“Kudlow” panelists Kevin Brady, Art Laffer and Sandra Smith discuss how “Bidenomics” isn’t gaining traction with voters.
Americans continue to accumulate credit card debt Fighting high inflation And interest rates.
The average debt per borrower reached $6,218 at the end of the first quarter, an 8.5% increase from a year ago, according to new data released by TransUnion on Thursday.
Consumers owe a total of $1.2 trillion in credit card debt.
Paul Siegfried, senior vice president and credit card business leader at TransUnion, said: “Despite the current relatively high interest rates, demand for credit remains strong as consumers take control of their spending in the face of continued high inflation. It continues to be strong.”
Americans are carrying record amounts of household debt
Most households are experiencing increased monthly expenses as a result of the ongoing inflation crisis. Although the consumer price index has fallen from its peak of 9.1%, it remains significantly higher than pre-pandemic levels. And compared to January 2021, before prices started skyrocketing, the inflation rate has increased by more than 18%.
Most households are experiencing increased monthly expenses as a result of the ongoing inflation crisis. (image/image)
The findings come shortly after the New York Fed released new data revealing that more Americans are behind on their monthly credit card payments.
Credit card delinquencies reached an annualized rate of 8.9% in the first quarter, above pre-pandemic levels. In fact, the percentage of credit card balances in serious delinquency, at least 90 days late, has risen to its highest level since 2012.
“In the first quarter of 2024, rates of credit card and auto loan transitions into serious delinquency continued to rise across all age groups,” said Joel Scully, director of regional economics in the Household and Public Policy Research Department at the New York Fed. said.
“We found that an increasing number of borrowers are falling behind on their credit card payments, worsening financial hardship for some households.”
New York Fed researchers are unsure why delinquencies have increased so significantly despite low unemployment, but they have offered several theories.
Latest New York Fed survey shows Americans expect high inflation to continue
Consumers may have depleted the excess savings they built up during the pandemic and are still spending at high levels even though that money is gone. This surge may also be a result of labor market fluidity. Americans lose their jobs and then find jobs elsewhere with lower salaries.
Increased credit card usage and debt are especially concerning because interest rates are astronomically high. (Robert Nickelsburg/Getty Images/Getty Images)
Another possibility is that some Americans’ credit scores have been artificially increased because student loan debt is no longer reported to credit bureaus during the pandemic. As a result, the number of people to whom credit cards can be issued has expanded.
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Increased credit card usage and debt are especially concerning because interest rates are astronomically high. The average annual percentage rate (APR) for credit cards hit a new record of 20.72% last week, according to the Bankrate database dating back to 1985. The previous record was 19% in July 1991.
If people take on debt to cover higher prices, goods can become more expensive to buy in the long run. For example, if the average American owes $5,000, at her current APR level, it would take about 279 months and $8,124 in interest to pay off the debt with minimal payments. It will cost you.
