US Credit Card Debt Reached $1 Trillion in 2016: Nilson Report

Credit card receivables, also referred to as outstanding debt, generated by cards issued in the U.S. topped $1 trillion at year end 2016 according to a recently released Nilson Report. Those outstanding amount was tied to Visa, Mastercard, American Express, and Discover cards as well as to private-label cards issued for use only at select retail, gasoline, medical, airline, and car-rental locations.

"Every credit card purchase of goods or services immediately triggers outstanding debt," said David Robertson, Publisher of The Nilson Report. "Every purchase is technically a loan. However, it is important to remember that more than one-third of all outstanding credit card debt at the end of each month will be paid in full before the buyer incurs any finance charges."

The report further says that of the total $1 trillion credit card outstanding amount at year end 2016, 86 per cent was generated by Visa, Mastercard, American Express, and Discover cards. This includes receivables tied to commercial card products that are provided by corporations to their employees. The other 14 per cent was divided among multiple private-label credit card providers.

In comparison, at year end 2016 student loan debt totaled $1.407 trillion (Federal Reserve Consumer Credit - G.19). Of the $1 trillion card debt identified by the report, only $650 billion was subject to finance charges, while the full $1.407 trillion in student loan debt was subject to finance charges. Finance charge is the fee a borrower pays for carrying his loan. In case of a credit card, finance charge is the fee that a credit card holder has to pay for carrying the balance beyond grace period on his credit card.

The report points out that credit card debt is spread out over a much wider pool of Americans than student debt. There were 157 million Americans with outstanding debt on one or more credit cards at year-end 2016, but just 44 million with student loan debt. Nearly four times as many Americans have card debt than student loan debt.