Whatever you do, DON'T SPEND $831 or more because that's how close...
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Americans owe at least $3.4 trillion in credit debt, and that number continues to rise as payment on the debt falls below borrowing. On average, each household owes more than $15,000 in debt.
LOS ANGELES, CA (California Network) - Americans are falling deeper into debt as the economy leaves them behind. Stagnant wage growth combines with rising prices has forced many people to make up the difference by using credit. However, credit is not a very good long-term approach as it accrues interest and can greatly increase the costs many people pay.
A 2016 study of credit cards performed by Card Hub, reveals that household debt is rising and consumers now owe about $1 trillion in credit card debt alone.
Card Hub concludes that many households are very close to unsustainable levels and that the low pay-down rates versus high balances looks a lot like in early 2007. In other words, we may be on the verge of a credit collapse as people struggle to make their payments.
On average, households have just $831 in credit left before they close the gap that Credit Hub says is unsustainable. In plan English, if American households accrue just $831 more in credit debt, on average, the entire system could collapse. That's not a lot of cushion, about the price of an expensive new iPhone.
Although the U.S. economy has escaped the Great Recession, and appears to be in a slow growth phase, gains have not been passed along to workers. With stagnant wages, Main Street has remained in recession. The fear is that another recession could spiral out of control much more quickly than in 2008.
American consumers need less credit, not more, they need to spend less in general, they need lower rates for borrowing, and they need more income. Unless this happens -and it certainly will not, the present cycle will continue until it becomes unsustainable and collapses.
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