ARTICLE

The Next Recession Could Crush Those Carrying Credit Card Debt

News Image By Mac Slavo/ActivistPost.com October 02, 2019
Share this article:

Because credit card rates are so much higher now than they were in the past, even a mild recession could crush those who carry credit card debt.  The current national average interest rate on credit cards is 17.61%, just shy of the record set in July. By comparison, the average credit card charged about 13% when the Great Recession began.

According to CNBC, this overlooked issue of high-interest rates on consumer goods and credit card purchases are going to be incredibly difficult to pay for people during the next recession.  

Whether it's mild or severe, an economic downturn could really hurt those carrying a balance.


The so-called "private label" credit cards (often known as store credit cards) are experiencing the highest severe delinquency rate since 2011, according to Equifax. 

Delinquencies are ticking up even amid the media's glowing reports of a "10-year economic expansion." The Consumer Financial Protection Bureau reports that in 2018, about 9% of general-purpose credit cardholders and 4.5% of private label cardholders had at least one severe delinquency in the preceding 12 months.

Millions of Americans are living dangerously close to the financial edge.

Just 35% of Americans have enough savings to cover three months' expenses, and 28% have no emergency savings at all. Additionally, 39 million U.S. adults have been carrying credit card debt for at least two years, and another 8 million can't recall how long they've been in debt. 


A quarter of debtors expect to die in debt. All of this despite an extraordinarily low unemployment rate of 3.7%. I fear what could happen to credit card debtors if that rises to 5%, 6% or 7%, let alone the 10% we saw in 2009. -CNBC

The Federal Reserve states that the average American holds $5,700 worth of credit card debt.  That means cutting the interest rates a quarter of a point would only save them $1 on their minimum payment. It also means those minimum payments would stretch nearly 20 years and cost about $7,500 in interest (more than double the principal).

Credit cards are often a trap for the middle class in the United States, as people fall victim to consumerism and the ease of paying with plastic.  This trap could crush them during the next recession, so take the steps necessary to prepare for an economic problem early.

Originally posted at Activist Post - reposted with permission.




Other News

July 09, 2025From Japan To The U.S - Earthquake Fault Lines Are Awakening

Is there a possibility that a cataclysmic eruption of Mt. Rainier could occur in the not too distant future? On Tuesday morning, Mt. Rain...

July 09, 2025When The Left Wants Blood: The Quiet Slide Toward Political Violence

Democratic lawmakers are hearing increasingly violent rhetoric from their constituents-calls to "break the rules," "fight dirty," and stop...

July 09, 2025The Digital Trap: Europe's Quiet March Toward Total Control

Imagine a world where every transaction you make, every website you visit, every thought you dare to express online is silently recorded, ...

July 09, 2025Shepherds Without Scripture: What Do Today’s Pastors Really Believe?

One in four Mainline clergy doubt the existence of God. These aren't fringe bloggers or deconstructing TikTok influencers. These are the m...

July 07, 2025Hijacking Creation: Scientists May Only Be Years Away From Lab-Made Children

In-vitro gametogenesis - the creation of human sperm and eggs from skin or blood cells--is now just years away. Scientists across Japan, C...

July 07, 2025Death To The IDF? The Disturbing New Normal On The Progressive Left

Once reliably pro-Israel, the Democratic Party has undergone a dramatic reversal on the Israeli-Palestinian conflict-and no demographic re...

July 07, 2025Access Denied: How Age Rules Could Reshape The Internet For Everyone

If identity becomes the new key to the internet, then the next great digital debate won't be about content moderation-it will be about acc...

Get Breaking News