How bad is credit card debt?

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Once upon a time, when times were tight, consumers would hang onto the house and ditch the credit cards. Now some are doing just the opposite.

Credit card debt is usually “the canary in the coal mine,” says David Wyss, chief economist for Standard & Poor’s. It’s the first obligation that consumers fail to pay when they hit a financial rough patch. The mortgage is usually the last.

“But this time,” he says, “it’s been the reverse.”

Part of the reason may be that home equity is dropping, says Wyss. Since consumers can’t borrow against their homes and prices continue to rise, they’re putting more on plastic.

In 2007, Americans charged $971 billion, up 7.5 percent from a year earlier, according to Standard & Poor’s. “It’s the biggest increase we’ve seen since 2000,” says Wyss.

The average household is shouldering $8,300 in credit card debt, calculates Scott Hoyt, director of consumer economics for Mood’s, using Federal Reserve and Census Bureau numbers.

Oddly enough, out of all the consumer debt categories, “credit cards are actually doing the best of the lot,” says Wyss.

True, default rates are up “pretty sharply,” says Wyss. Card companies are writing off 5.7 percent of their debt every month, according to S&P data. But that pretty much matches the historical average, he says.

“But we expect it to go higher,” says Wyss. “The crystal ball says somewhere around 7 percent by the end of the year.”

So how does that compare? Says Wyss, “It’s low for a recession, but high for any other time.”

Is your credit card debt a problem? Check these tips to see what you can do about it.