Americans raise their credit card debt to almost US$1B

Stubbornly high prices and robust consumer spending collided in the fourth quarter of 2022, pushing credit card balances to a record $986 billion.

The $61 billion increase from the prior quarter was the largest seen in data going back to 1999 and pushed total American credit card debt past the previous high of $927 billion, which was set in the fourth quarter. quarter of 2019, according to the New York Fed Household Credit and Debt Report.

Users are not only using their credit cards more than ever, they are also missing payments, with delinquency rates exceeding pre-pandemic norms. Just over 4% of credit card debt has gone seriously delinquent, which means not paying for 90 days or more.

The rise in credit card debt marks a dramatic shift from just a couple of years ago, when stimulus checks allowed homebound American consumers to save and pay down their balances.

As of early 2021, credit card balances had fallen 17% from their pre-pandemic high, according to a Bankrate.com report.

Now, inflation is driving up the costs of everything from groceries to gasoline, and repeated rate hikes by the Federal Reserve have pushed credit card interest rates to nearly 20%.

In total, credit card balances shot up $130 billion from December 2021 to December 2022, the highest annual growth on record. As the Fed continues to raise interest rates, credit card borrowing costs are expected to hit a high of 40 this year.

“It’s a triple problem for credit card users. Balances have gone up, rates have gone up, and more people have debt on their cards.” said Ted Rossman, a senior analyst at Bankrate, adding that 46% of credit card holders are in debt, up from 39% a year ago.