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Overall, Americans now owe a record $1.21 trillion credit card,according to New quarterly report on household debt From the Federal Reserve Bank of New York.
Credit card balances rose $45 billion in the fourth quarter of 2024, partly driven by holiday spending and are now 7.3% higher than a year ago.
at the same time, Credit card violation rate “Keep up,” the Fed researchers in a news call on Wednesday, found. “The rise could indicate “difficulty for borrowers to repay”.
“No one would be surprised that credit card debt reaches another record,” said Matt Schulz, chief credit analyst at Lendingtree.
“The stubborn inflation has shrunk the financial margins of many Americans because of the mistakes that go from slim to but not, forcing people to rely more heavily on credit card debt,” Schultz said.
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Credit card debt has remained stable over the past two decades. But most households have spent extra savings in the years since the pandemic, triggering a rebound in credit card balances. Despite the high cost of borrowing, consumer spending remains stable.
“There is little reason to believe that we won’t continue to see new credit card debt records in progress,” Schultz said.
Credit card rate up to 20%
At the same time, credit cards have become one of the most expensive ways to borrow money.
Low-income families must stretch to cover Prices riseafter the Federal Reserve’s rope, it was hit particularly hard Interest rate hiking Increase the average credit card interest rate to over 20% – close The highest in history.
Even if the Fed lowered its benchmark late last year, average credit card rates Almost no benefit.
“For those who have a balance … higher interest rates will make those balances rise faster, which will also pay monthly,” said Fed researchers in New York.
