Credit Card Payments Decline from Last Year
According to the story, Americans paid off approximately $32.5 billion in outstanding credit card debt during the first quarter of 2014. But this is less than previous years.
CardHub is a credit card comparison website based in Arlington, Va. and owned and operated by Evolution Finance, Inc., a personal finance company that was founded in 2008 by a former Capital One executive.
"Consumers historically pay off a lot of credit card debt during the first quarter of the year with tax refunds, annual salary bonuses, and New Year's Resolutions fueling their efforts," said Odysseas Papadimitriou, CardHub founder and author of the study. "But last year's first quarter pay down was 4% smaller than in 2012, and we ended the year having incurred 6% more debt overall. This year's first quarter pay down was even smaller still."
The company projects that by year-end, there will be a $41.9 billion net increase in credit card debt 8% more than last year and a 14% increase relative to 2012.
Other findings from CreditCardHub are that the average household's credit card balance went down to $6,628 from $6,980 at the end of 2013. CreditHub project that by the end of 2014, consumers will have defaulted on nearly $300 billion in credit card debt since 2009. CreditHub also sees the quarterly credit card default rate stabilizing near historical lows.
"A significant reversal in this trend could lead to a credit crunch," says Papadimitriou.
Another significant statistic is the employment report. It is nothing to be excited about, because even though the labor report revealed an addition of 217,000 jobs to the U.S. economy in May - ostensibly bringing employment back above pre-recession record levels - it is estimated that seven million more positions are actually needed to account for population growth.
--Written by Michael P. Tremoglie for MainStreet