Editors' Pick: Originally published March 23.

You're piling up credit card debt at pre-recession levels and have clearly learned nothing from the economic collapse.

This won't end well for you.

By the third quarter of 2015, according to the Federal Reserve Bank of New York, total U.S. credit card debt hit $714 billion (up $34 billion from a year earlier). The Federal Reserve put total revolving debt at $935.6 billion in December, up 5.1% from a year earlier despite that fact that interest rates rose from an average 11.91% to 12.09% during that time.

The fourth quarter of 2015 was particularly disturbing. Odysseas Papadimitriou, chief executive of credit statistics and analysis site CardHub, notes that consumers rang up $52.4 billion in credit card debt during the last three months of 2015. That's almost equal to the total amount of credit card debt consumers compiled for all of 2014 ($57.4 billion). That increased credit card debt for all of 2015 by a total of $71 billion.

So what? Well, that means that the average household with credit card debt now owes $7,879 -- or just $500 less than CardHub considers unsustainable for a median household income of little less than $52,000. Also, as CardHub points out, we haven't hit $900 billion in credit card debt since 2007 during the ramp up to the financial system’s 2008 collapse.

"There comes a point at which credit card debt becomes unsustainable, whether due to an increase in unemployment and the corresponding decline in income levels or because the cost of interest on rising balances grows to the point that even minimum payments are no longer feasible," Papadimitriou says. "The charge-off rate, 2.91% as of the end of 2015, is still near historical lows, which means consumers generally have been able to stay current on their payments to date."

The good news is that each year typically begins with a huge paydown as consumers get their tax refunds and annual salary bonuses. The bad news? Last year's $35 billion paydown was almost immediately erased when we added a whopping $32 billion in credit card debt the second quarter. It also didn't help that the “big” $35 billion paydown was actually $10 billion less than U.S. consumers paid toward their credit card debt to kick off 2009. We ended that year with an $875 million decrease in overall debt. We never repeated that feat, and only gained positive momentum once more, when the $36 billion in debt we added in 2012 was 22% less than the nearly $47 billion we added in 2011.

Papadimitriou notes that if we continue to add debt at this rate, it may cause default rates to rise credit availability to tighten. Honestly, the latter might not be such a bad thing for U.S. consumers. Finance site NerdWallet compiled its American Household Credit Card Debt Statistics Study last year and found that the average household is paying $6,274 in interest alone year, which means that 9% of average household income ($72,641) is being spent just on interest. Meanwhile, the average American household with credit card debt is facing 44 years of payments if they make only the minimum payment on their debt each month.

NerdWallet survey found that only 9% know that most consumers have more than three credit scores, 54% wrongly think that carrying a credit card balance helps their credit score (it doesn't) and 55% don’t know when they start being charged interest on credit card purchases (you don't if you pay off your balance each month). Sean McQuay, NerdWallet’s resident credit card expert and a former Visa strategy analyst, says consumers' general ignorance of how their credit card works doesn't just lead to bad spending choices, but poor payment decisions. “82% of Americans answered that paying a late will always hurt a credit score,” he says. “But contrary to popular belief, a late payment doesn’t necessarily mean damage to your credit. If you pay within 30 days of your due date, the blunder most likely will not be reported to the credit agencies.”


Meanwhile, there is no time like the present to pay down your balance and do your part to chip away at the nation's credit card debt. Advisors regularly suggest building an emergency fund with monthly contributions that add up to a year’s worth of after-tax income. You can also open new credit cards or lines of credit that should stay zeroed out, as they'll improve both your overall credit and your ratio of debt to free credit. CardHub also suggests using the “island approach,” where you use different cards for different types of transactions” like transferring your existing debt to a 0% interest credit card in order to reduce your monthly payments and using a rewards card for you biggest ongoing expenses.

Most importantly, pay a majority of your monthly debt payment to the card with the highest interest rate while making the minimum payment required on the rest. Once your most expensive debt is paid off, repeat the process as necessary with the remaining balances. By making a budget plan and sticking to it, you can more easily whittle down debt as it comes in instead of just compiling it more quickly than you can pay it down.

"We're playing with fire now, and either an unexpected economic downtown or the continuation of current spending and payment trends could be enough to unleash an avalanche of defaults," Papadimitriou says. "The relative strength of the U.S. economy certainly gives us a longer leash relative to the perfect storm of the Great Recession, but do we really want to test these limits?"

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.