Recent data from TransUnion shows that Americans are accumulating more credit card debt as they grapple with high inflation and interest rates. The average debt per borrower has increased by 8.5% from the previous year, reaching $6,218 at the end of the first quarter. In total, consumers now owe $1.02 trillion in credit card debt.
Households have experienced a rise in monthly expenses due to the inflation crisis, with the consumer price index remaining significantly higher than pre-pandemic levels. This has led to a growing number of Americans falling behind on their credit card payments, with the flow of credit card debt moving into delinquency hitting 8.9% in the first quarter.
The New York Federal Reserve recently released data showing that the percentage of credit card balances in serious delinquency has reached its highest level since 2012. This trend is concerning, especially given that the average credit card annual percentage rate has hit a record high of 20.72%.
Experts are unsure of the exact reasons behind the increase in delinquencies, but suggest that factors such as drained savings, high levels of spending, and shifts in the labor market may be contributing to the problem. The rise in credit card usage and debt is particularly worrying due to the high interest rates, which could result in individuals paying significantly more for items in the long run.
Overall, the current economic environment in the United States is posing challenges for many consumers as they navigate high inflation and interest rates. It remains to be seen how individuals and households will manage their debt in the face of these ongoing financial pressures.