Home Business 2023 Ends with Record High Credit Card Debt

2023 Ends with Record High Credit Card Debt

2023 Ends with Record High Credit Card Debt

The recent report published by the New York Federal Reserve has revealed that Americans are increasingly relying on credit cards to finance their everyday expenses. This has resulted in credit card debt reaching a record high of $1.13 trillion at the end of December, marking a significant increase from the previous quarter. Notably, the surge in debt has contributed to growing delinquency rates, particularly among young and low-income households.

The rise in delinquencies among younger Americans is believed to be linked to factors such as the resumption of student loan payments, the overextension of finances during the pandemic stimulus payments, and the impact of the recession on early careers. What’s more, the current high interest rates, with the average credit card annual percentage rate hitting a record 20.72%, present a cause for concern. This rapid increase in credit card debt has broader implications for the economy, potentially leading to a slowdown in consumption and a significant retrenchment by consumers.

Furthermore, the surge in balances is not limited to credit card debt, as auto loan balances climbed by $12 billion, student loan debt increased by $2 billion, and mortgage balances jumped by $112 billion to $12.25 trillion. These findings underscore the broader challenges that the ongoing inflationary pressures have placed on American households, particularly those in vulnerable financial situations.

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