US credit card debt surpasses record set at brink of crisis
New York, US - US consumer credit-card debt just passed an ominous milestone, beating a record set just before the global financial system almost collapsed in 2008.
Outstanding card loans reached US$1.02tn in June, data from the Federal Reserve showed, as lenders including Citigroup Inc and JPMorgan Chase & Co compete to sign up cardholders who may carry balances - a relatively lucrative business in a prolonged period of low interest rates.
The bet is that this time it won’t end so badly. In 2008, a drop in home prices spiraled into a global financial meltdown, and after the jobless rate surged toward ten per cent, banks wrote off more than US$100bn in credit-card loans over the next two years.
Investors have been skittish over the potential for defaults to rise ever since card balances eclipsed US$1tn in February. Credit-card issuers Capital One Financial Corp, Synchrony Financial and Discover Financial Services said write-off rates ticked up in the second quarter from the previous three months.