LULU GARCIA-NAVARRO, HOST:
The U.S. economy is going strong with record low unemployment, but that's not the whole story. Many Americans got smaller tax refunds this year. Wage growth is stagnant. And credit card debt is on the rise.
ODYSSEAS PAPADIMITRIOU: There is a significant group of our society that is kind of left behind.
GARCIA-NAVARRO: That's Odysseas Papadimitriou, CEO of the personal finance website WalletHub. We've heard about credit card debt being a problem for middle and working classes before, but it's now become an issue for the upper-middle class. Papadimitriou says they're in the sweet spot for this type of easy lending.
PAPADIMITRIOU: It is the consumer group that wants to take on some additional debt and also has the income and the assets to justify so.
GARCIA-NAVARRO: On top of that, recent numbers show that people approaching retirement age are also accruing larger amounts of credit card debt.
PAPADIMITRIOU: You know, they're away from retirement enough years to feel like, I will make up for it later on. Let me go and make this purchase. And then they end up later on in retirement with credit card debt.
GARCIA-NAVARRO: Credit card debt is at its highest level since 2008. WalletHub is projecting that each U.S. household will have an average of $9,300 in credit card debt by the end of the year. And Papadimitriou believes it's hitting a breaking point.
PAPADIMITRIOU: We start defaulting. Credit card companies stop lending. More people get into trouble. Interest rates go up. Penalty fees go up. And you get into a vicious cycle...
GARCIA-NAVARRO: That could have larger repercussions.
PAPADIMITRIOU: ...Which is, obviously, negative for the economy as well with spending power going down.
GARCIA-NAVARRO: The level of credit card debt is one economic warning sign. But Papadimitriou worries that lawmakers and consumers aren't taking it seriously. He says it could take the threat of a recession to get them to act.
PAPADIMITRIOU: We'll be going into a recession the next couple of years. I think the question is, when? If that recession comes before the election, I think, absolutely, it's going to be a major political headwind, if you will. If it comes afterwards, it's going to benefit, I think, the current administration.
GARCIA-NAVARRO: His advice - just because you have credit available to you doesn't mean you should use it.
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