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Credit card balances spiked in the third quarter to a $1.08 trillion record. Here's how we got here (www.cnbc.com)

submitted 11 months ago by [email protected] to c/[email protected]

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[–] [email protected] 87 points 11 months ago* (last edited 11 months ago) (5 children)

Up until recently, most Americans benefited from a few government-supplied safety nets, most notably the large injection of stimulus money, which left many households sitting on a stockpile of cash that enabled some cardholders to keep their credit card balances in check.

But that cash reserve is largely gone after consumers gradually spent down their excess savings from the Covid-19 pandemic years.

It is absolutely insane to me that anyone thinks the stimulus money left households sitting on a stockpile of cash.

As though millions of people on the edge of poverty sat like dragons upon a mountain of wealth.

[–] [email protected] 42 points 11 months ago* (last edited 11 months ago) (1 children)

Seriously, they don't even have a grasp on how little that money was even worth. That shit evaporated the instant it arrived just to pay off some of the interest on existing debt.

[–] [email protected] 30 points 11 months ago

Exactly. That shit was a months rent. Anyone still talking about it is just stirring up bs

[–] [email protected] 32 points 11 months ago (1 children)

There are a lot of people conditioned to see the little guy getting money as some kind of affront to freedom. Most of them are the little guy as well, unfortunately.

[–] [email protected] 10 points 11 months ago (2 children)

But but thats different, that guy down the street with two kids who wakes up at 6 and goes to work every day doesn't deserve that money for reasons I can't articulate without sounding racist, But I deserve my check.

[–] [email protected] 6 points 11 months ago (1 children)

Listen, I'm a hard working American and I come from hard working Americans. We built this country and we're just having a hard time for the last couple of months but we work hard. That guy up the street, he's needed "help" for years. That isn't help, that's a handout. He's not trying. I can't see any systemic reasons that things might be more difficult for those people, they just aren't working as hard as us. I mean sure he goes to work but where is he working? Why doesn't he just get a better job like I did?

/s although I'm sure someone has said those exact words and meant it seriously.

[–] [email protected] 1 points 11 months ago

I live in a red state and have heard people say almost exactly this, except they were serious.

[–] [email protected] 3 points 11 months ago

And the race angle is just a coincidence!

[–] [email protected] 25 points 11 months ago* (last edited 11 months ago) (1 children)

That's the wild part. We got like two or three checks of $1200, 800, and like $400 or something similar. Less than $2500. That's not a stockpile. A stockpile would be if we all had an extra $20-40k just sitting and no debt.

[–] [email protected] 9 points 11 months ago

It's the people who got laid off or partially laid off that got a good deal. The 600/week unemployment was a lot if money for people, especially if you still were getting most of a paycheck.

[–] [email protected] 24 points 11 months ago

Lol. The PPP loans is where all the money disappeared to. Yes people got some money but it was spent for necessities, and to be honest it wasn't even that much. Some business got hundreds of thousands to millions of dollars that the government is still trying to recover which they probably never will.

[–] [email protected] 7 points 11 months ago

I knew some bank folks. From what I heard, large amounts of the PPP loan money sat in the bank because some banks had trouble giving the money out. That extra money earned the banks a hefty amount of interest, and the C-suites of the bank made-off with a huge chunk of year-end bonus as a result. So while it isn't directly the PPP loan money, the bankers made a lot of money off of it.

The PPP loans that they were able to give out went to some small businesses and a large percentage of that money were forgiven. But some small businesses also had some trouble getting their loans forgiven due to either bad documentation / application / or the bank that gave them the loan did a poor job of filing the paperwork. So some of those businesses were stuck with a loan that they had to pay back or is waiting for it to be properly processed.

And of course there are a lot of fraud, too.

[–] [email protected] 52 points 11 months ago (3 children)

Companies continue to raise prices to unheard of levels to keep raking in obscene profits. They brag about it on their earnings calls.

Inflation isn’t the problem. Corporate greed is. Yet again.

[–] [email protected] 5 points 11 months ago

🌍👨‍🚀🔫🧑‍🚀

[–] [email protected] 5 points 11 months ago (4 children)

Greed was always there. Such a constant does not explain why now prices are rising.

[–] [email protected] 16 points 11 months ago

Because when supply chains got fucked up during COVID, they raised their prices for legitimate reasons, and found to their delight that people kept on buying, and In fact, because people were panic shopping, and stuck at home bored, they actually bought more.

