The Strategist

Americans' credit card debt reaches record levels

02/21/2023 - 08:46

At the end of the fourth quarter of last year, there were $16.9 trillion in outstanding U.S. household debts, an increase of $394 billion (2.4%) from the previous quarter.

Federal Reserve Bank of New York released its quarterly report on house debt and credit. Particularly noteworthy, according to experts, is the 6.6% quarterly increase in American credit card debt to $986 billion. Both the rate of growth and the overall amount of debt were record-breaking.

Experts cautioned that the increase in consumption, which is related to a strong labor market among other factors, comes at a time of historically high inflation and rising bank rates. Ted Rossman, a senior credit card analyst at Bankrate, told Bloomberg: "It's a triple bottom line for credit card holders."

The survey claims that people are finding it more and more difficult to pay their financial commitments in the present economic climate. 18.3 million American borrowers would have fallen behind on their credit card payments by the end of 2022. In contrast, there were 15.8 million of them in the US as of the end of 2019. Young borrowers are considered to have the most serious issues, which mainly revolve around credit card and car loan repayments.