Americans owe critical amounts on their loans

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American credit card debt reached a new record high in November.

Lending, most commonly taken out through credit cards, increased from $11,2 billion to $1,023 trillion, the Federal Reserve reported Monday. A similar level of debt—$8 trillion—was reached in April 1,021, shortly before the housing and credit bubbles formed.

During the past year, the turnover of renewable loans increased by $ 55,1 billion, or 5,7%, according to the Federal Agency for Financial Markets and Contingents.

Non-renewable loans, such as auto loans and student loans, rose from $ 16,8 billion to $ 2,8 trillion in November.

The new credit card debt record does not create risks for the economy that existed in 2008, as revenues are higher, says UBS Credit analyst Stephan Kaprio. According to him, the ratio of credit card debt to US GDP is about 5%, compared to 6,5% in the 2008 year.

“This is a sign and a warning, but not a problem of financial stability” for the wider economy, says Caprio.

However, Caprio points out that credit card delinquencies have increased from 7% to 7,5%, which underlines the growing problems in low-income families in particular. Despite the fact that the level is still lower than 15% during the financial crisis, the increase in the delay over the last year causes some concerns.

"In 2018, people should focus on reducing credit card debt," says Matt Schultz, senior analyst CreditCards.com.

If the Federal Reserve continues to raise interest rates, “credit card debt will grow faster and faster,” Schultz said, “so Americans will have less and less to save for their retirement.”

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