Credit card debt in America is increasing rapidly

A recent report from CreditCards.com has revealed that Americans are facing "triple trouble" from credit card debt, with consumers facing record-high rates, larger balances and more credit cards amid high inflation. The Federal Reserve Bank of New York estimates that total credit card balance has remained around a record $986 billion between Q4 2022 and Q1 2023. The report further found that 35% of American adults carry some credit card debt, and just 54% of cardholders pay their bills in full every month. Ted Rossman, the senior industry analyst at Bankrate.com who led the study, warns that credit card debt is often several multiples higher than most other forms of debt, and that many Americans are at a "tipping point" with around $5,000 in debt. The average credit card charges nearly 21%, up nearly 5 percentage points from the beginning of 2022. Mississippi has the nation's highest credit card debt burden, while Massachusetts has the lowest. Despite last week's Fed decision to hold interest rates steady, cardholders may not see any relief anytime soon, with the Fed projecting another two 25-basis-point rate hikes before the end of the year. This has led to an additional headwind to rising prices in sectors such as shelter, transportation services and food prices, making it more difficult for many lower-income Americans to pay off their credit card debt. Rossman recommends that cardholders who owe $5,000 or less get a 0% balance transfer card to avoid interest for up to 21 months. Those with more debt may struggle to get a high enough limit to transfer it all over or may struggle to pay it back within that allotted timeframe, though other options exist including seeking nonprofit credit or using personal loans as a form of debt consolidation.