New research paints bleak picture of credit card debt

Over the past several months, several encouraging reports of the decrease in evolving consumer debt have been published. Revolving debt, which consists primarily of outstanding credit card balances, fell by roughly $12 billion in the second quarter of 2010 from the quarter prior, according to the Federal Reserve. But there's just one problem with that, according to new research from CardHub.com: All of that drop and then some was due to banks throwing in the towel on bad loans and charging off delinquent balances.

"The biggest news of all is that it's been widely reported that consumers keep paying down their credit card debt and they have now learned their lesson," Odysseas Papadimitriou, founder and CEO of CardHub, told WalletPop in a phone interview. But, he adds, "It doesn't make sense. There's no way that in the worst economic environment consumers are finding money under their mattresses and paying off their credit cards." Papadimitriou says his company calculated that banks charged off around $21.8 billion in bad loans. In other words, Americans actually increased their collective revolving debt by some $9.8 billion, a figure that's slipped under the nation's radar because of the huge amount of charge-offs.