Credit Card Debt Passes $1 Trillion For First Time Since 2008

WASHINGTON, DC — American credit card debt surpassed $1 trillion, the highest it's been since the financial crisis hit in 2008, according to a report Friday from the Federal Reserve. It hit an annual growth rate of 4.8 percent in February. There's both an optimistic and a pessimistic take on this data, and both might be correct.

First, you might see the increase in consumer debt as a sign that we really have moved passed some of the worst effects of the recession. The cumulative impact of millions of customers paying down their debts after the financial crisis, while it may have been rational on an individual level, created downward pressure on economic growth. Now that debt is bouncing back, it shows consumers are more confident in their financial futures and willing to spend the money that drives the economy.

On the other hand, you might worry that excessive debt may place the country in peril again. An excessive confidence in the durability of the economy, after all, played a role in the most recent financial downturn and mortgage crisis.

"Credit card debt is rising quickly, but delinquencies are still really low," said Matt Schulz, senior industry analyst at Creditcards.com. "Many Americans are doing a good job of controlling their debts, but eventually with big debts and rising interest rates, it's likely that something will have to give. I expect delinquencies to start rising more quickly in 2017."

He continued: "2017 will be a record-setting year for credit card debt. Americans' credit card debt will almost certainly reach its highest levels ever later this year and keep growing from there. Add in a few expected rate increases from the Fed over the next two years, and that makes it even more important than usual to focus on paying down your credit card debt."

Shulz also added that people who struggle with credit card debt should face their problems head on.

"Take some sort of action, even if it's small," he advised. "Consider a balance transfer card, for example. We're seeing zero-percent offers for up to 21 months, and that can have a huge impact on your ability to pay down that debt."

Photo illustration by Matt Cardy/Getty Images