(PresidentialWire.com)- The Federal Reserve Bank of New York reported last Thursday that credit card debt among US consumers has jumped to nearly one trillion dollars.
In the final three months of 2022, credit card debt increased by over $60 billion, raising the total credit card debt for Americans to a record high of $986 billion, the report found.
Americans’ skyrocketing credit card balances coincided with the increase in credit card interest rates, further crippling household budgets as inflation devours the savings many Americans earned during the pandemic.
Bankerate.com senior analyst Ted Rossman told ABC News earlier this month that with consumer prices continuing to rise, many people lack the income “to support day-to-day expenses,” prompting them to make up the shortfall by using their credit cards.
According to WalletHub, in the last three months of 2022, the average US interest rate for credit cards was 21.6 percent, increasing from approximately 18 percent in the previous year as aggressive rate hikes from the Fed caused credit card rates to jump.
Additionally, the overall household debt increased by 2.4 percent over the last three months of 2022 to nearly $17 trillion, according to the report.
Wilbert van der Klaaus, an economic research advisor with the New York Fed, said in a statement that despite the record-low unemployment rate keeping consumers on strong financial footing, the high prices coupled with the increasing interest rates could be testing the ability of some borrowers to repay their debts.
In the final three months of 2022, credit card users carried on average a balance of over $5,800, an 11 percent increase from the last three months of 2021.
Earlier this month, the Federal Reserve imposed another borrowing cost increase as it continues to battle inflation by slowing the economy and cooling demand.
While inflation has fallen from its peak over the summer, it remains over three times higher than the Fed’s target of 2 percent.
Last month, consumer prices rose 6.4 percent compared to January 2022.
