By AnnaMaria Andriotis
After a few years of austerity, credit card debt is rising again. According to data released this week by credit-card comparison web site CardHub.com, consumers racked up $18.4 billion in credit card debt during the second quarter of 2011, 66% more than what they amassed during the second quarter of last year and more than four times what they did two years ago.
At the current rate, consumers are on track to end the year with $54 billion extra in credit card debt, following a $9 billion increase last year. That suggests consumers are amassing credit card debt at a faster rate than ever, says Odysseas Papadimitriou, chief executive at CardHub.com.
This spike, however, occurred while the economy was still on the upswing and consumers were feeling relatively good about their financial outlook. That has changed in the last few months, and the volatility in the stock market and unpredictability in Europe could cause consumers to reverse course in the third quarter, says Papadimitriou.
On the other hand, the stubbornly high unemployment rate could also be contributing to rising credit-card debt, especially for the long-term unemployed who exhausted their unemployment benefits and were relying in part on their existing credit cards for basic necessities.
At least carrying credit-card debt is less dangerous than it was prior to the Credit CARD Act that went into effect last year. In part, the legislation prevents issuers from raising interest rates on existing credit-card balances as long as borrowers aren’t two or more months late with their payment. If the economy dips again, simply paying the bills might be burdensome enough.