Credit card debt SURGES to record-high $930.6 billion and will keep increasing due to inflation, interest rates
02/06/2023 / By Arsenio Toledo
The amount of credit card debt owed by Americans jumped by 18.5 percent, hitting a record-high of $930.6 billion – and this is expected to climb even higher as American consumers continue to deal with nflation and rising interest rates.
“Whether it’s shopping for a new car or buying eggs in the grocery store, consumers continue to be impacted in ways big and small by both high inflation and the interest rate hikes implemented by the Federal Reserve,” noted Michele Raneri, vice president of United States research and consulting at consumer credit reporting agency TransUnion, the company that reported the increase in credit card debt.
A lot of the credit card debt increase comes from the 202 million new credit accounts opened during the fourth quarter of 2022, led by younger adults aged 18 to 25, bringing the tally of total credit cards in the U.S. to a record-high of 518.4 million.
“Credit card interest rates are already as high as they’ve been in decades,” noted Matt Schulz, chief credit analyst for fintech company LendingTree. “While the Fed is taking its foot off the gas a bit when it comes to raising rates, credit card APRs [annual percentage rates] almost certainly will keep climbing for at least the next few months, so it is important that cardholders continue to focus on knocking down their debt.”
TransUnion noted that the average consumer’s credit card balance rose to $5,805.
High inflation, interest rates, making it impossible for Americans to pay off their credit card debt
Persistent high inflation is making the problems of credit card debt holders even worse. Karissa Warren, a wife and mother in Silver Spring, Maryland, noted that rising food prices are making it nearly impossible for her to turn a profit on her side job as a baker.
“The cost of everything is going crazy, especially eggs,” said Warren. “All of the recipes I make have eggs.” (Related: Americans are increasingly turning to credit card debt and short-term loans as the cost of living becomes extremely painful.)
On top of that, interest rates on Warren and her husband’s credit cards have skyrocketed. Roughly two years ago, when she and her husband consolidated their $10,000 debt, they were offered no interest for the first year, and then five percent after that. In recent months, that rate has doubled to 10 percent.
“I’m really upset,” she said. “It’s a pressure every day.”
“Because the Fed has been raising rates aggressively over the past year, that really has a direct pass through to your credit card rate,” warned Ted Rossman, senior analyst at Bankrate, a financial services company. “A lot of people may not have enough income coming in to support day-to-day expenses, so it lands on the credit card. That becomes a very persistent cycle of debt, unfortunately.”
This one-two financial punch of rising inflation and aggressive interest rate hikes is plunging millions of Americans like Warren deeper into debt that could take years, possibly decades, to fully pay off.
Learn more about debt and the general state of the American economy at DebtCollapse.com.
Watch financial expert Gregory Mannarino warn that all kinds of debt, including personal and household, are about to explode even higher.
This video is from the High Hopes channel on Brighteon.com.
More related stories:
Americans falling behind on credit card and loan payments as inflation persists.
Number of Americans with a second job up by 6% as inflation continues to eclipse wage gains.
Inflation forcing Americans to rely on credit cards for daily expenses.
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big government, Collapse, credit, credit card debt, credit cards, debt, debt bomb, debt collapse, economic collapse, economics, economy, Federal Reserve, finance, financial crash, inflation, interest rate hikes
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