More credit cards lead to higher credit card debt this summer

Hands holding fanned-out credit cards

I hope we're not sliding back into some bad and costly habits.

Banks issued 15 million new credit cards during the first five months of 2011, the most in three years.

And the number of cards issued to subprime borrowers -- those with the worst credit histories and scores -- jumped 65% to 4.4 million cards during that time.

Oh, and overall credit limits on bank cards rose 27% during that time.

That's according to Equifax, the credit reporting bureau.

So perhaps it's not surprising that revolving credit, which is mostly credit card debt, jumped in June by $5.21 billion, the most since March 2008.

It was also the first time since 2008 that credit card debt has increased for two consecutive months.

That's according to the Federal Reserve.

Why would consumers want more credit cards, higher credit limits and bigger balances?

Here are three possible reasons:

Reason 1. Credit cards are lowering interest rates and rising credit limits, making it easier to run up bigger balances.

Reason 2. Consumers feel more comfortable with their job security and feel OK to spend a little more (“If I haven’t gotten laid off yet, I probably won’t.”).

Reason 3. More people are at the end of their collective financial ropes and are relying on credit to get them by as less money comes in while everything seems to get more expensive.

Could be a combination of all three.

But here's the moral to the story.

Americans have reduced their revolving debt by nearly $200 billion since 2008.

Studies suggest that most of that decline was due to credit card companies writing off uncollectable balances, not from us paying them down.

That's OK. It's still a step in the right direction.

Let's hope these stats aren't a sign that we're going back to our pre-recession ways.

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