Credit card debt in the United States hit a record high in 2018. In January the average American had a credit card balance of $6,375 which was up 3% from the prior year. However, credit scores were also higher compared to the previous year.
The most recent rate hike from the Federal Reserve is expected to add $2.2 billion in credit card interest charges. If the Fed raises rates two more times, as expected, it could boost interest charges on credit cards to approximately $10 billion in 2019. This is according to the June Credit Card Debt Report.
When the report was conducted Americans carried $984 billion in credit card and other revolving debt. This number is expected to exceed $1 trillion this summer especially with greater spending activity on credit cards during these months. This is all bad news for borrowers, or at the very least not a source of comfort. For credit card companies, on the other hand, the news is very good.
VISA Inc. (NYSE:V) stock rose 1.24% on June 26. Shares have climbed 14.8% in 2018 so far and are up 36% year over year. VISA reported revenue of $5.07 billion in the second quarter compared to $4.48 billion in the prior year. Earnings also rose to $1.11.
Mastercard Inc. (NYSE:MA) stock rose 0.76% on June 26. Shares of Mastercard have climbed 28.8% in 2018 so far. The company reported profit of $1.49 billion in the first quarter and beat estimates with $1.41 per share.
