Who is behind on their credit card bill?
These borrowers “may have become over-leveraged during the pandemic,” New York Fed researchers said in a news release on Tuesday.
Delinquent borrowers are typically renters with shorter credit histories and lower credit limits, making them more likely to be financially vulnerable and miss payments. researchers said.
The New York Federal Reserve found that about 9.1% of credit card balances fell into delinquency last year.
In the past few years since the outbreak, property rights Brett House, an economics professor at Columbia Business School, said housing has always been one of the most important tools for creating wealth, and those who have been priced out of the housing market need to achieve parity. Financial security is extremely difficult.
between Millennials Researchers at the New York Fed say many people entered the labor market during the Great Recession and may be experiencing the long-term negative effects of the recession. Those who enter the labor market during periods of high unemployment have lower long-term earnings, and many research shows.
50% of Americans have a balance
Today, 57% of consumers rely on credit cards to make ends meet, according to a separate survey. achieve, 36% of consumers said it was difficult to pay off recurring debt on time. The survey of 2,000 adults with one or more types of consumer debt was conducted in June.
Of those who failed to pay, the majority cited unemployment or reduced income This is the main reason why they have fallen behind recently.
Half of cardholders now Carrying debt every monthaccording to another report bank interest rate.
“High inflation and high interest rates have eroded Americans’ savings, leaving more and more people with more debt for longer,” said Ted Rossman, senior industry analyst at Bankrate.
Credit card interest rates are up to 20%
At the same time, credit cards have become one of the most expensive ways to borrow money. Credit card interest rates, already high in recent years, soared when the Federal Reserve began raising rates to curb inflation.
Since most credit cards have variable interest rates, there is a direct link to the Fed’s benchmark. As the federal funds rate rises, so does the prime rate, and so do credit card interest rates.
Low-income families must do whatever they can to make ends meet Price increasedhit particularly hard after 11 strings interest rate hike Raising average credit card interest rates above 20% — close to record high.
“With credit card balances at an all-time high and average credit card interest rates hovering near record levels, it’s more important than ever to pay off this debt as quickly as possible,” Rothman said.
Rothman calculated that at a 20% annual interest rate, if your average credit card balance was $6,218 and your minimum payment was $6,218, it would take you 18 years to pay off your debt and cost you more than $9,300 during that time interest.
