Republicans like to complain about the nation's debt; ranting about cutting social services and not taxing the wealthy. What they don't talk about is how Americans are burying themselves in debt while trying to hang on to a glimmer of the so-called "American Dream."
In reality what is going on is that the banks are once again setting up the economy to blow up and, for the second time in less than a decade strip Americans of what little wealth they have scrapped together since the 2008 bubble burst.
Americans are once again being duped into believing that "owing" is "owning" that once again is creating a nightmare scenario that will take a long time to wake up from.
U.S. credit-card balances are on track to hit $1 trillion this year, as banks aggressively push their plastic and consumers grow more comfortable carrying debt.
That sum would come close to the all-time peak of $1.02 trillion set in July 2008, just before the financial crisis intensified, and could signal an easing of frugal habits ingrained by the recession.
The boom has been driven by steady economic conditions and an improving job market that have made creditworthy consumers less reluctant to take on debt. In addition, lenders have signed up millions of subprime consumers who previously weren’t able to get credit.
Consumers are taking on other forms of debt, too. Auto-loan balances surpassed $1 trillion in the first quarter, a record for the industry, according to a report Thursday from credit bureau Experian.
Credit cards are one of the few business lines working for banks right now. Low interest rates have hurt margins on ordinary lending, and a combination of tougher regulation and volatile markets has crimped profits in trading. But banks’ card operations are benefiting from low delinquency rates and could become even more profitable if interest rates rise.
Card issuers are trying to capitalize on the good times by raising customers’ credit limits, giving out more cards and pumping up perks.
“We’ll continue to take this opportunity as far as it will take us,” Richard Fairbank, chief executive at Capital One Financial Corp., said in a recent conference call with investors.