NEW YORK (MainStreet) — It looks like households are getting more comfortable with being in debt again – for better or worse.
U.S. consumers have racked up debt at a faster pace than either of the previous two years and are projected to have $64 billion more in credit card debt by the end of 2011 than they had at the beginning of the year, according to a new report from CardHub.
The credit card comparison website found that consumers took on $16.8 billion in credit card debt in the third quarter of this year alone, an increase of 154% from the same quarter of 2010, which CardHub says is “unprecedented.”
In one sense, the fact that Americans are more willing to ramp up their spending and go into debt can be seen as a positive for the economy: It may boost demand for goods and services, which in turn can lead to more jobs. However, building up the debt bubble could also bring about another economic disaster down the road.
“While people going out and buying things is good for the economy, overleveraging is not,” says Odysseas Papadimitriou, CEO of CardHub. “We saw the effects of widespread overleveraging during the Great Recession, and it’s my concern that too few of us learned a lasting lesson when it comes to not spending more than we bring in each month. This, simply put, has got to change.”
Seth Fiegerman is a staff reporter for MainStreet. You can reach him by email at Seth.Fiegerman@thestreet.com, or follow him on Twitter at @sfiegerman.