Thoughts on Rising Consumer Debt?

leo222 · ‎06-11-2022

So, I was noticing that I've gotten so many more credit card offers lately...My credit quality / FICO has improved, but it's just been insane how aggressive banks are / have been. It's also apparent that credit card debt for consumers has gone up quite a bit in the past few months - You can look at many charts that show this - I got mine from the Federal Reserve. What's interesting is that many banks are being so aggressive in offering credit, when there are inflationary pressures and, seemingly, a higher risk of default by borrowers.

I'm wondering if the banks are looking at the increase in interest rates, and are able to be more aggressive in offering loans / credit, because they know they will soon be earning a lot more money from the net interest spread (from higher interest rates) on their deposits?

Citylights18 · ‎07-08-2022

Ray Dalio has a good video series on the importance of credit to the economy.

https://www.youtube.com/watch?v=PHe0bXAIuk0

Debt has fueled the US economy for the past 15 years.

Anonymalous · ‎07-10-2022

The increase in debt just seems to be the post-pandemic rebound. It's reached a new high, but it's not abnormally higher than 2019. Debt's been trending up for a long time.

Higher interest rates also increase the rate of default, but I suspect the credit card companies are more concerned with inflation and the possibility of officially going into a recession.