Americans are running up credit card debt at historic levels as they struggle with soaring inflation.
Credit card balances increased by 15 percent in the third quarter compared with last year, according to the Federal Reserve Bank of New York, marking the largest jump in more than 20 years.
“With prices more than 8 percent higher than they were a year ago, it is perhaps unsurprising that balances are increasing,” Fed economists said in the report. “Notably, credit card balances have grown at nearly double that rate since last year.”
Total credit card debt reached $930 billion in the third quarter.
Paying off this debt is more difficult right now, CNBC reported:
Meanwhile, “high inflation and high interest rates are making it harder than ever to pay down credit card debt,” said Ted Rossman, senior industry analyst for CreditCards.com.
Not only are credit card balances back to pre-pandemic levels, but consumers are also carrying balances for long periods.
Among Americans who carry credit card debt from month to month, 60% have been in credit card debt for at least a year, according to CreditCards.com.
As the Federal Reserve raises its target federal funds rate, credit card annual percentage rates are climbing, as well.
The news comes as credit card interest rates hit the highest levels on record: The current rate of 19.04 percent is the highest rate that financial services company Bankrate has recorded since it started tracking in 1985.
Published under: Debt, Economy, Federal Reserve, Inflation
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