When you are creeping out on a very high tree limb, everything may seem fine until suddenly the limb snaps and disaster strikes. I think that is a perfect metaphor for what we are facing as a country. Our politicians in Washington have artificially propped up our economy for years by piling up 34 trillion dollars in debt, and the “experts” at the Federal Reserve have artificially propped up the financial markets for years by pumping trillions upon trillions of dollars that they created out of thin air into the system. But now we are so far out on a limb that there is no way back, and there is no safety net below.
The flow of credit card debt moving into delinquency hit 8.9% in the first quarter at an annualized rate, above pre-pandemic levels.
The percentage of credit card balances in serious delinquency - payments are at least 90 days late - climbed to its highest level since 2012.
Finally, a vivid reminder that once credit card rates go up they almost never go down, in Q2 the average interest rate on credit card accounts rose again, up to 22.76% from 22.63% in Q1 and 1 basis point below the all time high.
While so far consumers have pretended they can afford to pay this interest upon interest, there will come a day when the brick wall will finally be reached and the US consumer's Wile E Coyote moment will finally come meet its gravitational implosion.
Most people don't realize this, but there is no federally mandated limit on credit card interest rates.
So these days many credit card companies are just going hog wild.
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