At an interest rate of 24%, you need to generate an even higher return on your own capital. The problem is there are no asset classes that offer 25% plus returns on capital, which is why the total credit card debt level will be even higher next year. It is a vicious cycle.
— Thomas Edmonds (@Kapitalizzum) May 8, 2023
In the US, 45% of millennials now have more credit card debt than savings.
44% of US adults who are aged 43 to 58 have more credit card debt than savings.
Overall, a record 36% of US adults now have more credit card debt than savings.
These numbers are up massively this year. pic.twitter.com/ueqJBTh5T7
— The Kobeissi Letter (@KobeissiLetter) May 8, 2023
Since the pandemic, credit card debt has skyrocketed.
Total US credit card debt is up nearly $200 billion in under 3 years.
The rate at which credit card debt is rising is faster than pre-2008.
On top of this, interest rates are also rising at their fastest pace in history. pic.twitter.com/Ckn4jNSn3W
— The Kobeissi Letter (@KobeissiLetter) May 7, 2023
Consumer Credit Shocker: Credit Card Debt Explodes At 2nd Fastest Pace On Record Just As Rates Hit All-Time High
And so the scene for both the next crisis and credit crunch are set, because just like Americans couldn’t afford their mortgages in 2008, hoping instead that some greater fool would take it off their hands at the right moment, so too now they are maxing out credit cards (just as rates hit all time high) knowing they will never repay the debt, but instead hope that the coming bank crisis will allow them to quietly sneak away without repaying their debt. Come to think of it, the bank crisis is already here…
The Worst Inflation of All: Record Levels of Debt
Credit card balances increased $61 billion in the fourth quarter of 2022 to $986 billion, surpassing the pre-pandemic high, according to an analysis released by the Federal Reserve Bank of New York. It’s the most significant debt gain in the history of the New York Fed’s data, compiled since 1999.