Credit card debt among Americans continues to rise as regular bills and every day costs continue to get more expensive due to record levels of inflation.
CreditCards.com issued a new report which showed 60% of credit card holders have been carrying balances on their cards for at least a year. That number was 10% just one year ago
Ted Rossman, senior analyst at Creditcards.com noted, “It’s even harder to get out of debt when it’s spending on necessities that got you into that position in the first place. These expenses aren’t easily avoided.”
Among Americans who earn less that $50,000 per year, 59% carry a balance from month to month. Among those who earn $50,000-$80,000, 49% carry a balance month to month. As you look at Americans who earn between $80,000 to $100,000, that number drops to 46% carrying a month to month balance.
CreditCards.com surveyed 1,834 credit card holders last month to acquire the data for the report. Cardholders reported the main reasons they acquired debt was unexpected bills, such as medical bills, or unexpected home or car repairs.
Inflation cooled slightly in July and August, however over the last 12 months prices have still risen 8.3%, with recent declines in gasoline prices being offset by quickly rising prices among groceries, shelter, and medical care. Core Inflation, which removes volatile energy and food prices, still rose 6.3% year over year in August, up 0.4% from July’s 5.9% year over year rise.
Total American credit card debt came in at $887 billion as of June 2022, according to data from the Federal Reserve. That was a 13% rise over the previous year, and was, “the largest increase in credit card debt that we’ve seen in over 20 years,” according to Ron Hetrick, senior economist at Lightcast.
LendingTree noted, the cost of that debt is not free, as the average interest rate for a new credit card is between 18% and 25%.
Matt Schulz, credit analyst with LendingTree noted, “Even people with the best credit (score) can expect to pay 18% interest or higher on their new credit card.”
