004 trillion. That’s up 6.2 percent from 2016’s figures, and just since January, it’s up a hefty 0.3 percent.

Now, thanks to this upswing, credit cards are the third class of consumer lending to pass the trillion mark, alongside auto loans—which were the first to get there—and student loans, which got there second.

Interestingly, the debt hike comes at a time in which most people are putting off home purchases, and are making that borrowing to pay for other things, essentially using credit cards as more of a mobile payment system than a large-scale purchase mechanism.

While unemployment is low—though how much of that is due to a lack of labor force participation and how much of it is because of actual employment—there are concerns that rising interest rates could come back to haunt card users.

It would be easy to scoff at this data and consider it little more than an example of irresponsible shoppers spending money they don’t have yet. Admittedly, there are other potential answers to the question of spiraling credit card debt, like people buying basic goods and attempting to stave off the debt for another day when jobs might be found.

Yet there’s a large amount of debt out there that may or may not be collectible. That could mean big problems ahead for lenders, especially if new underwriting standards really come into play.

Credit cards are one of the most widely used mobile payment systems around, and they’re being used extensively throughout the United States right now. Whether this is a good sign of economic recovery or a slow-burning fuse to disaster is as yet unclear, though.