Several factors affect how economists and lenders look at credit card debt. The top two are the strength of the economy and interest rates. A recession inevitably triggers defaults as people lose their jobs, and the value of key assets like homes erodes. Interest rates affect monthly payments. Some card companies like American Express charge exorbitant rates. Other cards, often tied to banks often have lower interest rates available.

The “health” of the credit business is relatively strong today. Unemployment in the U.S. is relatively low. Wages, nationally, have risen this year. Interest rates are near historic lows. Due to these factors, it is not as worrisome that people take on high levels of credit card debt as it might be in a shaky economy.

WalletHub has just issued its Credit Card Debt Study for the second quarter. The most critical observation from the report: “During Q2 2021, consumers added $45.7 billion to their tab – an all-time record that nearly wiped out the first-quarter paydown.” The primary statistics for the research were from consumer debt rating company TransUnion, BLS information, and Federal Reserve data.

In terms of credit card balance increase in the first quarter, California ranked first. It is also the state with the highest total debt at $111 billion. The total increase in the second quarter was $5.4 billion. These numbers should not come as any surprise. It is the largest state by far based on a total population of 39.5 million.

The second state on the list is Texas at $86 billion. The second-quarter increase was $4.2 billion. Once again, its position should be no surprise. Texas ranks second in U.S. population by state at 29.1 million. The WalletHub study puts Florida at $64.6 billion, up $3.2 billion. Florida ranks third in the U.S. based on population.

What should people take away from this? First, a healthy national economy, with GDP that may increase 6% or 7% this year has triggered rising income, and rising consumer credit. This confidence has driven people’s view of how much debt they can cover. However, there is a major caution. Recessions rarely start with much warning. They do, however, affect employment, and the value of people’s assets. The current rise in credit card debt will be a boat anchor for the consumer when that downturn comes–as it always does.

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