Credit Card Debt is Close to Recession-Era Numbers. Is it Time to Panic?

Close up man holding credit card while using smartphone.
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Well, the holidays are pretty much upon us.

And while the Christmas creep has malls and radio stations blasting “Jingle Bells” earlier and earlier each year, it seems like Americans are also getting out ahead of another holiday tradition: crippling credit card debt.

This summer, U.S. consumers added another $24 billion to the mounting pile of credit card debt in the country, bringing the total to $808 billion, according to the Federal Reserve Bank of New York’s latest household debt and credit report.

That 3.1% increase was more than triple the growth in student loan debt and five times the jump in mortgage debt during the same period. Auto loan debt grew 1.9% over the summer, but that’s a whole other story.

That big, scary number — the $808 billion one — happens to be the highest amount since it hit $866 billion in 2008. Ya’ll remember 2008, right?

And we’ve barely started holiday shopping!

But is it really time to freak out?

How to Stay Fiscally Vigilant as Credit Card Debt Mounts

Now, we’ve still got plenty of holiday shopping ahead of us, so there’s no doubt you’ll be swiping your card at least a few times. But seriously, it’s not time to panic.

As long as you remain vigilant about your credit score and utilization, you’ll be on your way to responsible holiday spending.

Credit Sesame is a free tool that will help you monitor your credit if you have to take on more debt this season (Sorry, U.S. government, this is just for individuals). You’ll get your credit score, report and a graded credit analysis

It also advises users on how to improve said credit score, which can be your New Year’s resolution. We’ve seen tons of stories about people paying off their credit cards and raising their credit scores with Credit Sesame

And after this all shakes out, you can also get on the road to paying off all that debt in just 13 minutes.

So, deep breaths.

U.S. Credit Card Debt Is Surging, but We’re Not All Going to Die

It’s true that if you look at the last year, credit card debt has catapulted up 8.2% — the greatest annual increase since 2008.

But there’s another important factor to consider when looking at the health of the economy: The number of people defaulting on that debt. The amount of credit card debt considered severely delinquent — more than 90 days overdue — did tick up to $9.7 billion this year but remains well below the levels during the Great Recession.

“Even though it is rising, we haven’t seen major spikes where it seems to be an indication where we are at this tipping point of some major, major trouble,” says senior industry analyst Matt Schulz.

According to a New York Fed report from August, banks are relaxing some of their restrictions on credit limits, and people on the higher end of the credit score spectrum are opening more cards. Hence, we just keep racking up that debt.

Still, it’s definitely something to keep an eye on, Schulz said. I mean, just because you can stretch your credit line doesn’t mean you should.

“It’s really important to knock your credit card debt down when times are good in order to allow you to build up a cushion for yourself for when things inevitably turn bad,” he said. “Most Americans are one big unexpected emergency away from some fairly hard times, economically.”

Alex Mahadevan is a data journalist at The Penny Hoarder. He still has an embarrassingly low credit limit.