U.S. Consumers Added $16 Billion to Their Credit Card Debt in Q3 2018

While the 2018 holiday shopping season only began a couple of weeks ago, it looks like Americans have already been racking up debt well before the Black Friday kick off. According to a new report by WalletHub, consumers added $16 billion to the total credit debt between June and October for a new total of $974 billion. While that is at least lower than the record $1 trillion+ in outstanding debt reached in the last quarter of 2017, it does mark the second highest level seen since 2008 and hold’s the record for highest Q3 total overall.

As mentioned U.S. consumers surpassed the $1 trillion mark in terms of outstanding credit card debt for the first time last year. Luckily this was followed by the second-largest quarterly payoff ever, with Q1 2018 totals falling by $40.8 billion. However, when you combine Q2 and now Q3 spending, that payoff is practically eliminated, with a mere $2.8 billion remaining — not the mention the impending holiday season that typically sends Q4 totals soaring.

Making matters worse, rising interest rates could end up costing consumers even more. In fact, as WalletHub notes, the latest Federal Reserve rate hike (rumored to take place on December 19th) would cost cardholders an extra $1.56 billion in interest. Of course it should be noted that there’s been some recent confusion about how much more the Fed will raise interest rates, but WalletHub suggests there’s a 70% chance of the December hike nonetheless.

Accompanying their latest credit study, WalletHub also looked at which Americans cities had the most and least sustainable credit card debt. To determine these lists, the site looked at the median credit card balances of residents in each of 2,564 U.S. cities, excluding surrounding metro areas. This data was then compared to the median income of each city’s residents in order to determine how long individuals would need to pay down debts and how much they’d end up paying in finance charges along the way.

“Topping” the list of cities with the least sustainable credit card debt was Colleyville, Texas — a suburb of the Dallas and Fort Worth area. Other cities on the list managed to span the country with Darien, Connecticut; Park City, Utah; Fairbanks, Alaska; Summit, New Jersey; Leawood, Kansas; The Woodlands, Texas; Mill Valley, California; Needham, Massachusetts; and Sammamish, Washington all making the cut. Meanwhile the most sustainable cities were mainly in the south and midwest, with Carmel, Indiana coming out on top. Those Hoosiers were followed by residents of Gainesville, Texas; Lake Forest, Illinois; Bastrop, Louisiana; Allen, Texas; Madison, Mississippi; Coral Gables, Florida; Frankfort, Kentucky; Russellville, Arkansas; and Southhaven, Mississippi.

Between the holiday shopping spike and rising interest rates, it’s concerning that overall outstanding credit card is already rising following Q1’s near-record payoff. Furthermore, with economic growth still going strong and credit scores trending upward, the rising credit card seems somewhat counterintuitive. While consumers may be able to “keep up” with their payments now, cardholders may be setting themselves up for disaster should things take a turn. Hopefully that won’t be the case but consumers would be wise to start changing their ways now to help prevent a credit catastrophe later.

Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

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