Data released Tuesday revealed that Americans have broken a new record: together, we have surpassed $1 trillion in credit card debt.
During the second quarter of 2023, America’s credit card balances added $45 billion, or roughly 4.6 percent, bringing us to a total of $1.03 trillion in debt, according to the New York Fed’s latest report. Overall household debt has spiked significantly since 2019, by roughly $2.9 trillion, likely due to the absurd economic policies during the COVID-19 pandemic that have led to devastating levels of inflation.
Interest rates over the same period have hit a 22-year high, CNN noted. “As interest rates feed through from the federal funds rate to interest rates on mortgages and credit cards, that affects everyday consumers,” Morning Consult economist Sofia Baig told CNN. “So with elevated interest rates, paying that debt becomes more expensive, and with consumers continuing to take on more debt, this combination will put more pressure on some households who have those tighter budgets.”
The average credit card charges a 20.53 percent interest rate at present, the outlet continued. These factors, plus general obsession with consumerism, have helped destabilize the American household. Some people are tapping into the 401(k) accounts to help mitigate the financial distress caused by our fluctuating economy.
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Early delinquencies for home mortgages, auto loans and credit cards have also increased in the last quarter. (RELATED: Dear Kay: I Just Saw The Banking News. Are We Screwed?)
“American consumers have so far withstood the economic difficulties of the pandemic and post-pandemic periods with resilience,” NY Fed’s analyst wrote. “However, rising balances may present challenges for some borrowers, and the resumption of student loan payments this fall may add additional financial strain for many student loan borrowers.”
Things will likely get far worse come October, when federal student loan payments will resume. The month will prove to be a “really big test for an awful lot of Americans,” forcing budgets to tighten right before the holidays, LendingTree analyst Matt Schulz told CNN. (RELATED: NYT Idiots Ignore Dire Financial Warnings For 2023 From Leading Experts)
The ongoing financial crisis is nothing new. The writing was on the walls in the first days of the pandemic, and was solidified during the lockdowns. Some economists have been so worried (for a while) that they’ve joked about killing themselves to avoid the implosion that awaits our economy.