So when things calmed down, instead of lowering prices, they continued to rise. because if they didn't, they'd be making less profit than last quarter (which is unacceptable)

Combine that with the wage stagnation that's been going on for decades and a housing shortage and you now have an economy where people can't afford rent, food, or basic goods

[–] [email protected] 14 points 11 months ago

It’s greed plus tacit coordination. If all the companies in an industry raise prices at the same time, and almost none of them defect by unilaterally lowering prices, then they can all increase prices together. One theory is that markets are too concentrated now so tacit coordination during inflationary periods are easier.

[–] [email protected] 8 points 11 months ago (1 children)

They noticed that everybody else was rising the prices and that they can get away with it.

[–] [email protected] 5 points 11 months ago

When you get fit everyone a board room table, you don't have competition. You have an oligopoly. At the highest level of these companies, everyone knows everyone. They all go to the same events, people have moved around between the companies, and they all run in the same social circles.

[–] [email protected] 1 points 11 months ago

Such a constant does not explain why now prices are rising.

Because they can. People have more to spend, so businesses charge more.

It's called "maximizing profit."

[–] [email protected] 2 points 11 months ago

I dunno. Do we expect corporations not to be greedy?

I think a bigger problem is people are proud to be ripped off because it helps them fit in with others.

[–] [email protected] 29 points 11 months ago (3 children)

What I really need right now is yet another article explaining to me how I'm actually better off now than I was a year or two ago, I'm just too stupid or whatever to realize it. Inflation was kicking our ass, and then we had two separate student loans kick in at once, on top of taking on a shitton of debt to take care of some of the broke boomers in our lives.

[–] [email protected] 3 points 11 months ago

Have you tried any of the following:

Stop buying avocado toast
Pull yourself up by your bootstrap
Not being poor

[–] [email protected] 22 points 11 months ago

20% inflation since the start of the pandemic (higher on necessities like food and shelter), stagnant wages, massive wealth concentration and transfer from the poor and middle class to the rich… not surprising at all. Between wealth inequality, climate change, and political unrest, we are heading towards major societal collapse.

[–] [email protected] 4 points 11 months ago (2 children)

Makes me wonder how people are managing it.

I get paid every 2 weeks and I go through and pay down or pay off all my cards every payday.

When I put them back in my wallet, I put the paid off cards in first, and the not paid off cards upside down so I don't unintentionally add more debt to them.

As of last Friday, I have two cards that are not fully paid off. One with a 0% loan on a large electrical project, the 0% deal expires in April, but I expect to pay it off in January.

The other has a brand new $1,000 debt because I just paid my Christmas lights install company.

[–] [email protected] 23 points 11 months ago (2 children)

You went into debt on a credit card so you could pay someone else to install Christmas lights?

[–] [email protected] 3 points 11 months ago

What a world, don't tell my wife.

[–] [email protected] 1 points 11 months ago (1 children)

Not just Christmas lights, they're cleaning the gutters too, and taking the lights down after the holidays.

Just over $1,000.

[–] [email protected] 13 points 11 months ago (1 children)

Jesus. That is an insane amount of money for that unless you live in a 5000+ sf. house.

[–] [email protected] 6 points 11 months ago (1 children)

Part of the penalty of not being able to do it myself. :( If we had a moss problem, they would treat that too, but the roof is only a year old. :)

[–] [email protected] 5 points 11 months ago (1 children)

Did you get a few quotes? The gutter cleaners near me charge less than $300 and I have a two story house. It's close to upper $100s if only one story. Shop around and save yourself the coin unless that's not an issue for you.

I imagine hanging lights shouldn't be that expensive unless it's the first time and they are installing light hooks to be reusable each year.

[–] [email protected] 4 points 11 months ago

Oh yeah, it wasn't this bad when we started using them 2 years ago, but inflation is hitting everything.

[–] [email protected] 8 points 11 months ago (1 children)

You really aren't the average person if you can pay $1000 to have your Christmas lights installed. I'm trying to even envision the Christmas light situation at your house that could possibly cost that much to put up. It must be impressive.

[–] [email protected] 2 points 11 months ago* (last edited 11 months ago) (1 children)

There's some custom work done because we have this awesome round window that's hard to work with.

This was last year:

[–] [email protected] 2 points 11 months ago (1 children)

Interesting. Most people don't have any round windows!

[–] [email protected] 1 points 11 months ago

I know, right? It was the first thing that made this house stand out.

[–] [email protected] 3 points 11 months ago

tl;dr: increased credit card usage